Picking a fight with China might prove to be one of Trump’s most consequential missteps, though only time will ultimately reveal the full impact, Nelson Wong writes.
China and the United States have become embroiled in a rapid and intense tariff conflict, which, to the surprise of many observers, has unfolded over just a few days. The Trump administration initiated the standoff by raising tariffs on Chinese imports to 34% and warned of an additional 50% should China retaliate. In a swift and decisive move, China responded with its own countermeasures. After the US raised its tariff to 125% on April 12, 2025, China announced that further retaliation would be pointless as it has become impossible for the Chinese market to accept US imports at the current tariff levels. China’s unusually resolute stance has drawn global attention. Meanwhile, the White House continues to express hope that Beijing will return to the negotiating table. With no clear path forward and tariffs soaring, trade between the world’s two largest economies has effectively come to a standstill, signalling a de factor decoupling of their economic ties.
Conventional wisdom holds that when two major economics like China and the US are deeply intertwined, the resolution of trade imbalances should be pursued through negotiation and diplomacy. Given China’s longstanding reputation for measured and restrained responses, the government’s swift and firm retaliation in the current tariff standoff has taken many by surprise. In contrast to the often-unpredictable policy shifts of the Trump administration, Beijing is generally known for its calculated and deliberate decision-making. China’s firm stance in this trade conflict is not reactionary, but rather a product of strategic foresight, economic resilience and broader geopolitical considerations. The following breakdown highlights the key factors behind China’s resolute approach in the face of escalating US tariffs, which as of April 15, 2025, stands at a staggering 145% on Chinese goods:
1. Strategic Preparation Over a Decade: China has had the last ten years to prepare itself for this day. Over the years, in an effort to diversify the country’s trade dependencies, China has systematically reduced its reliance on the US market. As a result, exports to the US now account for less than 15% of China’s total exports, down from approximately 20% in 2018. According to some expert predictions, even in the worst-case scenario of disregarding its sales to the US, the immediate GDP impact will be down to just 0.5% in theory, which is considered tolerable. Meanwhile, the “dual circulation” strategy adopted by China years ago to encourage the country’s domestic consumption pivot prioritises self-sufficiency and domestic demand, cushioning external shocks. The country’s effective implementation of other initiatives like “Made in China 2025” and the “Belt and Road Initiative” have contributed to the ultimate goal of reducing China’s dependency on both the technology and the market of the US.
2. Economic Leverage and Countermeasures: By controlling 80–90% of global rare earths processing and key mineral supply chains (e.g., lithium, cobalt), China claims a dominance in critical minerals and the US defence and green tech sectors will face bottlenecks without Chinese supplies. At the same time, in the semiconductors sector, and despite US sanctions, China is advancing in sub-7nm chip production (e.g. SMIC’s 5nm trials) and is already achieving breakthroughs in lithography alternatives, and will eventually overcome its dependence on US-controlled ASML and TSMC. Furthermore, in the financial sector, to mitigate the risks of the dollar being weaponised by the US, China now holds $800 billion in US Treasuries (down from its peak holdings), while at the same time is also accelerating the de-dollarisation process by encouraging more of its trading partners, including countries within BRICS, to use local currency for bilateral settlements. This could undermine and destabilise the US financial system.
3. Geopolitical and Diplomatic Resolve: No matter his motive, Trump’s “Victory Date” announcement to impose a worldwide tariff increase has provided an opportunity for China to frame the actions of the US as “economic coercion,” giving China the moral high ground and winning it the silent support of the Global South nations, which are all wary of US unilateralism. The fact that no major country has criticized China’s retaliation is proof of China’s sound judgment in a geopolitical context. Slowly but surely, China is enlarging its global alliances with the Belt and Road Initiative (BRI) and expanded BRICS group (e.g. with Saudi Arabia and the UAE joining) to provide alternative trade routes and partners. A further fact not to be neglected is that ASEAN is now China’s top trade partner, surpassing the US and the EU.
4. Domestic Unity and Long-Term Vision: Another factor that is perhaps less noticed by many is the public backing for the decision of the Chinese government to fight back this time. The Chinese people largely support their government’s stance, viewing the ridiculously high US tariffs as unjust containment. Nationalism and anti-US sentiment have been leveraged to rally public support and help sustain the economic hardships that may fall on ordinary citizens if the trade conflict persists without resolution. The silver lining, however, lies in China’s unique economic model, which provides the government with significant flexibility in industrial policy. This enables swift resource reallocation, including subsidies flexibility to rapidly reallocate resources, offering them to impacted exporters and retraining programs for displaced workers, among other measures.
