No Easy Negotiations, No Surrender, and a Focus on Long-Term Growth

No Easy Negotiations

China, locked in a trade war with the US, insists on negotiations on equal footing. They are prepared for higher tariffs and have retaliatory measures ready.

"Beijing doesn't see other options but to retaliate," said Sun Yun of the Stimson Center. "They can't be seen as begging."

China, a rising power, demands respect from all countries, especially the US.

"If war is what the US wants, we're ready to fight till the end."

This echoes their 2018 response to Trump's first trade war. China has developed a toolkit of tariffs and other measures to inflict pain on the US economy.

In response to Trump's recent doubling of tariffs, China rolled out retaliatory measures, including taxing American farm goods, suspending US lumber imports, and blacklisting 15 US companies.

Analysts believe China showed restraint to leave room for negotiation. Xi Jinping's leadership gives China more continuity in its planning. He has decided it's not yet time to speak with Trump.

"That's not a scheduling issue, it's leverage for China," said Daniel Russel of the Asia Society Policy Institute. "Xi won't walk into a call if there's a chance he'll be harassed or humiliated."

China is hitting back promptly but judiciously to each set of tariffs.

At his annual news conference, Chinese Foreign Minister Wang Yi said, "No country should fantasize that it can suppress, contain China while developing good relations with China."

"Such two-faced acts not only are bad for the stability of bilateral relations but also will not build mutual trust," Wang said. He added that China welcomes cooperation with the US, but noted that "if you keep pressuring, China will firmly retaliate."

China's economy has slowed but is still growing at nearly a 5% annual pace. Under Xi, the party is investing heavily in advanced technology, education, and other areas. It has stronger trade ties with many other countries than during Trump's first term and has diversified where it gets key products.

"They are better prepared to absorb the effect of the shocks, compared to several years ago," Kennedy said.

Meanwhile, more than 80% of Mexico's exports go to the US, and Canada sends 75% of its exports here.

China has learned from its previous dealings with Trump. Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum are facing a reversal of Trump's previous trade policies, with tariffs imposed and then postponed twice on at least some goods.

"Beijing has seen enough to know that appeasing Trump doesn't work," Russel said. In the first go-around, Trudeau and Sheinbaum "bought a little time, but the pressure only came roaring back stronger."

"This is a time to hit back hard and to demonstrate that a fight with Canada will have no winners."

Sheinbaum also has said that "no one wins with this decision.