‘US has chickened out’: How Xi Jinping called Donald Trump’s bluff on trade war

Why it matters

The art of standing stillWhat makes China’s position remarkable is how little it changed. While Washington raised tariffs to historic levels and leaned on frenetic public threats, Beijing stuck to its script: stay silent, absorb the shock, and wait for the pressure to flip.Xi refused to take Trump’s calls. He ordered rate cuts, fortified the domestic economy, and sent diplomats on a global charm offensive to decry “US bullying.” Beijing calculated that any short-term pain would be offset by long-term gains.It worked.

As factories in China slowed and youth unemployment climbed, Xi’s government leaned into nationalist messaging. The public was told this was not just a trade dispute, but a sovereignty issue. In Washington, Trump was met with a different kind of backlash-rising prices, corporate lobbying, and disquiet among Republican lawmakers worried about midterm fallout. The president’s own allies began to call for a reset.Economists warned that Trump had overplayed his hand. “The US blinked first,” Alicia García-Herrero, chief Asia-Pacific economist at Natixis, told the Financial Times. “It thought it could raise tariffs almost infinitely without being hurt, but that hasn’t been proven right.”Zoom inUnder the Geneva truce, the 145% average US tariff on Chinese goods will fall to around 30%, with targeted rates as low as 10% for some sectors. The rollback excludes items like steel, aluminum, cars and pharmaceuticals – areas the US views as strategic. China, for its part, has suspended most of the non-tariff measures it imposed since April, including export controls on rare earths, but the details remain murky.“We have learned our lesson from Trump 1.0, where we saw that tariff negotiations can go back and forth rather than being achieved overnight,” Dong Yan of the Chinese Academy of Social Sciences told Bloomberg.Economists at Bloomberg estimate the effective US tariff shock on China now sits just below 40%, down from over 100%. That still makes China the most heavily-tariffed major trading partner of the USBetween the linesThe speed and scope of the tariff rollback surprised many experts, not because a truce wasn’t expected, but because of how much ground the US appeared to cede. The US had imposed punitive tariffs under the guise of economic “shock therapy,” but in Geneva, that strategy unraveled.The choice of Switzerland – away from cameras and domestic audiences – was itself a sign that the US was ready to compromise. Deutsche Bank strategist George Saravelos told Bloomberg, “All of this is a clear signal of negotiations moving into a more conciliatory and respectful phase.”US business lobbies and even defense contractors pressured the White House behind the scenes, alarmed by export controls from China on rare earth minerals and other retaliatory measures. According to one former Trump official, “China’s export restrictions to the United States worked. It created enough pain to compel the US government to plead with the Chinese government to reverse course.”Even as China refused to budge on key economic practices – including the structure of its state-owned enterprises – it managed to reset the table of negotiations, trading retaliation for stability.What they’re saying

The big pictureDespite the détente, deep structural tensions between Washington and Beijing remain. Both sides continue to view trade through a national security lens. Trump, while portraying the deal as a reset, warned that tariffs could still rise “substantially higher” if progress stalls over the next 90 days.“The US-China trade negotiations are going to be like a rollercoaster,” Scott Kennedy of the Center for Strategic and International Studies told Bloomberg. “Markets can breathe a temporary sigh of relief but we’re nowhere near out of the woods.”Yet the broader message is clear: Xi’s refusal to play by Trump’s script -combined with a global economy that couldn’t absorb further shocks -forced a major shift. China didn’t just weather the storm; it reshaped it.“Standing up to Trump does not mean that you win. But giving in guarantees that you lose,” wrote Jonathan Chait in The Atlantic.The coming months will determine whether the truce can evolve into a more durable arrangement. But for now, Beijing has demonstrated that economic resilience and diplomatic patience can be powerful tools -even against a president who prides himself on disruption.(With inputs from agencies)