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US may be wielding a stick but China seeks trade recalibration
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WHEN China and the United States announced a 90-day mutual cut in tariffs after talks in Geneva, headlines declared a “trade truce.” But let’s not fool ourselves. This isn’t a peace deal; it’s a tactical pause in a long game of attrition.
China, contrary to popular Western tropes, isn’t just reacting; it’s recalibrating with clarity, discipline and a long-term focus.
While US tariffs on Chinese goods drop from a staggering 145 percent to effectively 30 percent, and China’s levies fall from 125 percent to 10 percent, these headline numbers tell only part of the story. What really matters is what happens after the 90-day window and who’s more prepared when the game restarts.
Since the beginning of the tariff war, Washington has outpaced Beijing in tariff escalation. But instead of responding blow for blow, China has chosen selective, proportionate retaliation. Some in the West saw that as weakness. It wasn’t. It was a calculated display of restraint, designed to minimize self-harm, stabilize markets and signal maturity to the global community.
Even amid rising pressures, China resisted the temptation to slam the brakes on US businesses operating locally. That choice — keeping Apple stores open and Tesla factories humming — didn’t result from naivety. It came from an understanding that long-term credibility is a more valuable asset than short-term political theater. The contrast with Trump-era brinkmanship is stark. Where Washington leans into chaos as leverage, Beijing plays the adult in the room, buying time to adapt its economy and to outgrow the need for confrontation.
The tariff truce offers American companies short-term relief, but it also delivers a wake-up call. The new geopolitics isn’t about decoupling; it’s about derisking. US multinationals now grasp the fragility of globalized supply chains tethered too tightly in geography. So, we’re seeing a slow but definite realignment, not an exodus from China but a diversification.
Look at Apple’s supply chain strategy. While maintaining its massive operations in China essential to serving the domestic and Southeast Asian markets, it is also investing in manufacturing in Vietnam and India. This isn’t rejection; it’s hedging. China understands that and is responding not with panic, but policy.
The Guangdong and Jiangsu provincial governments have rolled out incentives to deepen supply chain integration and increase added-value manufacturing. Local firms like BYD and CATL are investing in both upstream and downstream capabilities, from lithium refining to battery recycling, so that if supply chains shift, China keeps the high ground.
The US wants to rebuild domestic manufacturing in critical sectors like semiconductors, new-energy vehicles and defense. But wanting isn’t the same as doing. Washington still lacks the policy consensus and execution tools to turn that ambition into industrial reality. Congress can barely agree on a budget, let alone an industrial strategy.
China, by contrast, is moving ahead with purpose. Since 2023, export dependence on the US has declined to below 11 percent, down from over 18 percent a decade ago. At the same time, China has signed or deepened trade agreements with Southeast Asian countries, which have overtaken the US as China’s largest regional trading partner.
Equally important is a domestic turn. China is pivoting hard toward internal demand, not just as a growth engine but as a buffer. The “dual circulation” strategy isn’t just a slogan; it’s become a guiding economic doctrine.
Facing both offshore tariff threats and domestic economic headwinds, China has gone further. It’s unilaterally expanded access to key sectors like finance, cloud services and autos. While Western media fixates on “crackdowns,” foreign capital inflows into China’s green technology and electric vehicle sectors have surged, drawn by scale and predictability.
As the dust settles on this latest truce, the US may be wielding a stick, but China is steering the cart.
The author is an adjunct research fellow at the Research Center for Global Public Opinion of China, Shanghai International
Studies University, and founding partner of 3am Consulting, a consultancy specializing in global communications. He has no conflict of interests to declare.
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