As Trump singles out China in his tariff war, Xi reviews strategy: 4 things in focus (2025)

As the United States increases its economic pressure on China, President Xi Jinping’s government is quickly changing its plans at home and around the world. With Donald Trump leading a strong push on tariffs—raising taxes on Chinese products up to a huge 125 per cent—China is recalibrating its strategy.

China has said it won’t bow down to Trump’s pressures. Its top leadership including Xi and Premier Li Qiang have held a flurry of meetings. Reports suggest Xi is renewing his regime’s focus on readjusting China’s economy, working more closely with nearby countries and presenting it as a reliable trade partner to the world when the US looks more aggressive in trade.

Retaliation: A calculated counteroffensive

Beijing’s first reaction was to sharply raise tariffs on American products. China’s Ministry of Finance increased the average tax on US goods to 84 per cent, up from 34 per cent before, according to the BBC. This decision came right after Trump’s newest round of tariffs, which raised US taxes on Chinese imports from 104 per cent to 125 per cent. On his platform Truth Social, Trump said the increase was because China had shown a “lack of respect,” and said the new tariffs would start “immediately”.

Even though these moves look like back-and-forth reactions, experts say the real effects are more serious. Some analysts believe that if you add up all of China’s tariffs over the years—from both the Trump and Biden periods—the actual tax rate on US goods might now be as high as, or even higher than, America’s 125 per cent rate.

The BBC also reported that China’s latest actions came with a message calling for global unity against what it called “trade tyranny.” China’s state newspaper, the China Daily, even suggested working together with Japan, South Korea and the European Union to stand up to the US’ economic pressure.

These moves aren’t just about money—they send political messages too. By raising tariffs and at the same time calling for more countries to join its side, China wants to change how the world sees the situation: not just as a fight between the US and China, but as a global response to what it sees as unfair US trade actions.

Seeking to invigorate domestic economy

Trump’s new round of tariffs comes at a very tough time for Beijing. China’s economy has been struggling to recover after Covid-19, with people spending less and factories producing less. To deal with this, Premier Li held a high-level meeting with economists and business leaders, showing that the government is urgently working on adjusting its economic plans.

According to Bastille Post Global, Premier Li said China needs “more proactive and effective macroeconomic policies”. He stressed the importance of putting current policies into action and creating new ones when needed. Li also shared a long-term plan that focusses on “expanding and strengthening the domestic economic cycle,” which means relying more on China’s own economy instead of exports.

Li’s comments show a bigger change happening in how China plans its economy. Instead of seeing outside problems like Trump’s tariffs as one-time issues, Chinese leaders now see them as reasons to speed up deeper changes. They want to grow local demand, raise incomes and support industries from the supply side. This shows they know that the old days of big growth from selling to foreign markets are mostly gone.

Li also said it’s important to “stimulate the vitality of various market entities” and create “better development environments” for Chinese businesses. This isn’t just a quick fix—it’s a flexible plan to help China stay strong in a world where the global economy is more divided.

Presenting China as a reliable partner

Along with its tough economic response, China is also using a smart soft power strategy to show itself as the more stable and trustworthy country in today’s unstable world. The State Council Information Office published a white paper called China’s Position on Some Issues Concerning China-US Economic and Trade Relations. This paper tries to show China as consistent and fair, while making the US look unpredictable.

According to Xinhua, the white paper says the US broke its promises under the Phase One trade deal, while China has “scrupulously honoured” its side of the deal. The paper also says the US is using tariffs—some even linked to issues like fentanyl trafficking—in a way that’s “coercive” and “hegemonic,” meaning the US is using its power unfairly and going against global trade rules and fair market practices.

What makes this message significant is who it’s aimed at. It’s not just for people in China—it’s also for other countries and global trade partners who may be frustrated with Trump’s unpredictable actions. In this story, China is trying to present itself as the protector of fair trade rules, while the US is shown as a troublemaker causing economic problems.

This shift in diplomacy could help China. As its exports are being affected by tariffs, gaining the trust of other trade partners is very important. The white paper is basically a message to the world: China, unlike the US, still wants to work together and keep the global economy stable for the long run. It’s another matter that many countries are not willing to trust China on trade or strategy. For example, Australia has said it would not join hands with China in the current tariff wars over trust issues.

Neighbours are important

As part of China’s broader international efforts, President Xi is now putting more attention on building stronger relationships with nearby countries. At a recent major meeting on neighbuorhood diplomacy—the first one since 2013—Xi shared a detailed plan to improve ties with China’s surrounding nations. According to Channel News Asia, Xi said it’s important to “appropriately manage differences,” strengthen supply chains and create “a community of a shared future.”

This new focus on the region comes at a key time. Southeast Asian countries like Vietnam and Cambodia are not just neighbours—they’re also becoming important parts of China’s new export strategy. As Trump’s tariffs hit Chinese goods, many Chinese companies are moving their factories to these countries. So, improving diplomacy with them is not only about politics—it’s also about business and logistics.

The official statement from Xinhua highlighted the importance of mutual trust, working together economically and coordinating on security. This plan goes beyond trade—it’s meant to help the whole region stay strong when facing outside economic problems.

China has also reached out to India asking for unity against what it sees as unfair US actions. On April 9, the Chinese Embassy in New Delhi criticised the US tariffs, calling them an “abuse” that hurts the growth rights of countries in the Global South, Firstpost earlier reported. Embassy spokesperson Yu Jing said that “China-India economic and trade relationships are based on complementarity and mutual benefit,” and called for the two countries to “stand together” against US pressure.

Xi is also planning visits to Vietnam, Malaysia and Cambodia. This shows that China is making regional diplomacy a top priority. In a world where economic nationalism is rising, China sees strong relationships with its neighbours as a way to protect itself from growing tensions with the US.