To Donald Trump’s surprise, China showed no fear of tariffs. Instead, it launched a powerful tit-for-tat counteroffensive that caused the United States to back off. Trump’s pattern of bullying, his obsession with bellicose showmanship, his love of flattery and his attempts to instill fear are on display for all to see.
U.S. Secretary of the Treasury Scott Bessent speaks to Chinese Vice-Premier He Lifeng in Geneva, Switzerland, on May 10, 2025. (Photo: Handout via Reuters)
Substantive progress was made in the China-U.S. trade talks in Geneva, Switzerland. The U.S. side canceled an aggregate 91 percent of its tariffs imposed previously and suspended its so-called reciprocal tariff of 24 percent for 90 days, reducing tariffs on Chinese goods to 10 percent. The two countries will continue to engage in bilateral economic and trade negotiations.
The outcome of the talks is in sharp contrast with the harsh conditions that U.S. President Donald Trump unilaterally imposed in starting the tariff war in early April. His dramatic reversal, though not anticipated by many, confirms many preexisting views.
First, the tit-for-tat tactic proved reasonable and effective. Facing Trump’s all-around tariff attack, some countries decided to not fight back. Some directly compromised and gave in, hoping the United States would be lenient going forward. Some even attempted to ingratiate themselves with Trump at China’s expense. Yet China, the European Union and Canada chose to push back. China, in particular, not only showed no fear and launched the most powerful counteroffensive of them all.
The tactic was not free of risk or criticism. Many worried that the Chinese economy could not withstand the pressure of U.S. tariffs, that China would become Trump’s main target and that some countries might sign agreements with Washington that would hurt China. But the outcome of the Geneva talks proves, in the face of Trump’s blackmail, that China did the right thing by standing firm, choosing an unyielding tit-for-tat approach.
From the perspective game-theory, Trump’s tariff war could be likened to a game of chicken, wherein the party that yields first ultimately loses; and if neither side concedes, the outcome severely damages both. The Chinese side’s strategy was optimal — that is, choosing a resolutely unyielding stance in the early stage and thereby pressing Trump to soften his own position. It could then negotiate responsibly with the United States and avoid a lose-lose scenario.
More broadly, Trump’s tariff war is only one link in the long-term entanglement between China and the U.S. In repeated games, tit-for-tat is an effective tactic. While China’s starting point is the expectation that it will cooperate with the United States, retaliation is its only option if the U.S. refuses.
Second, the Trump administration has made some serious misjudgments about itself, the U.S. and China. Trump has long shown a mysterious overconfidence in his ability to engage in the “art of the deal” — the essence of which is nothing but taking advantage of U.S. power to coerce others.
Such a ploy is not smart. Having used it time and again, Trump’s pattern of bullying the weak, his obsession with bellicose showmanship, his love of flattery and his attempts to instill fear (in other words, an appearance of strength on the outside while being weak on the inside) can be seen by all — so much so that even Ukraine’s President Volodymyr Zelenskyy dared to defy him at the White House. He rendered Trump’s boast that he would bring a swift end to the war with Russia a swift failure. He even created relatively favorable conditions for Ukraine in its recent minerals agreement with the United States.
It is even more unlikely that China would fear Trump’s intimidations. The outcome of the Geneva meeting fully exposed Trump’s bluff, weakened the U.S. position and inspired other countries to wait and see, or even to coordinate in private.
That Trump’s buffaloing worked to a degree on some countries means only that he was recklessly willing to squander the hard and soft power the U.S. had accumulated over time. Yet, Trump has over-estimated U.S. hard power. Although America still boasts the highest GDP in the world, it is no longer the indispensable core of the global economic system. The U.S. is seriously reliant on foreign goods: Its share in global trade in goods accounts for a meager 10 percent. Global trade can find ways around a stiff-necked United States. It can form a more decentralized network, even as American consumers become impatient with their government as the prices of imported goods rise.
On the other hand, Trump’s short-sighted bullying will only accelerate the exhaustion of U.S. power. As America found itself in relative decline, soft power acted as a backstop to preserve U.S. hegemony. Trump, however, is firmly convinced that soft power is a burden that will tie his hands as he seeks to profit from bullying. The naked use of hard power may bring some transient benefits, but will also considerably increase the cost of maintaining global power.
Since the end of the pandemic, American officials and experts have come to the general conclusion that because the Chinese economy has experienced frustrations, the U.S. has the upper hand. In such an information cocoon, Trump believed that China would bow to his tariffs for fear of economic hardship. This is why he was taken aback by China’s determined counterattack. In fact, in Trump’s first term, China not only neutered his trade war, but learned how to approach this new round. Chinese exports increased 8.1 percent in the first four months of 2025, year-on-yea, despite the pressure of U.S. tariffs. This is also evidence of the Chinese economy’s stunning resilience.
Third, it will be very difficult for the Trump administration’s tariff war to reach its imagined goals. For Trump, imposing tariffs was supposed help reduce trade deficits, draw back manufacturing, guarantee supply chain security, increase fiscal revenues and achieve diplomatic goals. He has been especially enthusiastic about the first item, reducing trade deficits. But it is unrealistic to cut trade deficits by any great margin given the over-consumption at home and continual global dominance of the U.S. dollar. From the Obama administration onward, each U.S. government has tried to lure manufacturing back to the U.S., but it is already very difficult to bring part of the higher-end manufacturing back considering the high cost of Made-in-America.
For the white working class, which has shown strong support for Trump, Trump’s protectionist trade measures may only provide them with some emotional satisfaction. It won’t solve their economic problems. Ensuring supply chain security may be a realistic purpose of the tariff war, but U.S. manufacturing has already been hollowed out.
Even if the United States wants national defense-related supply chains to be more secure, that’s a long-term project that cannot be accomplished through a tariff war. Raising tariffs may increase some U.S. incomes. But ompared with the federal government’s $6 trillion to $7 trillion annual spending, such extra income is a drop in the bucket.
The economic distortion resulting from tariffs may surpass any supposed financial benefits. As for achieving diplomatic goals, tariffs may work in the short run, but the effects will definitely diminish in the long run.
While the imposition of tariffs may sound justifiable to many Americans, the domestic and international difficulties facing the U.S. are mainly of its own making. Rather than squarely facing the country’s problems, the Trump administration is trying to shift the blame onto outsiders. China’s powerful counteroffensive may help the Trump administration come to grips with reality, but China cannot afford to be optimistic at this point.
The latest round of talks by no means indicates that an agreement has been reached. America’s struggle with China will continue for a very long time, along with its policy of de-risking and strategic competition. Great power competition risks derailment, but proper pushback may help clear the clouds.
