Xi Jinping is playing hardball.

The Chinese president wants to show his people that the country can withstand the economic pain from President Donald Trump's tariffs and stand up to what Beijing is calling America's "bullying," according to experts.

Trump's trade war also feeds into the strategy that Xi has been working on for years: become less reliant on the United States.

This breakdown in trade is "exactly what Beijing has been preparing for," said Jude Blanchette, director of the RAND China Research Center. "Beijing is not looking for negotiation."

The world's superpowers are engaged in a risky game of chicken, experts told ABC News. The question is who blinks first.

"At the moment, Xi seems to be calculating that China can withstand the damage and that ultimately it's the United States who will blink first," said Neil Thomas, a fellow for Chinese politics at the Asia Society Policy Institute's Center for China Analysis

Xi's view is that countries will want to do business less with the U.S. because of the uncertainty created by tariffs, which will drive them toward China, said Thomas, who added that China has been preparing for this possibility for years by growing trade relations with the rest of the world.

"Both Washington and Beijing think they hold the stronger hand for different reasons. The Trump administration sees China as export-dependent, so they believe it's significant leverage to get the Chinese to bend," Blanchette said. "On the other hand, Beijing sees the U.S. as increasingly economically weak under Trump and distanced from its allies."

While Trump in his Cabinet meeting on Thursday called Xi a "friend" and said he'd love to strike a deal with China, the calculus isn't so simple for Xi. If Xi walks away from the phone call without a deal, he risks losing face.

"For Xi, there's a huge amount of risk of looking weak in his dealings with the U.S. He risks being humiliated or not having anything to show for his engagement with Trump," Thomas said. "The tariffs will be economically painful, but Xi also sees this as an opportunity to get China into a healthier situation by reducing reliance on the U.S."

China to limit number of American films imported from US amid tariff battle.

There are also other levers China can pull to retaliate. Experts say Beijing could ban more companies from doing business in China and further limit exports of critical materials, such as rare earth minerals.

China "hasn't gone anywhere close to the maximum that it could do with its rare earth exports, considering it's such a dominant player in the industry," Thomas said.

China could "shut down huge segments of high-tech supply chains" by banning rare earth minerals, Thomas said, calling it "a nuclear option that would severely damage not just the American economy but European and Asian economies."

Beijing has also said it will restrict Hollywood films in China. While it's not a "significant" retaliation, Thomas said that "it feeds right into Xi Jinping's broader political agenda to reduce foreign influence on Chinese society."

But Scott Kenney, senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies, argued that Beijing believes Trump has already blinked by pausing the reciprocal tariffs for 90 days.

"I think the Chinese will read this as weakness from President Trump and they will wait," he said.

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Old Xi Jinping speech resurfaces amid US trade war

China has urged the United States to meet it "halfway" as President Donald Trump continued to escalate his trade war against Beijing. But a widely shared video in April does not show Chinese leader Xi Jinping increasing retaliatory tariffs on the United States. The speech was Xi's response to the economic dispute during Trump's first term and he did not mention additional levies.

"President Xi Jinping announced 180% tariffs on US imports, effective tomorrow," reads a post shared April 9, 2025 on X.

It features a minute-long clip where Xi is heard saying in Mandarin: "The Chinese economy is an ocean, not a small pond. The ocean has calm times and stormy times. Without storms, it would not be an ocean."

He adds: "Storms can overturn a small pond, but they cannot overturn the ocean. After countless storms, the ocean is still there! After more than 5,000 years of hardships, China is still here! Looking to the future, China will always be here!"

Markets have been on a rollercoaster ride since Trump announced sweeping global tariffs on April 2 which he abruptly paused for most countries a week after (archived link).

But the US president upped the ante on a brutal trade war with superpower rival China, raising tariffs to 125 percent.

China has so far hit back with retaliatory levies of 84 percent on US imports, which came into effect just after midday (0401 GMT) on April 10.

China's commerce ministry warned the tariffs risked "severely" impacting the global economy, but stressed that "the door to dialogue is open".

"We hope the US will meet China halfway, and, based on the principles of mutual respect, peaceful coexistence and win-win cooperation, properly resolve differences through dialogue and consultation," Commerce Ministry spokeswoman He Yongqian said the same day.

Similar Thai and English posts shared the video of Xi speaking as recent -- but it dates back to 2018 and shows the Chinese leader's response to Trump's trade war during his first term as US president.

Keyword searches found the video was republished by Chinese state media People's Daily on April 7, 2025, days after Trump first announced the global tariffs (archived link).

The video's description states Xi once described China's economy as a "wide ocean" that could weather economic downturn.

Towards the end of the video shared in the false posts, AFP spotted superimposed text which indicates that the Chinese president's address was made on November 5, 2018 -- 10 months into the ongoing trade conflict between Beijing and Washington.

 

Keyword searches on Google led to a report from Chinese government-run outlet The Paper on November 5, 2018, with a video of Xi announcing the inauguration of the China International Import Expo (archived link).

AFP also found Xi's script for the event that day published by state-run Xinhua news agency, in which a part matches his remarks in the video (archived link).

He does not mention increasing tariffs on the United States at any point in the speech.

Xi instead pledged to widen access to China's economy and delivered a veiled rebuke of Trumpism (archived link).

Nations "should not just point fingers at others to gloss over their own problems", Xi said, decrying "protectionism", "isolationism" and "the law of the jungle".

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China Escalates Trade War as Trump Isolates Xi in Tariff U-Turn

China has hit back at the US after Donald Trump’s dramatic reversal on tariff threats isolated Beijing as the primary target of his trade offensive, dimming the prospect of immediate de-escalation.

