China has abandoned any pretense of negotiation, slamming the door on hopes for an immediate truce with Washington.
Over the weekend, Beijing not only matched US tariffs tit-for-tat but also unleashed a sweeping package of retaliatory measures that leaves little doubt: the world’s two largest economies are barreling toward a full-blown decoupling.
China’s Ministry of Foreign Affairs minced no words, warning that Beijing “will continue to take resolute measures to safeguard its sovereignty, security and development interests.”
This warning was no hollow threat. Within hours, Beijing slapped a crushing 34% tariff on all US goods — a mirror to the latest US hikes — while layering it atop the 10-15% tariffs previously imposed earlier this year.
This escalation isn’t just economic; it’s strategic.
China tightened its grip on key rare earth exports, crucial for global tech and defense industries, and banned shipments of dual-use technologies to a dozen US firms, primarily in aerospace and defense.
Even more provocatively, Beijing expanded its “unreliable entities list,” effectively blacklisting 11 additional American companies from operating freely in China.
For those still clinging to hopes of a diplomatic off-ramp, this weekend’s developments should serve as a cold wake-up call. Beijing’s shift is not reactive, it’s premeditated.
Trump administration officials, some of whom see this period as an opportunity to accelerate the economic uncoupling of the US and China, are unlikely to soften their stance in the face of Beijing’s defiance. In fact, further rounds of US tariffs are now all but inevitable.
The economic damage is already being tallied. Washington’s new tariffs, combined with China’s countermeasures, will lift the US weighted average tariff rate on Chinese goods to a staggering 65%.
For China, that could chop 1.5 to 2 percentage points off growth this year — a brutal blow for a country already grappling with sluggish exports, a property crisis and deflationary pressures.
Yet even with growth risks mounting, China seems willing — even eager — to absorb the pain.
Why? Because Beijing has concluded that the US is determined to constrain China’s rise, and that any deal offered now would merely be a temporary truce, not a genuine peace. Better, in China’s view, to endure short-term suffering than to accept a long-term strategic disadvantage.
The implications of this calculation are seismic. If China, the world’s second-largest economy, is prepared to sacrifice near-term prosperity in favor of strategic autonomy, then the era of managed competition is truly over.
Global markets, still nursing the illusion that cooler heads might prevail, are in for a brutal adjustment.
Against this backdrop, investors, businesses and policymakers must recalibrate. The US-China rivalry is no longer about who blinks first. It’s about who can hold their breath the longest.
In the coming months, more tariffs, tit-for-tat restrictions and strategic decoupling are likely to define the relationship between Washington and Beijing.
The latest escalation shows both sides are preparing for a long, bruising confrontation — one that will reshape global trade, finance and geopolitics for years to come.
