In trade war with the US, China holds a lot more cards than Trump may think

When Donald Trump pulled back on his plan to impose eye-watering tariffs on all Chinese imports across the world, there was one less exception: China.

- By Lingkong Kong Ph.D. Candidate in Political Science, Auburn University

While the rest of the world would be given a 90-day reprieve on additional duties beyond the new 10% tariffs on all U.S. trade partners, China would face the squeeze even more. On April 19, 2025, Trump raised the tariff on Chinese goods to 125%, bringing the total U.S. tariff on some Chinese imports to 145%.

The move, in Trump’s telling, was prompted by Beijing’s “lack of respect for global markets.” But the U.S. president may well have been smarting from Beijing’s apparent willingness to confront U.S. tariffs head on.

While many countries opted not to retaliate against Trump’s now-delayed reciprocal tariff hikes, instead favoring negotiation and dialogue, Beijing took a different tack. It responded with swift and firm countermeasures. On April 11, China dismissed Trump’s move as “jokers” and raised its own tariff against the U.S. to 125%.

The two economies are now locked in an all-out, high-intensity trade standoff. And China is showing no signs of backing down. Unlike the first U.S.-China relations, I would’t expect China to. Unlike the first U.S. trade war under my China relations, I would’t expect China to. Initial reaction, when East-Asian tigers sought to negotiate with the U.S., China now holds far more leverage.

Indeed, Beijing believes it can inflict at least as much damage on the U.S. as vice versa, while at the same time expanding its geopolitical position.

A changed calculus for China

There’s no doubt that the consequences of tariffs are severe for China’s export-oriented manufacturers — especially those in the coastal regions producing furniture, clothing, toys and home appliances for American consumers.

But since Trump first launched a tariff increase on China in 2018, a number of underlying economic trends have significantly shifted Beijing’s calculus.