China's built-in advantage in trade war with U.S. is already apparent

Which side is more likely to win a trade war, (1) an economic powerhouse governed by a ruthless, unelected dictator capable of violently suppressing dissent or (2) an economic powerhouse that’s democratic and whose electorate punishes leaders who preside over a struggling economy?

The answer, obviously, is (1), the ruthless dictatorship. Equally obvious is the fact that Chine fits the first description and the U.S. fits the second.

According to the Wall Street Journal, the Chinese dictator, President Xi, is ratcheting up the country’s pain tolerance for a prolonged trade war with the United States:

Since an earlier trade war during the first Trump administration, Xi has intensified his grip on the country’s leadership and spent lavishly reinforcing the authoritarian tools that underpin the party’s longevity, including enhancements of the world’s most sophisticated systems for censorship and surveillance. The Chinese leader wants to harden his country specifically for a confrontation with the U.S., urging officials to engage in what he calls “extreme scenario thinking.”

In the U.S., we don’t do pain tolerance, and there’s no way a president can ratchet it up. Americans didn’t tolerate the pain from inflation under Joe Biden and they aren’t tolerating the pain from inflation and a plunging stock market under Donald Trump.

The poll I discussed yesterday shows that, by a wide margin, Americans disapprove of the current economic situation and of the policy they perceive as responsible for that situation — Trump’s tariffs, including the ones he’s slapped on China.

Americans don’t hesitate to vote out leaders they deem responsible for even small amounts of economic pain. George H.W. Bush found that out in 1992. Biden found it out in 2024. Nor are they hesitant to flip Congress at the slightest hint of bad times.

From China’s perspective, Trump has already blinked in the trade war because of the American public’s distaste for economic pain. He has seen the impact on the stock market of the extreme tariffs on Chinese products, and his key economic advisers have told him that these tariffs are unsustainable.

In response, Trump has backed down a bit. China can only infer that Trump lacks the resolve needed to win a sustained trade war.

The same inference flows from what’s reported here (if true):

China on Thursday directly contradicted President Donald Trump’s claims that Beijing and Washington are actively discussing resolutions to a trade war that threatens to upend the global economy.

While Trump said Wednesday that the world’s two largest economies are “actively” talking, a Chinese foreign ministry spokesperson responded that “China and the U.S. have not engaged in any consultations or negotiations regarding tariffs, let alone reached an agreement.”

One party is trying to satisfy a restless public that it’s negotiating. The other, whose public doesn’t figure in the calculus, denies the existence of any negotiations. It’s clear to me that the latter party has the upper hand.

Gordan Chang, a leading American expert on China and a China hawk, cut to the heart of the matter when tweeted:

In the last two days, both Prez Trump and Treasury Secretary Bessent have softened their tone on China tariffs, so how did Beijing react? It upped its demands. Unfortunately, China’s regime does not reciprocate friendly gestures. It only respects strength.

Donald Trump isn’t projecting strength against China. Bluster isn’t strength. Neither is a constant change messaging and policy.

More fundamentally, there’s only so much strength Trump can project against China in a trade war because, as I said at the outset, China will tolerate far more economic pain than America will.

That’s China’s built-in advantage. Did Trump wrong-foot himself by not taking it into account? That’s how it looks to me, but we’ll see.