China Folds to Trump Tariffs

After months of tough-guy talk, Chinese President Xi Jinping has folded to U.S. tariffs, with President Donald Trump emerging as the big winner.

Despite Beijing’s public bravado, recent developments reveal a stark contrast between China's official narrative and its behind-the-scenes actions.

While Chinese state media continues to project defiance, labeling U.S. tariffs as "economic coercion," internal measures tell a different story. Reuters reports that Chinese authorities have been quietly reaching out to domestic companies, informing them that they may not need to pay the full 125% tariffs imposed on certain U.S. goods.

These exemptions cover critical imports such as pharmaceuticals, microchips, ethane, and aircraft engines.

This clandestine approach underscores China's reliance on specific American products, despite official rhetoric suggesting self-sufficiency.

We're even seeing the return of “gray routing,” with some Chinese exporters reportedly shipping products to countries like Malaysia or Thailand, relabelling them, and then forwarding them to the U.S. to bypass tariffs.

The impact of the trade war on China's economy has been profound.

Official data indicates that factory activity plummeted in April—the fastest contraction in over a year. This downturn has triggered a wave of worker protests, wage arrears, and mass closures of export-reliant factories.

Independent media outlet in China, The China Observer, published footage of hundreds of factories shut down with many workers in tears, a stark contrast to the government’s silence. The footage has gone viral, despite censorship attempts.

With approximately 20 million Chinese workers involved in U.S.-bound exports, the ripple effect is being deeply felt across the industrial heartland.

Just weeks ago, Chinese leaders were dismissing any need for dialogue with Washington.

That too has changed.

In a notable shift, Beijing has now acknowledged it is evaluating a U.S. offer to re-enter trade talks.

The move appears to be a reluctant admission that Trump’s aggressive trade strategy has worked.

Despite public efforts to maintain face, it is becoming increasingly difficult for China to hide the pain caused by the tariffs.

What began as a battle of economic wills may be tilting decisively in America’s favor.

With China now quietly backing down, Donald Trump’s tariff strategy has delivered a major geopolitical win.

The damage to China’s economy—and the collapse of its carefully scripted narrative—marks a stunning reversal in the ongoing trade war.