Lizzi C. Lee
As the China-U.S. tariff war enters yet another phase of escalation, with Trump 2.0 proposing new hikes that push the effective U.S. tariff burden on Chinese goods to a staggering 145 percent and Beijing responding by raising its tariffs on U.S. goods to 125 percent, Chinese policymakers have shed any lingering illusions of an imminent thaw. The headlines may center on retaliatory tariffs and shipping slowdowns, but beneath the surface, a more consequential shift is unfolding: a long-term strategic recalibration aimed not at out-escalating Washington, but at enduring it.
In addition to matching Washington blow-for-blow, China is moving cautiously yet deliberately to manage exposure, mitigate damage, and reposition itself globally. This emerging strategy is organized into three concentric layers of response. At its core is an all-out push to stabilize the domestic economy. The middle ring focuses on placing targeted pressure back on the United States, measured and mindful of cost-benefit tradeoffs. The outermost circle turns to the broader world, where China is working to counter diplomatic isolation and carve out space in an increasingly polarized global order.
Bolstering China’s Economy
The most immediate priority is internal resilience. Chinese policymakers are under no illusion that the tariff escalation will subside anytime soon. Accordingly, they’ve doubled down on their ongoing pivot toward internal demand – now elevated from an economic goal to a strategic imperative. The long-discussed, intermittently pursued shift toward domestic consumption is no longer optional: it has become the only viable hedge against external coercion, and the system is mobilizing to match.
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