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.
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.
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.
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 of 84% on US goods have come into effect. Six US companies have been added to Beijing’s list of “unreliable entities”, restricting their ability to do business in China.