This piece is part of a Carnegie series examining the impacts of Trump’s first 100 days in office.
Under President Donald Trump, U.S.-China relations have deteriorated more quickly than many anticipated. Early on, Trump’s positive comments toward Chinese President Xi Jinping, modest opening moves on tariffs, and conflicting signals on investment suggested that bilateral frictions could be kept within bounds. But since Trump’s so-called Liberation Day announcement on April 2, the situation has shifted, and the contours of Chinese thinking and approach are coming into shape.
First, both the United States and China see leader-level diplomacy as critical for resolving the current trade war impasse, but Washington and Beijing have diametrically opposed approaches to getting there. The U.S. administration believes that engagement between Trump and Xi should be spontaneous and direct, but Beijing believes it must be carefully prepared by working-level contacts in advance.
Trump’s early engagements with Mexico, Canada, and Ukraine intensified China’s always cautious approach to top-level diplomacy. One Chinese official privately noted, “We hope for an early leader engagement, but we will not rush to Mar-a-Lago like [Canadian former prime minister Justin] Trudeau. A meeting must be carefully prepared.” Chinese interlocutors recognize that leader-level diplomacy is essential, but they also see it as high-risk and want to use lower-level channels to try to manage that risk prior to a Trump-Xi conversation.
Nothing in the first hundred days of the new administration has altered Beijing’s conviction that only Trump can speak for himself. Until this perception changes, China is unlikely to initiate a call between Trump and Xi, though a U.S.-initiated one might get traction.
Second, Beijing does not yet have a clear interpretation of Trump’s goal in imposing tariffs—whether the president is trying to bring industries back to the United States, which would offer limited motivation for negotiation, or whether he’s trying to rebalance bilateral trade. Fentanyl-related tariffs complicate the picture, as Beijing wants to offer concessions as part of a comprehensive deal rather than paying piecemeal with moves on precursor chemicals that do not directly link back to U.S. tariff relief.
Nonetheless, both official statements and private communications convey a near-universal message of resoluteness in Beijing: an intent to hold firm against U.S. pressure, based on the underlying belief that Washington is overestimating China’s economic weakness, America’s own leverage, and the U.S. ability to handle the trade war’s impacts. This dynamic helps explain the shift in China’s retaliatory calculus—from a de-escalatory approach to a greater willingness to fight. Beijing appears to be approaching the new administration as a long-term strategic challenge it must manage, rather than a crisis it should rush to resolve.
Finally, retaliation remains limited to trade for now, but spillover risks are emerging, including in the financial and security realms. With Taiwan, tensions will continue to simmer. Societal ties that have at times stabilized the U.S.-China relationship are also fraying. And the rise of policies Beijing sees as targeting regime legitimacy—such as renewed U.S. emphasis on a lab leak as the origin of COVID-19 and a reversion to singling out the Chinese Communist Party in official U.S. statements—has led it to intensify attacks on U.S. officials and policies.
With both sides dug in, much depends on who blinks first. China will see deflation and unemployment, while the United States could experience stagflation, market volatility, recession, and a weakening of its ability to muster ad hoc coalitions against China. Trump’s volatility, including tariff exemptions on semiconductors and electronics, may lead Beijing to bide its time to see if the administration buckles under domestic pressure. For now, China appears to be adopting a rally-around-the-flag mantra, though domestic attitudes are very difficult to gauge and could be fleeting once the pain of economic displacement sets in.
Geopolitically, the leverage scorecard is similarly mixed. Washington could get a boost if the administration is able to secure early deals with a few major partners, but the complexity of trade negotiations is likely to make that a challenging task. China has benefited from highly publicized state visits to Vietnam, Malaysia, and Cambodia, even though these were likely planned months in advance. Beijing’s charm offensive toward Europe confronts structural obstacles: a double-digit percentage drop in U.S. West Coast–bound freight the week of April 11 coincided with an increase in container volume to Europe of nearly the same magnitude. Each side’s view that time will weaken the other’s position is about to be put to the test—just as off-ramps have become even harder to find.
The best possible outcome may be a deal that shifts the implementation of U.S. tariffs to better align with realistic timelines for third-country negotiations and supply chain relocation decisions. This formula could unlock a Trump-Xi call or meeting (perhaps on the margins of a multilateral summit this fall) that temporarily de-escalates and contains unintended spillover risk—while also building time for U.S. bilateral negotiations with other countries aimed at better defining the contours of friendshoring. But given tensions and the lackluster U.S. attendance record at Asian summits, some Chinese scholars speculate a face-to-face meeting could slip to 2026, limiting the possibility of resolving bilateral frictions in the interim.
Meanwhile, China’s slow-moving political system may be showing signs of adjustment to the changing international order. In a recent speech, Xi elevated regional diplomacy in China’s foreign policy hierarchy to equal priority with “major country relations.” Other elements of China’s foreign policy are largely consistent for now, and there is little sign of interest in aggressively backfilling areas in which the United States is retrenching, such as USAID programming. In other words, China appears to be taking steps to ensure that its most important interests remain protected, while waiting for U.S. policy to come into clearer focus.
Beijing’s leaders appear to be debating how permanent the shifts in U.S. domestic and foreign policies will be and whether they present risks or opportunities. Elements of the debate are positive, such as a growing consensus that China must do more to stimulate domestic demand as its export picture becomes more complicated. Other signs are more worrisome—some are reportedly arguing that reduced interdependence could lower the cost of forcible “reunification” with Taiwan. But these are still debates, not firm conclusions. Chinese leaders are likely to spend the next few months studying and updating a policy direction that can still be shaped from outside.
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