With Trump’s latest tariff action, the magnitude of his trade assault hit home and Beijing’s hope for dialogue melted into frustration and anger.
Until now its response had been restrained. On Friday, Beijing matched Trump’s 34% additional tariffs and for the first time it hit all U.S. products, no exceptions. It also restricted exports of certain rare-earth minerals, added U.S. companies to trade blacklists and aimed an antitrust probe at the China operations of U.S. chemicals and materials company DuPont.
Trump’s response to its retaliation suggested things would only get worse. In a social-media post, Trump wrote, “CHINA PLAYED IT WRONG, THEY PANICKED—THE ONE THING THEY CANNOT AFFORD TO DO!”
The lack of communication between the two sides shows no signs of letting up. What lies ahead is likely to be a cycle of tit-for-tat retaliation, making it hard to even start negotiations in the near term.
Beijing had been cautiously optimistic in the Trump administration’s first days. Xi Jinping dispatched a top envoy to attend Trump’s inauguration, a move that was seen as an opening for fruitful communication. While Trump had threatened to hit China with tariffs when campaigning for president, he held off on Day One. His only mention of China in his inaugural speech, about wresting the Panama Canal from Chinese control, raised no alarms.
Trump had indicated that he was open to a deal with China, and Beijing hoped to explore one centered on what China was willing to offer, such as more Chinese purchases of American products and more Chinese investment in the U.S.
But in the following weeks, wherever senior Chinese officials tried to engage the new administration, they found only closed doors.
Foreign Minister Wang Yi sought a meeting with Trump’s national-security adviser Mike Waltz in February while he was in the U.S. for a United Nations meeting, according to people who consult with senior Chinese officials. Wang, who had hoped to revive a line of communication he had had with Waltz’s predecessor, Jake Sullivan, got nowhere with the Trump team.
The full-blown trade war during Trump’s first term had strengthened Xi’s resolve to fortify China against a new Trump-like assault. And yet, in the absence of contacts with the Trump team, Washington’s most formidable adversary settled on a wait-and-see approach.
Gone was the swagger Xi’s team often projected in interactions with Biden officials. When Trump set 10% tariffs on Chinese goods in two separate rounds, China’s retaliation was cautious.
Then came the shock of the extra 34% tariffs Trump slapped on China on Wednesday. That brings the average U.S. import levies on Chinese products to 76%, figuring in the previous 20% tariffs and levies that predate Trump’s second term, according to Chad Bown, a senior fellow at the Peterson Institute for International Economics—more than 20 times what it was before Trump launched his first trade war against China in 2018.
“That amounts to a declaration of ‘strategic decoupling’ with China,” said a senior economist in Beijing, using a term from Trump’s first-term trade czar, Robert Lighthizer. “Can we find a pathway toward negotiations under such maximum pressure? The lack of communication between the two sides might make it difficult.”
Some policy advisers in Beijing described the stunned reaction within the Chinese system over Trump’s latest tariff increases. That, the advisers said, raises questions about whether Beijing has the ability to effectively negotiate with Trump to alleviate pressure on the Chinese economy—and prevent a deeper decoupling with the U.S.
“The Trump administration is driving the agenda,” said Ryan Hass, a former national-security official in the Obama administration and now director of the China Center at the Brookings Institution in Washington. “Beijing is almost entirely in a reactive posture.”
Some foreign-policy and trade analysts say Beijing was smart to wait it out as Trump has also significantly bumped up import levies on traditional allies and other big trading partners, raising the specter of a global backlash against the U.S. that could benefit China.
A key reason for Beijing’s defensive posture, according to the people who consult with senior Chinese officials, is that while Beijing explores whether it’s still possible to strike a trade deal with Trump, Xi doesn’t want to be seen as an overearnest suitor.
“Trump and Xi are locked in a paradox of pressure and pride,” said Craig Singleton, a senior fellow at the Foundation for Defense of Democracies in Washington. “Trump’s strategy mixes maximum pressure with sudden diplomatic overtures—he sees leverage and engagement as complementary. Xi, by contrast, is methodical and risk-averse, relying on delay and discipline.”
If Xi engages too soon, Singleton said, he risks looking weak.
Trump had suggested a meeting with Xi could come in the “not too distant future.” But given the heightened pressure from the U.S., Chinese officials have indicated to U.S. executives that Xi is unlikely to visit the U.S. soon.
Trump’s latest tariff moves exceeded both markets’ and governments’ expectations, said the China Finance 40 Forum, a Beijing think tank, in a report Thursday. It estimates China’s exports to the U.S. will drop by more than half as a result.
No more back-channeling
The Chinese political system isn’t built to nimbly respond to a leader like Trump. Chinese leaders rely heavily on established ways to engage with the outside world, including through back-channeling with adversaries.