5. US Vulnerabilities Exploited by China: Typically, in a trade war, a careful and objective analysis of the resilience of the other side is also critical in decision making. US tariffs on Chinese products such as EVs, solar panels and other consumer goods will risk exacerbating inflation and domestic divisions in America, a political liability for the administration in the White House. Another proof of US failure is its containment policies; its sanctions on Huawei and SMIC have resulted in technological blowback and have in turn accelerated China’s tech autonomy and innovation. An example is Huawei’s 7nm Kirin chips (2023) and its continued 5G base station dominance. What is more, the EU and ASEAN have resisted full alignment with the US’ decoupling efforts, with Germany’s opposition to EV tariffs and ASML’s lobbying against chip curbs underscoring the fragmentation among US allies when facing fundamental interests.
Overall, China’s retaliation is a strategically calculated move, not an impulsive reaction, though also an inevitability after years of US containment. By accepting short-term pain, China’s aims are believed to be driven by its will to break the US hegemony in trade and technology, to solidify a multipolar world order where the Yuan and the BRI alternatives will rival the dollar-dominated Western system, and to demonstrate to its allies and adversaries that capitulation to US pressure is not the only way forward.
The first three months of Donald Trump’s reign in the White House have already caused some upheavals domestically, the disappointment and discontent of his country’s traditional allies, and above all, the loss of trust in the leadership of the United States worldwide. By turning the tables both domestically in the US and around the world, based on his own perceptions and convictions, he is proving himself to be the president to have changed the cause of his country with rippling effects worldwide. He might be a good deal maker in business transactions, and is right to have found some shocking flaws in how his country has been run, but he appears to have failed to see the root causes of the problems and has largely underestimated the level of complexities involved in state and global governance.
Donald Trump might have planned well with his team of advisers to achieve his declared goal to “Make America Great Again”. But even MAGA advocates and believers will have to recognise that global governance is not similar to the stock market, where one country’s gain is won at the expense of another. Whether the situation around the world will have to become worse before it gets better remains a question. The unpredictability of the Trump administration has discouraged any attempt to cling onto what was known as the general practice of world trade, prompting many countries, particularly the smaller economies, to have no choice but to kneel down and beg for mercy. For bigger nations with larger and stronger economies, such as China, Russia and India, the global chaos has provided an opportunity for them to play a pivotal role in reshaping the international landscape.
The tendency of Trump to consolidate power and act unilaterally is unlikely to change in the foreseeable future. Although his approval ratings hover around 40%, this still constitutes significant support by Western political standards. The rapid deterioration of US-China relations has become an undeniable reality, with the actual situation likely to become more severe than perceived; its structural impacts will be historically profound and far-reaching. For China, managing relations with the US can no longer follow the mindset of 50 years ago. Hoping for another Kissinger-style figure to emerge in Washington is unrealistic, as the international landscape and domestic conditions in both countries have fundamentally transformed. Similarly, expecting a crushing defeat for the Republicans in the midterm Congressional elections is wishful thinking. China’s firm countermeasures are therefore both an instinctive response and a strategic necessity.
Notably, China has suspended the deliveries of 28 Boeing 737 MAX jets and three 787 Dreamliners (excluding the 10 already delivered 737 MAX aircraft), a targeted move seen as a calibrated pushback against US technological containment. On the economic front, UBS has revised down its 2025 growth forecast for China three times in Q1 alone–from 4.6% to 4%, and recently to 3.4% due to Trump’s tariff hikes, marking the most pessimistic projection among major institutions. Yet it is crucial to note that even at this rate, China, as a mega-sized economy, will still account for roughly one-third of global growth. This underscores a critical reality: while Trump’s tariffs may create short-term turbulence, they cannot derail the fundamentals or resilience of China’s economy. Like a massive vessel equipped with self-sustaining propulsion, China’s economy is navigating through this geopolitical storm with strategic autonomy.
Picking a fight with China might prove to be one of Trump’s most consequential missteps, though only time will ultimately reveal the full impact. Even if a negotiated settlement on the tariff issue can be reached between China and the US in the near future, which is still possible, no one can guarantee that President Trump will not change his mind again. If the current trade war between the two largest economies fails to be properly managed, especially alongside potential miscalculations by other major economic powers, it could set the stage for a global crisis. Widespread collateral damage to many nations would be almost inevitable, with even the threat of a real-world conflict looming in the background. If, as many astute strategists have warned, the road ahead is likely to be turbulent, with ongoing regional conflicts, and possibly even a world war, seen as unavoidable, then now is the moment for visionary thinkers, political economists, influential diplomats, and even spiritual and religious leaders to urge our political leaders to act rationally and prioritise the greater good, with or without the US.