The Chinese government on Thursday said it will reduce the number of US films allowed to enter the country, hours after Trump imposed record duties on China’s imports and paused those on dozens other countries. The decision opens a new front in a confrontation that until now centered on the trade in goods and relied largely on tariffs and export controls as a means of retaliation.

The countermeasure came a day after Trump said he was expecting Beijing to call, suggesting that Chinese President Xi Jinping is intent on resisting US pressure despite growing headwinds for his economy.

“The Chinese don’t want to talk to the US when it looks like they’re outgunned,” Derek Scissors, senior fellow at the American Enterprise Institute who previously worked at the Pentagon, said before the China Film Administration announced the film curb. “Either they come to Trump with some sort of quiet trade, taking the chance he’ll reject it and brag about it, or nothing happens.”

Wall Street is set to open lower, with S&P 500 futures indicating a 1.5% retreat. The index surged almost 10% on Wednesday after Trump announced the tariff pause.

The selective reprieve announced hours earlier drove US stocks to their best rally since 2008 but at one point pushed the onshore yuan to its weakest level since 2007.

By singling out China, Washington indicated it’s looking to exert maximum pressure on the world’s second-largest economy while seeking other countries’ cooperation in its rivalry with Beijing. The tactic puts the US president on a collision course with Xi, who has hit back at the levies and looks to shore up ties with trade partners to resist Trump.

With the exception of China, countries that were hit with the higher, reciprocal duties that went into effect Wednesday will now be taxed at the earlier 10% baseline rate applied to other nations.

US Treasury Secretary Scott Bessent said he envisions reaching trade agreements with US allies that would then lay the ground for a collective approach toward Beijing. He said he would be speaking to officials from Vietnam, Japan, India and South Korea in the coming days.

“We can probably reach a deal with our allies” at the end of the day, he said Wednesday. “They’ve been good military allies, not perfect economic allies. And then we can approach China as a group.”

Trade tensions have spilled beyond economics. The Trump administration on Wednesday criticized Beijing for its influence on global infrastructure such as the Panama Canal. China has warned citizens of traveling or studying in the US, even though Xi had called for more people-to-people exchanges to improve relations.

“Trust has gone,” said Da Wei, director of the Center for International Security and Strategy at Tsinghua University in Beijing. “On the balance between economic development and economic security, you will always emphasize security. This is a long-term change.”

Power Rivalry

China has refused to cave to Trump’s pressure even as soaring duties are expected to weigh on the economy, with Goldman Sachs Group Inc. economists cutting their 2025 growth forecast to 4% from 4.5%.

In response to Trump’s earlier 50% tariff threat, Beijing raised levies on all US goods by the same rate to 84% — an announcement that seemed deliberately timed to land just before US markets opened. China also added primarily American defense companies to its unreliable entity list and export control list, a largely symbolic move as most targeted companies have minimal China exposure.

On the military front, tensions persist even though defense officials from both countries have made formal contact since Trump returned to the White House. On his first official trip to Asia, Defense Secretary Pete Hegseth said the US needed to “re-establish” deterrence against China by bolstering its military power in the region — and by supporting similar efforts of its allies.

This week, he also criticized China’s military for having “too large of a presence in the Western Hemisphere,” calling on the region’s governments to work together to deter China.

As ties with the US spiral, China has courted Europe and Southeast Asia, attempting to find common cause over Trump’s tariff threats.

China’s Commerce Minister Wang Wentao called on the European Union to deepen trade ties to “inject more stability and certainty” into the world at a meeting with EU Trade Commissioner Maros Sefcovic on Tuesday.

The next day, Xi chaired an upgraded Central Work Conference on Diplomacy with Neighboring Countries, highlighting China’s increased focus on regional relationships. Xi is expected to visit Vietnam, Malaysia, and Cambodia — countries that received Trump’s the 90-day reprieve — later this month on his first overseas trip this year.

Stimulus Outlook

Domestically, Beijing has signaled increased urgency to bolster the economy that relied on exports for a third of growth last year. China’s top leaders are poised to meet Thursday to discuss additional economic stimulus after Trump ratcheted up tariffs, according to people familiar with the matter.

China has also urged fast-fashion giant Shein and other companies to refrain from diversifying supply chains by sourcing from other countries, as Beijing seeks to stave off a manufacturing exodus.

At a meeting with experts and entrepreneurs Wednesday, Premier Li Qiang reiterated the need to expand domestic demand. Fujian province, a coastal region that relies on trade, is planning to help exporters sell their goods to Chinese customers to absorb some tariff impacts, a move that could be followed by other trade hubs in China.

In a further warning sign for the economy, China’s consumer deflation extended for a second month in March and factory deflation persisted for a 30th month. Prices could come under pressure to weaken further should exporters redirect some goods to the domestic market or if other countries facing higher US tariffs divert their products to China.

Peak Tariffs

For now, the frenzy of tariff threats from the US seems to have peaked. Trump said he didn’t think he’d have to raise the rate higher to force talks. Economists have also suggested that the effect of tariff hikes is getting increasingly marginal.

An initial 50% tariff would decrease China’s gross domestic product by 1.5 percentage points, Goldman Sachs economists including Andrew Tilton wrote in a note Tuesday. A second 50% tariff, however, would have a diminished impact, reducing GDP by only another 0.9 percentage points.

“China’s leadership doesn’t seem to be in any rush to make a deal,” Julian Evans-Pritchard, head of China economics at Capital Economics, wrote in a note Wednesday. “They appear to have concluded that they can afford to weather the impact of US tariffs and that Trump will be in a weakened position further down the line as the economic and political fallout from the tariffs mounts.”