On Thursday morning in Shanghai, as shoppers filled the luxury malls and delivery drivers whizzed around the winding streets at breakneck speed, financiers breathed a cautious sigh of relief. Overnight, US President Donald Trump had reversed course, announcing a 90-day pause on his so-called “reciprocal tariffs” of up to 50% for dozens of countries. Although China got no such reprieve – instead, the levy on Chinese goods was increased to 145% – the temporary return of normal trade channels showed Chinese businesspeople that all was not lost.
Trump’s announcement of punitive tariffs on countries across south-east Asia had risked closing off the routes that Chinese companies have been using since his first term in office to circumvent his levies.
Since 2017, thanks to tariffs on Chinese goods, the share of China’s exports bound for the US has dropped from about 20% to less than 15%. But much of that trade has simply been re-routed through third countries, as Chinese firms set up shop in places with cheaper labour costs and easier access to the US market.
Chinese foreign direct investment in Asean countries reached $24bn in 2023, up from less than $10bn in 2017. Several of China’s major solar companies have shifted manufacturing to south-east Asia. So despite the fact that “made in China” solar panels are virtually nonexistent in the US market, 80% of the US’s solar panels come from Malaysia, Cambodia, Vietnam and Thailand. Next week, President Xi Jinping will visit Vietnam, Malaysia and Cambodia, on his first official foreign trip this year.
Hobbling those countries’ ability to export to the US would inflict more true economic pain on Chinese companies than bilateral tariffs ever could. So in Shanghai, China’s commercial capital, a return to a narrowly US-China trade war, while still unwelcome, is some comfort.
But on the ideological front, the mood in China is hardening over Trump’s imposition of 145% tariffs. State media and the foreign ministry have been sharing a clip of the former US president Ronald Reagan decrying tariffs in 1987. On X, foreign ministry spokesperson Mao Ning has been trolling the US, posting a meme of a Make America Great Again baseball cap increasing in price from $50 to $77.
The most telling propaganda has been the resurfacing of a video clip of former Chinese leader Mao Zedong from 1953. “As to how long this war will last, we are not the ones who can decide,” Mao says. “No matter how long this war is going to last, we will never yield,” he says to applause.
Mao was referring to the Korean war, a conflict which is remembered in China as a time when China successfully stood up to the US through China’s support of North Korea. But in 2025, the combative rhetoric is being applied to the trade war, in which China has vowed to “fight to the end”. With suggestions from influential commentators that China might suspend cooperation with the US on fentanyl control as a retaliation for the tariffs, some are comparing the present moment to the Opium Wars, which were fought over an unsavoury mix of addictive opiates and anger about trade imbalances – just like in 2025.
Ren Yi, an influential commentator who writes under the name Chairman Rabbit, wrote on Thursday: “The trade war is a war of public opinion, public sentiment, and information … China should adopt a ‘wartime’ state of tension in terms of public opinion, and all sectors should move in one direction and one goal. This issue is by no means a joke.”
There is an ominous sense that the US-China relationship could still get worse. On Thursday, in a largely symbolic move, China said it would restrict the import of Hollywood movies. China’s tariffs on US goods were increased on Friday to 125%. Six US companies have been added to Beijing’s list of “unreliable entities”, restricting their ability to do business in China.
Discussion on Chinese social media, massaged by censors to ensure only the most nationalist comments are prominent, are full of defiance and bombast. One meme joked that Trump’s new slogan should be “MCGA” – Making China Great Again.
But some commentators have warned against rampant nationalism on the Chinese side. In a recent essay published in Chinese media, Zheng Yongnian, a professor at the Chinese University of Hong Kong in Shenzhen, wrote: “We must not underestimate the vitality of American society. The vitality of the United States has never been in the government, but in society and capital.
“There are still a large number of people in domestic media, especially social media, who feel that they have ‘won’,” Zheng wrote. “This is very dangerous. If this happens, we will be confused by the west … and in the end will make strategic mistakes.”
Offline, some fear, that without the linchpin of trade keeping the US and China on co-operative terms, the reasons for avoiding more dangerous conflicts, such as war in the Taiwan Strait or the South China Sea, are becoming less compelling.
