Well, I'll admit I'm wrong, seems like China is not done with this first battle yet. As mentioned before, higher tariff rates than the current rates don't materially affect trade much anymore, so both sides are after other things. It's interesting that China waited a day before responding some time, so I believe they did pause and assess the situation and decided that further pressuring the US is the right course of action. I wonder if the resumption of the bond yield increase and stock market tanking despite Trump's reprieve for the ROW is what prompted this.
China has reached a point of indifference toward the U.S. tariff hikes (currently at 34% nominal rate, but effectively 54% after cumulative increases). De facto decoupling is now inevitable, though Beijing did not anticipate Trump’s erratic escalation – a childish game China no longer wishes to play.
The Chinese government’s policy responses follow structured decision-making cycles involving multiple departments. Historically, countermeasures were announced within one business day after U.S. actions. However, this week’s developments exposed Washington’s unreliability:
April 10: The U.S. abruptly raised tariffs to 125% overnight
April 11: Further revised to 145% despite internal communications indicating 125%
Faced with such capriciousness, China has officially declared disengagement from this "numerical arms race." A Foreign Ministry spokesperson stated:
"Regardless of future U.S. tariff percentages, China will no longer reciprocate. Let America play this game alone."
This outcome aligns with most Chinese citizens’ expectations. As noted in China’s 2025 White Paper:
"Unilateral coercion only accelerates the demise of U.S. economic credibility."
Strategic Implications
Tariff Reality: Effective 54% U.S. tariffs on Chinese goods (20% baseline + 34% "reciprocal" surcharge) already disrupt supply chains, but further hikes yield diminishing returns.
Decoupling Momentum: China’s industrial restructuring (e.g., semiconductor self-sufficiency at 70% by 2025) reduces dependency on U.S. markets.
Global Realignment: With RCEP partners absorbing 38% of China’s exports (vs. 11% to U.S.), Beijing prioritizes stabilizing alternative trade flows over reactive tariff battles.
As State Councilor Wang Yi cautioned:
"A zero-sum mindset poisons cooperation. China’s door remains open, but we won’t dance to reckless tunes."
