Trade war: How far will China go to beat the U.S.?

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When you're reading Chinese diplomatic language, words really matter because the meaning is almost always deeper than what's on the surface. In March, for the second time, Trump imposed a 10% tariff on Chinese goods. China, in a statement, signaled strong dissatisfaction — they weren’t happy. But then those tariffs ramped up by 34%, and the language changed. China now "firmly opposed" U.S. tariffs.

This might seem like a small change, but it’s not. It conveys a much more serious level of disapproval, shifting from something China was willing to tolerate to something it now sees as unacceptable. Yet, there was still a note of conciliation at the end — a plea to resolve differences properly through fair negotiation.

But now, everything is different.

Trump said, “Hundreds of billions of dollars a year they’d make on us on trade. I have great respect for China, but they can’t do this.” When Trump threatened an additional 50% tariff on Chinese goods as punishment for China retaliating against earlier U.S. tariffs, China didn’t just respond with firm opposition. This time, it went further — calling the U.S. escalation "a mistake on top of a mistake." In Chinese, the term used was equivalent to “extortion.”

What’s important here is the use of remarkably blunt language. China is increasingly comfortable using language to signal political discontent and anger. The posture is defiant, more hostile and resolute than before, and it hints at what the country is willing to do to stand up to Trump — and where it sees itself in the new world order.

China has retaliated against new U.S. tariffs in many ways. There have been successive tariffs on U.S. energy and agriculture, a broad-based tariff on all American goods (now going up to 84%), restrictions on critical mineral exports, investigations into American companies, and various constraints. But China also has other levers.

Consider how it can apply political pressure in areas that seem to matter a lot to Donald Trump. For example, TikTok — Trump once said, “I have a warm spot in my heart for TikTok.” The administration had concerns about TikTok, a platform hugely popular in the U.S. but owned by a Chinese company. They wanted its American operations to be American-owned. Trump seemed optimistic, saying he was working with multiple bidders.

According to a New York Times report, although a deal looked close — with new investors owning 50% of a new American TikTok entity and Chinese owners retaining less than 20% — that all changed suddenly. The deal reportedly hit a wall, and sources indicated that China changed the terms because of tariffs.

Beijing uses a multi-pronged economic coercion playbook — and it's deploying the entire kit against the United States.

But that's just one example. Consider how much economic power China is willing to use. Remember when Trump talked about creating a sovereign wealth fund — a giant government piggy bank plugged into the stock market? That never really got off the ground, perhaps because it's unclear how a country deeply in debt can suddenly find money to invest in world markets.

But you know which country has one of the biggest sovereign wealth funds, fueled by a massive trade surplus? China.

That same fund helped Alibaba become a $200 billion rival to Amazon. It also props up Chinese stock markets. China has intervened in the markets before to keep prices from falling — and it’s doing it again. The Chinese government is buying shares with the explicit goal of stabilizing businesses impacted by tariffs, which have increased by 100% in just a few months. The central bank is also providing loans to secure those investments.

As a result, Chinese markets — which tumbled early on — have stabilized and are beginning to rebound.

Taken together, all of this paints a picture of China digging in. But digging in for what?

China appears to believe that the U.S., under Trump, is actively undermining its own global standing. China benefits from the current global economic order — if many economies are in trouble, that’s bad for China. But politically and rhetorically, Beijing likely sees an opportunity. It’s using this moment to portray itself not just as a global trade power, but also as a more reliable partner than the U.S.

In response to Trump’s "Liberation Day" tariffs, China’s Ministry of Foreign Affairs posted a message stating its "moral choice." It claimed China faces suppression, provocation, and tariffs. The implication: Do you want to live in a world of conflict, or a world of cooperation and security?

China has long worked to undercut the liberal international order, especially among developing countries. It tries to present itself as a better partner than the U.S. or other democracies — because China doesn’t make demands. It won’t ask countries to fix human rights abuses, reform governance, or address environmental challenges. It simply shows up with cash.

This approach is pragmatic. Since Trump’s first term, Chinese companies have shifted production to dodge tariffs. More than half of Cambodia’s factories, for example, are now Chinese-owned — and the U.S. now runs a significant trade deficit with Cambodia.

China is also the largest trading partner for more than 120 countries, running large surpluses with the U.S., U.K., EU, Germany, Italy, the Netherlands, India, Vietnam, Thailand, and Singapore. China has more options than the U.S. If exports shrink, it can boost domestic demand through government spending and tax cuts — options not as easily available to the U.S., which relies heavily on imports from China.

China knows its influence. Its response is to call for an “equal and orderly multipolar world.” At the Munich Security Conference in February, where U.S. Vice President JD Vance criticized Europe’s leaders, China took a different tone — presenting itself as a bridge-builder, a champion of globalization.

Chinese officials emphasized four points: equal treatment, respect for international law, multilateralism, and mutual benefit. China is positioning itself as a reasonable, benevolent global leader — offering an alternative to the liberal democratic model. It promotes the idea that a Chinese-led world order would be more inclusive and tolerant of different forms of government.

But China has its own image problem. To many, it is not a heroic force standing up to a bully — it’s the bully itself. China has crushed dissent in Hong Kong, threatens Taiwan's sovereignty, has militarized disputed waters, and faces accusations of human rights abuses, foreign interference, and intellectual property theft.

So, is this the alternative to Donald Trump the world seeks?

It’s also worth remembering that China had serious internal challenges long before Trump’s return — including a declining birth rate and a sluggish economy. But, as some experts have noted, China has a higher tolerance for pain. Its leaders aren’t judged by polls or elections. They can absorb economic pain and continue long-term strategies without immediate public backlash.

If this trade war between China and the U.S. continues to spiral out of control, there will be pain — on all sides.