China has identified how to fight back against Trump’s tariffs, and is not ready to back down
- Written by Chee Meng Tan, Assistant Professor of Business Economics, University of Nottingham
US ports are now starting to see scheduled shipments from China decline as the result of Donald Trump’s 145% tariffs on Chinese goods. The port of Los Angeles, the biggest port for Chinese goods in the US, is predicting scheduled shipments in early May to be about a third lower[1] than the same time last year.
Declining numbers of ships arriving stocked with Chinese imports are likely to affect US supermarket shelves[2] soon, and after warnings from US supermarket bosses, Trump responded by saying trade talks between the US and China were under way[3] in the past few days. But Chinese president Xi Jinping quickly denied talks were happening[4], suggesting he has no intention of backing away from a fight with the US.
As one of the most powerful leaders[5] in the history of the People’s Republic of China, Xi has fashioned himself as a nationalistic[6] icon. So if China perceives Trump’s tariffs as a bully tactic designed to undermine[7] it, backing down from a confrontation with the US would seriously undermine Xi’s strongman[8] image and rhetoric.
This is something that Trump probably hadn’t considered. At a rally marking his 100 days in office, the US president was still suggesting that China would just back down[9] and “eat the tariffs”.
While tariffs appear to be the primary weapon in the trade war, China might have more tactics to hit back at Trump and the US economy. The question is what might they be?
A few weeks ago it seemed like Washington might punish China’s lack of willingness to negotiate[10] with more tariffs, but now it’s clear that Trump is willing to make a deal and is trying to get China to come to the table. Trump is now implying that US tariffs on China could come down substantially[11]. And US treasury secretary Scott Bessent has called the trade war with China “unsustainable”[12].
Leveraging agriculture and energy
China has reduced its reliance on US farm imports since the trade war[13] began in Trump’s first presidency. This is bad news for Washington as agriculture is one few sectors in the US that actually has a large trade surplus[14] with China. The 125%[15] retaliatory tariffs will harm the sector’s profitability.
But China’s retaliatory tariffs aren’t the only issue American farmers have to contend with. As the trade war escalates, China has been using bureaucratic hurdles to restrict US agricultural products from entering China and as a potential negotiation tool[16]. For instance, China has delayed the renewals of export license renewals of US pig farmers[17], and refused to renew licenses of poultry farmers for “health and safety” reasons[18].
What’s the impact of tariffs?Beijing’s actions might be designed to particularly hit the economy in core Trump supporting states[19]. A major part of Trump and the Republican party’s base lies in “red states”[20], such as Nebraska, Iowa and Kansas, all have significant farming communities. Focusing on agricultural issues is a tactic that Beijing realises will hit home with Trump voters[21].
Out of the 444 US counties[22] designated by the United States Department of Agriculture (USDA) as farming-dependent, 77.7% voted for Trump[23] during the 2024 US presidential election. So, any hardship faced by the agriculture sector due to Trump’s own actions is likely to lose him support from a major political base. And with mid-term[24] elections in 2026, Trump has to tread carefully when antagonising Beijing.
Another support base[25] that Beijing might seek to undermine is those involved in the fossil fuel sector. In the past, the US has been a top supplier of natural gas to China.
China has not imported natural gas[26] from the US since early February 2025, and has sought its natural gas from Australia, Indonesia, and Brunei[27]. As the trade war continues, it is unlikely that the US would be able to sell its natural gas to China anytime soon, and this will have an impact on the energy industry – one of Trump’s major political support bases.
Restricting minerals
Another huge problem that the US faces stems from China’s restriction of the export of critical minerals. They include seven rare earth minerals[28] namely samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. While these are used in the clean energy and automobile sectors[29], the biggest concern would come from the US defence complex[30].
These critical minerals are used in manufacturing[31] fighter jets, submarines, missiles, and radar systems. China has an effective monopoly[32] on the extraction and processing[33] of rare earths, while the US lacks such capabilities. This means that China’s export restrictions are likely to affect America’s defence industry[34], while Beijing rapidly expands[35] its ammunition and military technology.
The White House probably anticipated export restrictions of critical minerals from China. After all, Beijing had banned the export of critical minerals to Japan in 2010 over a fishing trawler dispute[36], and stopped exporting “dual-use”[37] metals that can be used to produce civilian and military technology, such as gallium, germanium and tungsten.
What’s next?
For the last few years, China has been trying to overcome an ailing economy that was primarily fuelled by a real-estate crisis[38]. Trump probably expected China to buckle under pressure[39] and come crawling to the negotiation table. After all, the Chinese Communist Party needs to fix its economy fast. The establishment has long relied on delivering economic prosperity[40] to legitimise its rule over China.
Right now the tit-for-tat battle continues. By April 11, US tariffs on China peaked at 145%[41], while China’s retaliatory tariffs on US goods reached an unprecedented 125%[42].
Although it is clearly fighting back, China could go even further by selling off US treasuries[43] and increasing US interest rates and thus borrowing cost. But unlike Trump, Xi often plays the long game. After all, Trump’s term as president will be over[44] in less than four years, while Chinese president Xi has no term limits[45]. All the latter has to do is exercise patience, and a friendlier US president might come around.
References
- ^ third lower (www.theguardian.com)
- ^ supermarket shelves (www.cbsnews.com)
- ^ under way (www.reuters.com)
- ^ denied talks were happening (www.reuters.com)
- ^ most powerful leaders (thediplomat.com)
- ^ nationalistic (www.nytimes.com)
- ^ undermine (www.journalofdemocracy.org)
- ^ strongman (asiasociety.org)
- ^ just back down (eu.usatoday.com)
- ^ lack of willingness to negotiate (www.abc.net.au)
- ^ come down substantially (www.youtube.com)
- ^ “unsustainable” (apnews.com)
- ^ since the trade war (www.reuters.com)
- ^ large trade surplus (www.ers.usda.gov)
- ^ 125% (www.reuters.com)
- ^ negotiation tool (www.reuters.com)
- ^ US pig farmers (www.reuters.com)
- ^ “health and safety” reasons (www.politico.com)
- ^ the economy in core Trump supporting states (www.politico.com)
- ^ “red states” (worldpopulationreview.com)
- ^ home with Trump voters (www.straitstimes.com)
- ^ 444 US counties (investigatemidwest.org)
- ^ 77.7% voted for Trump (investigatemidwest.org)
- ^ mid-term (theconversation.com)
- ^ support base (www.theguardian.com)
- ^ not imported natural gas (oilprice.com)
- ^ Australia, Indonesia, and Brunei (international.astroawani.com)
- ^ seven rare earth minerals (www.bloomberg.com)
- ^ clean energy and automobile sectors (www.iea.org)
- ^ US defence complex (www.chathamhouse.org)
- ^ manufacturing (www.csis.org)
- ^ effective monopoly (thediplomat.com)
- ^ extraction and processing (www.bbc.com)
- ^ affect America’s defence industry (www.csis.org)
- ^ rapidly expands (www.csis.org)
- ^ fishing trawler dispute (www.csis.org)
- ^ “dual-use” (www.csis.org)
- ^ real-estate crisis (www.bloomberg.com)
- ^ buckle under pressure (www.yahoo.com)
- ^ delivering economic prosperity (asiasociety.org)
- ^ 145% (www.cnbc.com)
- ^ 125% (www.theguardian.com)
- ^ US treasuries (www.theatlantic.com)
- ^ be over (constitutioncenter.org)
- ^ no term limits (www.bbc.com)