During Trump’s first term, Beijing’s then-ambassador to Washington, Cui Tiankai, built connections with Trump’s son-in-law Jared Kushner that helped facilitate negotiations between the two capitals. With the new Trump team, no such channel has been established.
The current Chinese ambassador to Washington, Xie Feng, has tried in vain to engage with Trump adviser Elon Musk, according to the people who consult with Chinese officials. Beijing had hoped that Musk, whose company Tesla makes half its electric vehicles in China, could help counterbalance the China hard-liners on Trump’s team.
Other U.S. business leaders, such as Wall Street financiers that Chinese leaders have often turned to in periods of trouble, now see little upside in acting as a go-between for Beijing. “Who wants that role?” said a senior American executive. “No one.”
Beijing’s inability to think beyond formal diplomatic protocol has proven to be a mismatch with a Trump team willing to engage only with those closest to Xi. People close to Beijing’s thinking say that when Trump’s people have suggested Xi top aides they would like to talk to—such as Xi’s chief of staff, Cai Qi—Beijing has recoiled, seeing the political risk from such improvisation as unacceptable.
Meanwhile, China’s Commerce Minister Wang Wentao had no luck with February letters to Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer. Instead, in late March, Greer held an introductory video call with Vice Premier He Lifeng, Wang’s superior and a trusted Xi aide.
‘The wrong side’
The fact that China didn’t appear to figure as a primary focus for Trump in his first two months was unnerving to senior Chinese officials who had expected negotiations between the two sides to begin almost right away.
When Trump in his first two months raised China tariffs by 20%, citing China’s role in the fentanyl crisis in the U.S., senior Chinese officials considered the fentanyl issue as a pretext intended to pressure Beijing, according to the people who consult with Chinese officials. The Xi leadership didn’t rush to talk to Trump or offer him any concessions on the issue like leaders from Canada and Mexico did.
Adding to Beijing’s wait-and-see approach was its belief that tariff hikes threatened to push up inflation in the U.S. and tank the U.S. markets, prospects officials thought might force Trump to back down, the people said.
When U.S. markets started losing ground this year, some Chinese commentators seized on the rise in China’s own stock markets, riding the sudden fame of Chinese artificial-intelligence startup DeepSeek, to revive a Xi adage that “the East is rising and the West is in decline.”
“Within the Chinese government, the view is that the U.S. is taking measures to alienate itself,” said Craig Allen, a senior adviser to Washington-based consulting firm Cohen Group, who attended a high-level economic forum in Beijing in late March. “They think the U.S. is on the wrong side and China is on the right side.”
Trump’s sweeping tariffs could be an opportunity for China to attempt to capitalize on anger against Washington, especially among the U.S.’s traditional allies and trading partners.
There are big challenges. With the new U.S. tariffs, even more Chinese goods will be rerouted to countries in Europe and Asia, where leaders are already concerned about a flood of Chinese products that have jeopardized jobs.
In addition, Beijing has deeply antagonized Europe with its support for Moscow during Russia’s three-year-long invasion of Ukraine.
Leverage lost
Despite Trump’s warning to China over the Panama Canal in his inaugural address, leaders were caught off guard when Hong Kong’s CK Hutchison announced a deal to sell its Panama ports to a U.S. investor group led by BlackRock.
Trump’s statement that China was operating the waterway and that the U.S. was taking it back was barely discussed among senior leaders, according to the people who consult with Chinese officials. No one thought to reach out to CK Hutchison to pre-empt a sale, they said.
If anything, the Xi leadership thought it could use the Panama port issue as a bargaining chip in negotiations with the Trump administration, which they expected to start soon.
Now China is in a no-win situation, trying to regain leverage with an antitrust review of the CK Hutchison transaction. But any move to interfere with the deal could give ammunition to Trump’s charge that China controls the canal.
Officials are eager to not repeat the mistake and give up any leverage it might have with Washington over TikTok as Trump weighs proposals for divesting the app’s U.S. operations from Chinese parent ByteDance.
In recent meetings, according to people familiar with the matter, Chinese officials have indicated to visiting U.S. business leaders that Beijing is firmly against any form of what they called “commercial robbery” and in particular, against any sale that would involve China losing control over TikTok’s algorithm, the app’s secret formula for steering content to users.
For now, the people said, no negotiation over TikTok, or any trade or economic matters, has yet taken place between the Trump administration and the Chinese government. China will expect an off-ramp to enter into any kind of compromise, or even talks, one of the people said—for instance, if Trump finds himself forced to pull back on tariffs. After his sweeping action, markets fell around the world, but hardest in the U.S.
For now, whoever is in the driver’s seat of U.S.-China relations, it’s not Beijing.
