-Analysis-
SHANGHAI – China’s latest swing in the trade war with the U.S. was unexpected: targeting Hollywood. Major premieres like Mission: Impossible, Superman, and Avengers — lined up for release this year — might now be scrapped in the People’s Republic. Donald Trump’s tariff barrage, according to the official reasoning, would “inevitably further weaken the goodwill of Chinese audiences toward U.S. films.”
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So, to follow this would-be logic: China is slashing its import quota for American movies in order to spare Chinese moviegoers the stress.
Lately, one could say that the tariff battle between China and the U.S has played out like a classic Hollywood Western. Trump slapped on tariffs, China fired back. He doubled down, so did they. Neither side flinched.
As capital markets trembled to the tune of a funeral march, even Trump’s 90-day truce for the rest of the world didn’t stop the standoff. In just 10 days this April, tariffs on both sides surged by a staggering 125 percentage points.
The Second Trade War
It all feels familiar. Back in Trump’s first term, he already dragged China into a drawn-out trade war. What took years then has now happened in a flash. But while China once seemed rattled by Trump’s moves, this time the U.S. is up against a rival brimming with confidence.
So far, the People’s Republic is the only country hit by the tariffs that’s shown no willingness to bend. Instead of backing down, the leadership has rolled out what look like carefully calculated countermeasures — symbolic ones like the movie ban, but also targeted sanctions on American companies and export curbs on rare earths, which could cause real pain for other economies too.
So far, there’s no sign of a climbdown: every official statement from Beijing, whether from the Commerce Ministry or Foreign Affairs, ends with the same message — China will “fight to the end.”
China has been getting ready for this moment for years
A kind of endgame atmosphere now hangs over the country. As usual, the leadership’s strategy is hard to read, but their actions seem to rest on a few key assumptions: that there’s little to be gained from compromise; that standing firm offers more rewards; that this dispute is just one front in an inevitable systemic showdown with the U.S.; that America is badly positioned for that clash; and finally, that China has never been better prepared.
“China has been getting ready for this moment for years,” says Huang Tianlei, a China specialist at the Peterson Institute for International Economics in Washington. Since the 2018 start of the first trade war with the U.S., American exports as a share of China’s total have dropped from just under 20 percent to below 15. “They deliberately diversified away from the U.S. because they knew this day would come,” Huang says. “And now it’s here.”
Only in hindsight does it become clear how much of a wake-up call Trump’s first-term offensive was for China’s leaders. In the years that followed, Xi Jinping poured energy into insulating and securing the economy, cutting China’s reliance on foreign trade and imported tech. Before Western capitals even started debating decoupling, China had already begun pulling away from the West. It built domestic supply chains, rerouted exports, ramped up research, bankrolled future industries, and shored up economic weak spots.
By and large, that plan paid off. Trump’s new tariff blitz will hurt, but China is in a far better place to hit back. The country’s economy is now far less exposed to outside shocks — a shift that was already visible under Joe Biden, who imposed a steady stream of export bans and tech restrictions to slow China’s rise in global innovation. The results were mixed. Despite the pressure, China closed the gap in several high-tech sectors. When the Chinese AI model Deep Seek made waves around the world in January, it was a wake-up call in Washington: China’s momentum won’t be easy to stop.
Could this push China and Europe closer?
That’s the message Beijing is broadcasting on all fronts. The Foreign Ministry, for instance, is circulating a video in which Mao Zedong, China’s founding father, appears to comment on today’s standoff: “How long this war lasts isn’t up to us,” Mao declares. “But however long it does last, we’ll never back down.”
The line referred to the Korean War in 1953, when China sided with the North against the US. The anti-imperialist tone is no accident — it’s part of a broader strategy. Right now, China is working hard to position itself to developing nations as a steadier global leader, a counterweight to Trump’s worldwide inferno.
“China firmly stands on the side of international justice,” said Foreign Minister Wang Yi at the National People’s Congress in March, addressing a room full of journalists from developing nations. He denounced “great power politics and hegemony,” and warned that if every country just looked out for itself, “the law of the jungle would rule again,” to the particular detriment of “smaller and weaker nations.”
“Trump’s tariff policy is a chance for China to lead the Global South.”
