China is teaching Trump some tough lessons on trade

The Hill

25-04-2025

China is about to hand President Trump his head.
Trump's efforts to bully China into submission via tariffs has already gone spectacularly wrong. Far from being intimidated, China has been invigorated with a new sense of national purpose. To anyone who had the slightest understanding of Chinese history, this was all perfectly predictable.
The First Opium War in 1839 — there were two — was, ironically enough, a dispute over the trade deficit. It involved Great Britain attacking China to force it to allow Western powers, including the U.S., to sell opium into China. If you imagine the Chinese occupying New York City to force the U.S. to legalize the trade in fentanyl, you get some idea of what this incident means to people in China.
The First Opium War began what the Chinese call the ' century of humiliation, ' during which China was exploited and invaded by various foreign powers. It didn't end until the Japanese were driven out at the end of World War Two. This is still an open wound for China, so it is politically impossible for Xi Jinping to give in to Trump's intimidation even if he wanted to.
And he doesn't want to. Trump's efforts to punish China by imposing a 145 percent tariff on Chinese imports was actually the greatest gift he could have given Xi. First, China is far better positioned to survive a trade war than is the U.S., for one simple reason: China can solve its biggest problem by throwing money at it. Exporters may lose business, but China can use some of the more than $750 billion it has invested in U.S. Treasurys alone to keep them afloat.
The U.S. can't do that — we have a supply-chain problem, not a financial problem. Once China stops exporting to the U.S., there is no amount of money we can spend that will fill up our Walmarts. Remember trying to buy medical masks during the pandemic? Multiply that by tens of thousands of products. Many things will be completely unavailable, and what is available will be much more expensive. Not even Trump can repeal the law of supply and demand by executive order.
China also has a long-term interest in making its economy less dependent on exports and decreasing its dependence on Western technology. Trump's trade war gives Xi the perfect opportunity to pursue these goals, since any resultant pain will now be the fault of rapacious foreigners seeking to humiliate China yet again.
So China is in no hurry to end the current stand-off, a fact that is now making Trump extremely nervous. When pressed, Trump has a habit of saying whatever he thinks will buy him some time and take the pressure off, regardless of whether it is true or not. His constant promises to release some new policy 'in the next two weeks' became a running joke during his first term.
He's doing the same thing now, issuing fantasy statements about how a trade deal with China is imminent. Despite Trump's claim that Chinese officials have ' reached out ' to him a number of times and his insistence that active talks are going on ' every day,' there are no negotiations going on at all.
Trump is essentially negotiating with himself. He abandoned his 145 percent tariff on Chinese-made electronics within 48 hours, and now, in response to Chinese silence, he's telling the world that tariffs on China will be much lower. He insists 'We're going to be very nice. They're going to be very nice, and we'll see what happens. But ultimately, they have to make a deal because otherwise they're not going to be able to deal in the United States.'
You can practically smell the fear. If you have to begin a negotiation by insisting that the other side come to the table, you've lost already.
Trump has good reason to be afraid, just as the Chinese have good reason to let him stew. While the impact of an effective trade embargo will begin to empty shelves in a matter of weeks, most wholesale Christmas orders are placed with factories by the beginning of June. None of those orders are going to be made if retailers think they might be hit with 145 percent tariffs on Christmas lights and Barbie dolls. 'The Trump That Stole Christmas' headlines write themselves.
Of course, Trump is free to abandon U.S. tariffs on China unilaterally, but there is no guarantee that China will reciprocate.
All this means that Trump has dug himself a very deep hole, and the Chinese are not going to help him dig his way out. Before they agree to restore normal trade, they're going to extract a price. It might be a groveling public apology. It might be a promise to abandon Taiwan — something Trump is probably temperamentally inclined to do anyway — or it might be a formal recognition of China's ' nine-dash line ' territorial claims. But whatever it is, it will be big.
And it will be bad for America. Trump's effort to punish China for 'defying' him was an essay in historical ignorance and economic foolishness. He is now getting schooled in real time. And it's going to be an expensive lesson, both for him and for us.