The one exception, of course, is China, which—we must now always emphasize, as of this writing—faces U.S. tariffs of roughly 150 percent, if one includes the standard tariffs on trading partners, the penal tariffs imposed during Trump’s first term and left in place by President Joe Biden, the 20 percent on fentanyl-related goods, and the duties announced on April 9.

Trump’s fans say this is a well-concealed plan to focus on Beijing; others may see the shift as a face-saving way to reframe a retreat after markets crashed and businesses went into shock. Either way, it seems hard for China to escape unscathed, unless Trump makes another sudden U-turn very soon. The United States still can impose a lot more pain, albeit at significant cost to itself, including financial sanctions and banning exchange students or travel altogether, and can offer benefits to other trading partners that join the campaign to isolate China. A China cut off from the global economy and society would face enormous economic, political, and geostrategic troubles.

Despite this danger, my sense is that the Chinese government believes it has no choice but to stand its ground and that its leaders will not submit to negotiations in which they are the only ones expected to make concessions. Moreover, my recent travels to China and elsewhere reveal a broader, modestly more positive reappraisal by Chinese and international audiences about the resilience and strengths of the Chinese system.

Large mansions that look like mirrors of each other line a development.

Large mansions that look like mirrors of each other line a development.

An aerial photo shows empty mansions in a suburb of Shenyang in China’s northeastern Liaoning province on March 31, 2023. Jade Gao/AFP via Getty Images

During trips to China from late 2022 to late 2024, I found a country struggling along almost every continuum. The last few months of the COVID-19 pandemic were scarring, as residents of many cities faced suffocating lockdowns, and hundreds of thousands, if not millions, of people were severely sickened or perished. The economic rebound that was supposed to occur following the end of the government’s zero-COVID policies rapidly evaporated. In an effort to jump-start growth, mountains of capital were poured into new manufacturing facilities for electric vehicles, batteries, medical equipment, robotics, and other sectors; however, domestic consumption did not grow to meet it, leaving a huge gap between supply and demand and severe deflation at the factory gate.

Pandemic insecurity, the collapse of the housing market, and a weak social safety net led households to expand their precautionary savings and for young couples to forgo having children, worsening the demographic problem. The broader political tightening and emphasis on state security also took its toll on public sentiment. Indicators for consumer confidence dropped like a rock in early 2022 and have barely moved since.

As a result, many conversations among Chinese themselves during this period centered on why the Chinese leadership seemed unwilling to admit the extent of the problem and take the steps needed to boost growth. Hypotheses included a lack of accurate information about the country’s travails making it to the top, a weak team without a smart governing plan, the prioritization of security over economics, or a leadership fervently committed to focusing on advanced technology (what propagandists call the “new productive forces”) as the country’s most important growth driver.

These domestic anxieties were mirrored outside China. At a conference for thousands of institutional investors held by J.P. Morgan in early 2023 in Miami, the central debate was, “Is China investible?” There was no consensus, as some argued that the end of zero-COVID meant new opportunities, while others stressed the supply chain vulnerabilities and the crackdown on the private sector as reasons to hold back.

A year later at the same conference, there was a consensus answer: “No.” International investors offered a litany of worries about China’s short-term environment and long-term trajectory. Many said they had sold down their positions and reallocated their funds elsewhere, particularly to the United States.

A worker reaches up toward lines of colorful screens on a production line.

A worker reaches up toward lines of colorful screens on a production line.

An employee works on the production line for display screens at a factory in Ruichang, China, on Jan. 9. Wei Dongsheng/VCG via Getty Images

Fast-forward to 2025, and the mood within China—and from many external observers—has perceptibly brightened. A part of the explanation lies with recent domestic developments. The first was the leadership’s admission last September of the country’s severe economic challenges and the subsequent announcement of a major stimulus plan, whose details were revealed this March. The second was the unveiling of DeepSeek’s pathbreaking large language model, which suggested that Chinese innovators were able to find workarounds to U.S.-led technology restrictions.