State-linked think tanks are also pushing this line. “If Beijing offers win-win trade deals to developing countries, many will choose China over the US,” says Sun Chenghao, a political scientist at the Beijing Center for International Security and Strategy.
China is already the top trading partner for more than 120 countries, ahead of the US. “Trump’s tariff policy,” Sun says, “is a chance for China to lead the Global South.”
In short, China is trying to trade economic pain for political clout — and at least for now, that gamble seems to be working. Beijing’s posture toward Trump has won it respect and support around the world: not only from those eager to see the U.S. fail, but also from those who miss the old America and want to see Trump fail.
“Despite our differences,” says one German executive, “Xi is more reliable than Trump.”
One player clearly caught in the middle is Germany’s business sector, traditionally close to China. Talk to German firms with a footprint in China these days and you’ll hear calls for a “new tone” in diplomacy as the incoming German government takes shape. Foreign Minister Annalena Baerbock’s hawkish stance on China never sat well with business leaders. But with a shift underway in Washington and Berlin, many see a chance to reset the relationship.
“Despite our differences,” says one German executive, “Xi is more reliable than Trump with his tariff tantrums.”
A draft memo is already circulating among German firms in China, urging the next government to drop its plan to scale back engagement. “Risk management should not mean reducing presence in China,” the document reads. On the contrary: deeper ties are needed “to remain competitive and help secure Germany’s prosperity.”
So could this transatlantic rift really push China and Europe closer? Beijing certainly seems to be testing the waters. European diplomats in the Chinese capital say they’re seeing outreach from the Chinese they haven’t seen in years. “They seem to think we’re rushing into their arms,” says one. He notes that some EU states now need to be “watched more closely.”
Still, this tariff war could easily deepen tensions between China and the EU. Brussels is already bracing for a potential surge in exports that could flood Europe if U.S. markets close to Chinese goods.
Beijing stands its ground
Charles Liu, a mid-sized trader based in Shenzhen, is already thinking about shifting his exports from America to Europe. He sells household items — coffee warmers, plastic ice cube trays, digital alarm clocks — mostly on Amazon in the U.S.. Last year, he made around 9 to 10 million euros in sales, with about a tenth of that in profit. But if the next shipment gets hit with a 145% tariff, he says, his profit’s gone. “I’ll have to raise prices,” he explains by phone. “My American customers will end up footing the bill.”
Despite how the dispute has hit his business, Liu backs Beijing’s tough line. “The U.S. depends on China’s exports,” he says. “The tariffs will hit American consumers hard.” That’s why, he says, “I’m in favor of China standing its ground.”
Online, the tone is even more defiant. On Chinese social media, users are hailing their country’s resistance in often nationalistic terms. Some suggest ramping up pressure on the U.S. — perhaps by ending cooperation in fighting the fentanyl crisis. Others invoke the 19th-century Opium Wars and call for revenge.
Trump’s tariffs may hit half the world, but nationalists online see them mostly as a direct attack on China. “China is Trump’s real target,” agrees Sun Chenghao of CISS. “This trade war isn’t random.” What might look impulsive is, to them, part of a strategy to hem China in. The steep tariffs on Vietnam, Cambodia, and Myanmar, for instance, are aimed at Chinese companies that moved production there to dodge older Trump-era duties. “The U.S. can’t decouple from China if China keeps trading with everyone else,” says Sun. Now Trump could try to cut China off by offering tariff breaks to developing countries in exchange for cooperation.
There’s still room for a deal
Maybe Sun is reading too much into Trump’s moves. But the belief that this chaos is a plan focused on China is widespread in Beijing right now. Feeling cornered, China is pushing back hard. The breakdown in communication between Washington and Beijing isn’t helping either. Xi’s inner circle has little access to the Trump administration, and the risk of dangerous misunderstandings is high.
Even so, a negotiated resolution is still on the table. Both sides know the alternative would be costly. Trump has hinted more than once that he’s open to talks with Xi — and even in its fiercest statements, Beijing always includes a nod to diplomacy, provided talks happen on equal footing.
But unlike last time, China doesn’t seem eager to cave. “What did all those past concessions get them?” asks Huang Tianlei in Washington. “Just more bans and sanctions.” If a new deal is to be struck, it’s likely to be a grinding match: tariff for tariff, sanction for sanction, deal for deal.
