Xi Jinping Breaks Silence on US-China Tariff War: "No Winners" in Escalating Economic Conflict
Chinese President Xi Jinping has finally broken his silence on the rapidly escalating US-China trade conflict, declaring that "there are no winners in a trade war" as both nations impose unprecedented tariffs exceeding 100% on each other's goods. Speaking during a meeting with Spanish Prime Minister Pedro Sanchez, Xi warned that "going against the world will only lead to self-isolation," in his first public comments since the tariff battle intensified to historically high levels.
Key Developments in US-China Trade Tensions
The tariff conflict has spiraled dramatically over the past week, with China announcing Friday it would raise duties on US imports to 125%, directly responding to President Trump's move to impose tariffs totaling 145% on Chinese goods CNN1. This marks an unprecedented level of trade barriers between the world's two largest economies.
China's Finance Ministry issued a scathing assessment of US actions, calling them "completely unilateral bullying and coercion" that "seriously violates international economic and trade rules" Business Insider2. The ministry added that continued US tariff increases would "become a joke in the history of the world economy."
Beyond tariffs, China has expanded its retaliation to include new restrictions on Hollywood films and issued travel advisories for Chinese citizens considering visits to the United States Reuters3. These moves signal Beijing's willingness to leverage its market access in cultural and service sectors as additional pressure points.
Timeline of Escalation
The rapid deterioration in trade relations began with the Trump administration imposing a 20% tariff on Chinese goods in February and March over fentanyl precursor concerns. On April 2, citing the US trade deficit with China, Trump announced an additional 34% tariff. China responded with matching 34% duties on April 4, triggering a series of retaliatory increases that have now reached 145% for US tariffs on Chinese products and 125% for Chinese tariffs on US goods NBC News4.
Global Reactions to Xi's Statement and Tariff War
Market Volatility
Financial markets have responded with significant volatility to Xi's comments and the trade conflict escalation. Japan's Nikkei 225 tumbled almost 3%, while European markets showed mixed reactions with Germany's DAX falling 1.5% and Britain's FTSE 100 rising 0.4% Business Insider2.
The Chinese yuan experienced sharp fluctuations, initially slipping to levels last seen during the global financial crisis before rebounding slightly after China's tariff announcement Reuters3.
Diplomatic Maneuvers
Xi's comments came during a meeting with Spain's Prime Minister, suggesting strategic timing as China appears to be courting European allies. The Chinese leader has explicitly invited the European Union to "jointly oppose unilateral acts of bullying," attempting to isolate the United States in the global trade arena The Guardian5.
French President Emmanuel Macron has spoken of "90 days of uncertainty" ahead, referring to Trump's decision to pause some tariffs for other countries while maintaining the escalation against China The Guardian5.
Expert Insights on the US-China Tariff Conflict
Economic analysts remain divided on the long-term implications of the trade war. Deutsche Bank noted that the difference between the reported tariff percentages is "negligible in any practical economic sense," suggesting that beyond certain thresholds, additional increases have limited economic impact Business Insider2.
Mark Haefele, chief investment officer at UBS Global Wealth Management, observed that "while downside risks do remain, we believe the risk of a more severe economic downturn is now more limited," noting that Trump has shown sensitivity to market turbulence in his tariff decisions Business Insider2.
However, more pessimistic analysts warn of potentially devastating consequences. Victor Gao, a Chinese policy expert, has cautioned that the scale of tariffs could lead to "millions of people becoming unemployed" and a "wave of bankruptcy" across China CNN6.
According to Gordon Chang, a China expert, Xi's reluctance to directly call President Trump reflects fear of appearing weak domestically while facing significant economic pressure Fox Business7.
Future Implications of Xi's Stance and Trade War Escalation
China's Self-Reliance Strategy
Xi's statement that "for over 70 years, China's development has relied on self-reliance and hard work—never on handouts from others, and it is not afraid of any unjust suppression" signals a reinforcement of China's long-standing self-reliance policy Newsweek8.
This emphasis on self-sufficiency aligns with Xi's previous calls for accelerating China's scientific and technological independence. Since 2018, Xi has advocated for a "whole-nation approach" to reducing China's dependence on imported technology components CEPR9, potentially using the current trade conflict to accelerate these efforts.
Economic Decoupling Risks
With both nations now taxing 100% of each other's goods at rates that effectively halt normal trade, experts warn of accelerating economic decoupling. According to a Harvard Business Review analysis, the April tariff rates alone could lower US GDP growth by 1.4% in 2025 Harvard Business Review10.
China has explicitly stated it will not respond to any further US tariff increases, indicating that at current levels, "U.S. exports to China are no longer commercially viable" NBC News4.
Potential Non-Tariff Retaliation
Security experts warn that China's retaliation could extend beyond tariffs to more strategic areas. Potential measures include restrictions on rare earth minerals critical to US defense systems, modifications to China's holdings of US debt, and additional impediments to American businesses operating in China Fox Business11.
There are growing concerns that currencies may become a larger battleground in the conflict, as suggested by China's Finance Ministry statement that "if the US continues to play a numbers game with tariffs, China will not respond," while leaving the door open for other types of retaliation Barron's12.
A New Chapter in US-China Relations
President Xi's unprecedented public comments mark a critical juncture in the rapidly deteriorating US-China economic relationship. His warning that "there are no winners in a trade war" comes as both nations appear locked in a cycle of retaliation that threatens global economic stability.
As tariffs reach levels that make bilateral trade practically impossible and both sides explore non-tariff measures, the fundamental question remains: Will this conflict reshape the global economic order, or can diplomatic channels eventually prevail over escalation politics?
Xi Jinping and Donald Trump face off in an increasingly bitter trade dispute that has now reached unprecedented tariff levels. Credit: Newsweek