In discussions with business executives in China in March 2025, interlocutors suggested that the worst of the economic downturn was over and that they could see initial shoots of renewed growth. An auto executive said demand for their EV models was growing far faster than anticipated and that they would move up plans to open manufacturing facilities abroad.

An executive from a semiconductor firm sanctioned by the United States said they had improved their production efficiency and quality in the absence of service support from Western equipment suppliers. None said it was time to breathe a sigh of relief, highlighting the difference between announcing policies and having them generate results. One emphasized the continuing higher interest rate that private firms must pay for credit compared with state-owned enterprises. Nevertheless, the dark clouds of previous years had receded.

The same shift was visible among the international business community. In the early 2025 version of the J.P. Morgan conference in Miami (and in similar conferences elsewhere), investors no longer complained about the Chinese leadership’s perceived missteps; instead, they repeatedly asked two questions: “How big will the stimulus be?” and “When will the stimulus translate into faster growth?”

At the China Development Forum, the conference held every March in Beijing that brings together leading Western multinationals and Chinese leaders, business executive after business executive highlighted their plans for new investments in China.

A person looks at her phone in the foreground as others cross a busy street. Above them is a digital sign advertising Apple's iPhone 16.

A person looks at her phone in the foreground as others cross a busy street. Above them is a digital sign advertising Apple's iPhone 16.

People cross a busy street in Beijing on April 8 under a digital sign advertising Apple’s iPhone 16.Kevin Frayer/Getty Images

Although changes in Chinese policies and some technology breakthroughs explain some of the mood swing, the most important source of restored confidence lies 12 time zones away in Washington. Whether in Beijing, Shanghai, New York, Miami, or elsewhere, in meeting after meeting in the first quarter of 2025, the No. 1 topic was Trump. Almost every one of the conversations revolved around befuddlement at one or more of his policies.

Most alarmingly, although the context is so immensely different, many people, without prompting, compared today’s United States with China during the 1966-76 Cultural Revolution, a period of unprecedented turmoil and suffering across the entire country. To be sure, the Cultural Revolution is the Chinese go-to for political analogies in bad times, in the same way that Nazi Germany is for some in the West. Yet the U.S. government’s actions have genuinely shocked Chinese observers, some of whom have worked or studied in the United States.

Many with whom I spoke in China said they understood the need to cut government waste and reduce corruption—prominent problems in their own country. But time and again, observers were puzzled why Elon Musk’s Department of Government Efficiency was leading the charge to haphazardly dismantle agency after agency and fire tens of thousands of civil servants. In a meeting to discuss possible U.S.-China cooperation on science and technology, a Chinese policy expert—after hearing a list of cuts to U.S. government agencies and universities for work on basic science research, climate, medicine, space, and other spheres—asked in amazement, “Does the U.S. government even believe in science anymore?”

On numerous occasions, people expressed shock at the attacks on the media, lawyers, and the courts. One interlocutor said he and his friends were among the most pro-American in China and were proud to have studied there and worked for U.S. companies. But the country they knew seemed to be changing before their eyes, and they could no longer consider sending their children to live or study there.

Just as prevalent as the perplexity about U.S. domestic actions was puzzlement about the fundamental changes in U.S. trade and foreign policies. In discussions held less than two weeks before Trump’s self-declared “Liberation Day” but after the fentanyl-related tariffs were imposed, Chinese could not wrap their heads around why the United States would want to dismantle the multilateral trading system that had created so much prosperity in the United States and around the world. The notion that Washington could use tariffs to engineer a radical revival in manufacturing production and employment was seen as an outright fantasy. And some wondered why Washington would abandon its allies in favor of Vladimir Putin’s Russia.

More on the U.S.-China Trade War

Donald Trump points with one finger and gestures at Xi Jinping as they stand behind lecterns covere d in flowers. Behind them are flags of both countries against an ornate wall.

Donald Trump points with one finger and gestures at Xi Jinping as they stand behind lecterns covere d in flowers. Behind them are flags of both countries against an ornate wall.

