In One Sentence

• On April 2, President Trump announced tariffs on over 100 U.S. trading partners, including a 34% hike on Chinese goods, prompting China to respond with a series of retaliatory measures on April 4.
• On April 9, President Trump paused his “reciprocal” tariffs for 90 days for countries that hadn’t retaliated against the U.S., while simultaneously increasing tariff rates on Chinese goods effectively to 145%.
• In response to Trump’s decision to raise tariffs on Chinese goods, China raised tariffs on U.S. imports to 125% on April 11.
• During a WTO meeting, China, along with twenty other delegations, spoke out against Trump’s tariffs, claiming the measures violate WTO principles and will have a significantly negative economic impact.
• Trump also signed an order officially ending de minimis treatment for Chinese goods, following a notice from the Commerce Department indicating that the U.S. was ready to begin collecting tariffs on those low value imports.

Mark the Essentials

• The European Commission announced it would suspend planned trade retaliation on €20.9 billion ($23 billion) worth of U.S. goods for 90 days, aligning with Trump’s tariff pause to allow time for potential negotiations.
• Following Trump’s “reciprocal” tariffs, U.S. Trade Representative Jamieson Greer said his office had engaged in talks with dozens of partners such as the EU, Korea, Ecuador, and Mexico, while countries like Argentina, Vietnam, and Israel had indicated they would reduce their tariffs and non-tariff barriers.
• After announcing a 90-day pause on the new tariff policy, Trump granted exemptions for smartphones, laptops, and other electronic products imported from China, but warned that these exemptions will be short-lived.
• White House Council of Economic Advisers Chairman Stephen Miran defended President Trump’s “reciprocal” tariffs as a way for the U.S. to recover the costs of supplying “global public goods,” arguing that countries benefiting from the postwar order should see the duties as a form of “burden sharing.”

Keeping an Eye On…

• In April 2017, three months into the first Trump administration, Donald Trump and Xi Jinping were nuzzling each other in the ornate backdrop of Mar-a-Lago. There would be another eight months to go before the bottom of the relationship began to sustain its first cracks, with the administration’s labeling of China as a “revisionist power” in its National Security Strategy. This time around, three months into Trump’s second term, Donald Trump and Xi Jinping are barely on speaking terms with the other. China’s strategy thus far to Trump’s tariff assault has been to retaliate immediately and assuredly but in measured proportion. In addition to tariffs, China’s countermeasures imposed have ranged widely. They include controls on U.S. companies, including their placement in various proscribed lists; corporate probes, particularly on the anti-trust front; slowwalking and/or opposing corporate dealmaking, be it with regard to Tiktok or Hutchinson Ports; slowdown or suspension of major U.S. goods and services purchases, including Boeing aircraft and Hollywood movies; rare earth export curbs; travel to U.S. and study warnings to its own citizens; and a lawsuit challenging U.S. action at the WTO. Additionally, state media have been pressed into service to vocally champion the Party and Government’s standpoint. That standpoint comprises four arguments. First, while Trump’s indiscriminate tariffs will have an impact on China, the “sky will not fall.” Second, the Chinese economy is stable and improving and the country has the confidence to deal with the impact of the U.S.’ tariffs. Third, the Party and Government have a plan with regard to fighting the trade war and riding out its ill-effects. The raising of the government’s budget deficit target as well as targeted fiscal support measures for enterprises and consumers, as laid out at March’s Two Sessions meeting, is presented as a concrete manifestation of this planning. And finally, the new round of U.S. containment and suppression via the trade war will in fact turn out to be a motivational device that will accelerate the construction of a new development paradigm based on the expansion of domestic demand as well as the promotion of technology-enabled breakthroughs on the supply side of the economy. As such, while the door to negotiations is certainly not closed with the U.S., nothing has been left to chance by the leadership.
  
  Overall, there is much to recommend in China’s strategy and talking points. The U.S.’ vaunted leverage in its trade war with Beijing has indeed been short-circuited by Beijing’s strategy as well as, more broadly, by the market’s loss of confidence in the White House’s capacity for competent economic and trade policy decision-making. Call it a ‘hillbilly premium’ being charged by financial markets on U.S. government assets. That said, the longer the game of chicken between the U.S. and China drags out, the greater is the likelihood of damage to China’s economic interests. From delisting of Chinese firms on Wall Street including those using the variable interest entity (VIE) structure, to harsher export controls and widened outbound investment restrictions, to dollar-linked property blocking sanctions on Chinese firms and secondary sanctions on Chinese banks, to termination of China’s MFN status and the bilateral income tax convention, there is much pain yet that can be heaped on Chinese interests. Upping the ante will also place subsequent U.S.-China trade negotiations on a razor’s edge, with high-stakes failure leading to an almost across-the-board decoupling of the two economies. And even if the bilateral negotiations proceed on an even keel and produce useful outcomes, it is by no means clear that many of the tariff and non-tariff countermeasures will come off. The Trump 1.0 experience suggests, rather, that most will continue to stick.
  
  Given this likely state of play, it is just as much in China’s interest, then, that the two sides – and their leaders – get to the negotiating table sooner rather than later, and certainly before the full menu of sanctions and coercive measures are imposed. And for all of his bravado, disruptiveness and dishonesty, it is worth noting that Donald Trump is probably the least anti-Chinese in his orientation among members of his own administration. Trump is not anti-China nor pro-China. As a lifelong dealmaker, he would like to come away with a handsome market access agreement with Beijing, which cannot be said for most other members of his administration who would prefer to substantially decouple America’s economic, trade and technology relationship from China. And so, given that it is in Beijing’s own national modernization interest to have the ‘least worst’ economic relationship with America – if only to foster a somewhat more stable external environment, it is as incumbent on China, as it is on the U.S., to ensure that senior officials can sit across the table sooner rather than later and facilitate a meeting thereafter of their two presidents.

Expanded Reading

• China files new complaint to WTO over Trump tariffs, Reuters, April 9, 2025.
• Hong Kong will stop shipping small packages to the U.S. after Trump drops ‘de minimis’ exemption that let Shein and Temu sell to Americans. Fortune, April 16, 2025.
• EU pauses tariff retaliation for 90 days to match Trump move, holding out hope for talks, AP News, April 10, 2025.
• Nearly 50 countries want tariff deals, Trump trade chief Greer says, Reuters, April 7, 2025.
• Trump warns exemptions on smartphones, electronics will be short-lived, promises future tariffs, The Guardian, April 13, 2025.