Chinese President Xi Jinping shakes hands with Vietnamese Communist Party General Secretary To Lam during a meeting at the Office of the Party Central Committee, in Hanoi, Vietnam, April 14, 2025.

Over the past 10 days, the global economy has been rocked by the dramatic decisions of U.S. President Donald Trump as he launched aggressive tariffs on trading partners across the board and then just as abruptly hit pause on the most draconian of them. In the process, he destabilized the global economy and cast doubt on the historical role of the U.S. as a safe haven during periods of economic upheaval.

In this case, however, the upheaval came directly as the result of the actions and tweets of the U.S. president. Can China benefit from the Trump administration’s “own goal”? And can it capitalize on this moment to portray itself as the sole remaining responsible global power?

While China’s leaders probably felt much schadenfreude at how the decisions made in D.C. damaged U.S. credibility, they face a difficult and delicate situation. China must demonstrate resolve toward the U.S. while also signaling an accommodating stance elsewhere. Yet Beijing’s own history of economic coercion and Trump’s desire to isolate China and force countries to “choose sides” are difficult constraints on its ability to maneuver.

This aggressive new stage in Trump’s trade war is chaotic, confusing and dangerously risky. Forced to back down on his initial announcement due to strange movements in the bond market, Trump paused the highest of his “liberation day” global tariffs. Instead, he doubled down on tariffs against China, which by the end of last week stood at 145 percent for most goods.

But even with his desire to get tough on China, late on Friday night, Trump excluded many computer goods and cell phones from these harsh tariffs. Those products make up over 20 percent of China’s exports to the U.S., and a large portion of them are made in China by foreign-owned enterprises. So the exclusions Trump made Friday night were a clear recognition of the limits of a strategy that seeks to hurt China without hurting U.S. consumers and companies. All of these reversals by Trump also provide useful information to China about his pain points as it crafts its own retaliation.

And indeed, China has responded resolutely so far, placing equally high tariffs on U.S. goods. At 125 percent, U.S.-China trade in many industries is now prohibitively expensive. China has also restricted the export of critical minerals and magnets that are irreplaceable in many supply chains, including for weapons components and clean technology, such as batteries for electric vehicles, or EVs. China has placed more U.S. companies on its entities list, prohibiting them from trading with Chinese counterparts, and announced investigations on intellectual property protection practices by some U.S. firms based in China.

Beijing doesn’t want to just survive this trade war. It wants to use it to demonstrate that the U.S. is an unreliable and capricious partner. This will be difficult for two reasons.

Beijing is also doing more diplomatic outreach to highlight its role as a stable economic leader, hosting Spanish Prime Minister Pedro Sanchez last week and European Union leaders at a summit in July. This week, President Xi Jinping embarked on a high-profile regional tour, beginning with a state visit to Vietnam. While there, he made overtures to Hanoi’s new leadership and emphasized parts of China and Vietnam’s shared history, including communist revolutions against imperialist colonizers, as well as their linked economies.

While many commentators believe China is still open to some kind of negotiated settlement with the U.S., the pathway to one seems narrower now with mutual high tariffs and China’s halt of critical mineral exports in place. There is also little chance of Xi agreeing to an in-person meeting with someone as volatile and unpredictable as Trump.

China now faces a delicate task. It must show the Trump administration that it has the determination and the tools to punish the U.S. in any confrontation. It must also demonstrate to the rest of the world, but especially to the EU and its neighbors, that it will play a stabilizing and accommodating role. Beijing doesn’t want to just survive this trade war with Washington. It wants to use it to demonstrate that the U.S. is an unreliable and capricious partner. The Trump administration is taking many steps to erode global trust in U.S. leadership, but China needs to signal to the world left trapped between the two economic giants that it can bridge the gap left by U.S. withdrawal.

This will be difficult for two reasons. First, China has already used the tools it will deploy against the U.S. to punish other trading partners. Beijing itself has a long history of using economic coercion to respond to what it sees as geopolitical slights, including in recent years against the Philippines, South Korea, Australia and Lithuania. Every other country will be watching the retaliatory spiral between China and the U.S., in no small part to observe their own vulnerabilities to the measures taken by both countries. Japan well remembers China’s brief ban on rare earth minerals in 2010, which changed how Japanese companies stock these materials. Vietnam has long clashed with China over their overlapping claims in the South China Sea, suffering retaliation on some of its main exports to China as a result.

The second difficulty stems from the current U.S. strategy, which now seems set on forcing major economies to choose between the U.S. and China. Take, for example, the Vietnam-China economic relationship. Vietnam is China’s fourth-largest trading partner, while China is Vietnam’s largest, in large part because of how integrated Vietnam’s economy is into Chinese supply chains. Vietnam was one of the major beneficiaries of the first U.S.-China trade war in 2018, as companies—many of them Chinese—relocated production there to take advantage of lower tariffs for finished goods. If the U.S. negotiates a deal with Vietnam that requires eliminating China from its supply chains, what will China be able to offer Vietnam that is more attractive when China’s own domestic consumption is so weak? Is there enough complementarity between China and Vietnam without the U.S. consumer at the end of their supply chain?

For countries in Europe, China’s challenge is different but equally difficult. The EU is the most likely destination for Chinese exports that would have gone to the U.S. but are no longer competitive there because of Trump’s tariffs. How will China provide assurances that greater dependency on China will not lead to further deindustrialization in Europe? One attractive option for the EU is for China to export its manufacturing, rather than its manufactured goods. Chinese companies could build factories across Europe, boosting local employment and perhaps even innovation in sectors where Chinese companies outperform their European counterparts, such as robotics, EVs and aspects of clean energy. Some of these plans are in the works. The rub here is that Xi wants China to maintain its position as the workshop of the world and to upgrade that workshop even further, into advanced semiconductors and aviation. Xi may see this offshoring solution as detrimental to his long-term vision of China’s future. Facing high rates of youth unemployment, as well, it may not be politically easy for China to begin its own offshoring wave.

China may have a historic opportunity to capitalize on the chaos and uncertainty emanating out of D.C. right now. Open resistance to Trump’s agenda is increasing in the U.S. among business leaders buffeted by uncertainty and unstable markets, so time is limited. But China may be hamstrung by its own record of economic coercion in the past as well as its inability to offer anything that replaces Washington’s fundamental competitive advantage: the U.S. consumer.