Donald Trump points with one finger and gestures at Xi Jinping as they stand behind lecterns covere d in flowers. Behind them are flags of both countries against an ornate wall.

Can Washington and Beijing Walk Back Their Trade War?

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Xi, wearing a suit, holds up a glass of red wine.

Xi, wearing a suit, holds up a glass of red wine.

Xi, wearing a suit, holds up a glass of red wine.

Trump’s Tariffs Are a Gift to Xi

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A sculpture of a bull decorated in the Chinese flag is seen above a securities exchange in Hong Kong.

A sculpture of a bull decorated in the Chinese flag is seen above a securities exchange in Hong Kong.

A sculpture of a bull decorated in the Chinese flag is seen above a securities exchange in Hong Kong.

How China Should Handle Trump’s Tariffs

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U.S. President Donald Trump reads the New York Post as he arrives at Trump National Golf Club in Jupiter, Florida, on April 5.

U.S. President Donald Trump reads the New York Post as he arrives at Trump National Golf Club in Jupiter, Florida, on April 5.

U.S. President Donald Trump reads the New York Post as he arrives at Trump National Golf Club in Jupiter, Florida, on April 5.

Trump and Xi Are in a Tariff Trap

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The significance of these comments has little to do with whether they are correct; instead, widespread perceptions of what is viewed as governmental ineptitude and societal fragmentation in the United States have become an imperceptible mirror in which Chinese look to reevaluate their own country’s present and future.

In reality, many of China’s leaders are highly ideological; corruption is widespread; political purges still occur; information is controlled; scientists (both physical and social scientists) face substantial barriers to intellectual freedom; unfair regulatory restrictions on markets abound; and industrial policy puts foreign business at a distinct disadvantage—all of which threatens China’s development prospects and relations with others. But when refracted through the lens of the United States in 2025, China’s system is viewed differently.

For pro-regime nationalists, Trump is a gift. His illiberal turn means the United States has abandoned its ideological challenge to the Chinese political system. Moreover, his weakening of U.S. governing institutions, economy, and alliance relationships translate into “making China great again.” And his attack on the multilateral trading system makes it far easier for China to be seen as its responsible steward over the United States.

For many apolitical Chinese, they are not enthusiastic about today’s China and many specific policies, but by comparison, China feels relatively stable and predictable, leaving them minimally satisfied to live in their system and a world that supports it.

For liberal Chinese who have long admired the United States, the Trumpian turn in Washington prompts a deep sadness. For them, the United States had been, as they said, a “light on a hill” and a “beacon.” In 2008, with the global financial crisis, the United States undermined confidence in China in free markets. In 2025, with its political infighting, the United States is discrediting its political system. The consequence of such melancholy is resignation. To this group of Chinese, Liberation Day must feel like just the opposite.

In the coming weeks and months, the contest between Beijing and Washington will continue to evolve in unpredictable ways, even if Trump backs off his full-scale declaration of trade war. Both have economic strengths and weaknesses, and each could aim for the other’s weakest points. They will maneuver to outflank and isolate the other by wooing countries in Asia, Europe, Africa, and Latin America. Plenty of drama has yet to unfold.

Yet my conversations in China and elsewhere suggest two ironic certainties. First, given the renewed resolve in Beijing, there is almost no chance the Trump administration will be able to wrangle any more concessions from China in the coming months that it could not have obtained on Jan. 20. The escalation, brinksmanship, and volatility will likely be a monumental waste of time.

And second, regardless of who is more effective at weakening the other’s economy or outfoxes the other at the negotiating table, the real contest for systemic competition, at least for now, is over. Whether in celebration or mourning, to most Chinese, Trump’s red tie is a white flag.

This post is part of FP’s ongoing coverage of the Trump administration. Follow along here.

Scott Kennedy is a senior advisor and trustee chair in Chinese business and economics at the Center for Strategic and International Studies.

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writer is lazy

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