US-China trade war: Escalate to de-escalate to escalate?

The Wall Street Journal reported Wednesday that Trump is considering a significant reduction of the extraordinarily high tariffs on China that followed a dizzying tit-for-tat spiral between the two countries in early April.

China was the only country to immediately retaliate against Trump’s draconian “liberation day” tariffs, and Trump’s intolerance for that self-assertion led to 145% tariffs on the U.S. side and 125% tariffs on the Chinese side — tantamount to severing economic relations overnight between the world’s two most important economic powers.

Trump’s public softening is a hopeful sign because the tariff confrontation could all too easily tip over into an irreparable break between the United States and China, ultimately developing into large-scale violence. Yet significant obstacles stand in the way, and both sides have already taken damaging steps that undermine the possibility for de-escalation. Regardless of what happens with the tariff rate, if the Trump administration successfully pushes major third countries to exclude China from their economies, conflict is likely to spin out of control.

Commentators have been slow to focus on the danger of U.S.–China conflict. Many have grown complacent as the conflict became familiar and seemingly contained to small-scale antagonistic measures and empty diplomatic discussions. Trump’s conflicts with allies, his tariff campaign against the whole world, and his attacks on liberal institutions at home have drawn all the attention.

Yet we now stand in a moment of acute danger. Against a years-long background of growing economic, military, and philosophical tensions, the trade war threatens to unleash a series of escalatory dynamics across all realms in the U.S.–China relationship.

Already under the first Trump and Biden administrations, the gradual formation of adversarial geopolitical blocs was underway. Biden’s consolidation and systematization of Trump 1’s exclusionary policies toward China had convinced the Chinese leadership of immovable American hostility to China’s interests. Then, Trump stacked his administration with a fractious national security and international economic team whose only point of agreement was the need for confrontation with China.

Trump himself, however, offered hope of escaping a devastating international conflict. His enthusiasm for dealmaking, his admiration of Xi Jinping, and his hostility to the dogmas of American primacy that animated the Biden administration all created an opening to move the relationship off its trajectory toward permanent hostility. Beijing recognized the possibilities and from the moment of Trump’s election victory began informally floating ideas on what China could offer to Trump’s priorities, seeking a reliable connection in Trump’s notoriously fluid inner circle, and inquiring into how a negotiation process could be structured.

The biggest obstacle was not Trump’s team, which he has cowed into obedience, but his desire to cow China, too.

Rather than responding to Beijing’s outreach, Trump hit China with an initial 10%t tariff increase in early February, claiming it was punishment for China’s indirect involvement in the fentanyl trade. Media coverage focused on even larger punitive tariffs directed at Canada and México, but these were quickly withdrawn while those on China remained. Trump repeated the same routine in early March, again sparing Canada and México while raising tariffs on China another 10%.

China responded with considerable restraint to both rounds, still seeking to preserve space for negotiation. Already under Biden, China had begun cooperation on limiting fentanyl inputs, so Chinese leaders were skeptical that this was the real issue. With increasing urgency, Beijing sought to determine what Trump actually wanted. But no response was forthcoming.

Then came the “liberation day” tariffs, with a 34% increase applied to China, and Beijing fundamentally changed its approach. China’s leaders seem to have concluded that Trump simply wants to demonstrate his own power by debasing China, as he has done to countries ranging from Canada to Colombia to Ukraine. This is clear in China’s repeated condition for talks: they “must proceed in a manner of sovereign equality on a foundation of mutual respect.”

The Chinese Communist Party’s entire foreign policy legitimacy and ideology are built on the claim that it remade China so that it could finally stand up against the depredations of foreign powers. Chinese diplomats’ emphasis on respectful treatment, often expressed through a preoccupation with diplomatic protocol and a sharp antipathy toward U.S. attempts to discredit China, grows from this foundation.

Even as he mulls the possibility of reducing the crippling tariff rates he imposed, Trump continues to say that China will have to be the one to request it. “China wants to make a deal. They just don’t know how quite to go about it,” Trump said shortly after tossing away the chance for talks and breaking the economic relationship. “You know, it’s one of those things they don’t know quite — they’re proud people.”

Over the last two weeks, he and close advisers like Treasury Secretary Scott Bessent have repeatedly expressed such sentiments. In response, China has shown openness to talks but insists it will not negotiate at the point of a gun. China is also looking for a clear process in the talks and some sense of an agenda from the United States. Most recently, China’s Commerce Ministry suggested that Trump could resolve the impasse by removing all “unilateral tariff measures.”

As the two trade accusations in public, in the background both are moving in the most dangerous direction possible: to force the rest of the world to choose one or the other. In its talks with other countries that were targeted on “liberation day,” the Trump administration is demanding that they sever economic ties with China. China responded by arguing that other countries would be short-sighted to make deals with a bully and promising “equivalent countermeasures” against any country that sacrifices Chinese interests as the price for access to the United States.

We are now stuck in the absurd spectacle of the world’s two most powerful leaders acting like children who want to make up but who insist that the other take the first step. The longer this impasse lasts, the less likely we will avoid cascading escalation into conflict.