Trump’s Tariffs Push China into Trade "War of Attrition" With U.S.

Beijing is preparing for an economic war of attrition with the United States, feeling cornered by the Trump administration’s escalating tariff measures on Chinese goods and products manufactured in third countries, Laurie Chen, Kevin Yao, and David Kirton reported for Reuters.

One affected company is US drone maker Skydio, which had sourced batteries from China and now faces Chinese sanctions. I Photo: Skydio

Last week, the US imposed import tariffs of at least 10% on nearly all trading partners, with significantly higher levies on countries such as Vietnam—where Chinese companies have been relocating production.

In response, China retaliated, prompting President Trump to threaten even more aggressive escalation.

“Whoever surrenders first becomes the victim. It’s a matter of who can hold out longer,” said a Chinese policy adviser, who requested anonymity due to the sensitivity of the issue.

China's options are limited. While it is looking to strengthen trade with other markets in Asia, Europe, and beyond, these markets are far smaller than the US and may not be enough to compensate.

Matching US tariffs and introducing export controls are possible responses, but the asymmetry in trade makes this challenging. China exports around three times more to the US than it imports—about $160 billion annually.

Beijing has already responded to the new 34% US tariffs with a similar countermeasure and has vowed to “fight to the end” in the face of Trump’s threat of an additional 50% hike.

China is also leveraging its dominance in certain strategic sectors. It added seven rare earth elements to its export control list—critical materials for US defense and tech industries.

Officials hinted at the possibility of adding ten more or enacting a full export ban to the US.

In parallel, Beijing could target American firms operating in China, including by expanding its unreliable entity list, which already includes companies accused of selling arms to Taiwan.

One affected company is US drone maker Skydio, which had sourced batteries from China and now faces Chinese sanctions.