President Donald Trump’s aggressive tariff strategy toward China has delivered short-term wins for the U.S. economy, but Chinese President Xi Jinping still wields significant advantages that could shape the long-term outcome of this geopolitical and economic standoff.
“Trump has been able to keep the U.S. economy from plunging into recession – at least in the near term – while maintaining pressure on China, which he labels a national security threat,” CNN reported.
Since escalating tariffs on Chinese goods to historic levels early in his second term, Trump has enjoyed a string of favorable economic indicators. The U.S. stock market hovers near record highs, GDP rebounded sharply in the second quarter, and inflation has remained surprisingly tame despite the heavy trade measures. In May, negotiations between Washington and Beijing reduced the tariffs from a peak of 145% to 30% — still far higher than anything the U.S. has imposed on a major trading partner in nearly a century.
Those talks also produced modest concessions from China, including purchases of U.S. soybeans and a halt to antitrust investigations into major American companies. Trump has touted the billions in monthly tariff revenue flowing into the Treasury as proof his strategy is working. According to USA Today, the president’s ability to project toughness without triggering an immediate economic downturn has bolstered his political position.
Still, economic warning signs remain. Job growth has slowed, and economists caution that the long-term effects of sustained tariffs could strain industries reliant on Chinese imports. Yet for now, business uncertainty over trade policy has eased, and some experts predict hiring could rebound later in the year.
While Trump scores wins at home, Xi has quietly strengthened his hand. China remains the world’s largest exporter, with a firm grip on roughly 90% of global processing for rare-earth minerals — critical for manufacturing electronics and defense equipment. The U.S. has pushed for preferential access to these resources, but American companies report ongoing delays in Chinese export permits.
In a notable concession this week, Trump eased restrictions on certain AI chips, allowing Nvidia to ship its H20 processors to China. He even floated the possibility of permitting a limited version of its cutting-edge Blackwell chips — a move the White House had previously ruled out. Analysts note that this reversal aligns with Beijing’s demands in exchange for greater cooperation on rare-earth exports.
Meanwhile, China’s economy has remained resilient. By finding new markets in South America and Africa, Beijing has offset much of the impact of U.S. tariffs. According to ING, China’s exports grew 5.9% in the first half of 2025, matching last year’s pace, and its trade surplus hit a record $586 billion for the period.
Xi also controls a key diplomatic card: a long-sought one-on-one meeting with Trump. While the U.S. president claims such a meeting is forthcoming, Beijing has yet to confirm a date, leaving the prospect as a strategic bargaining chip.
For now, both leaders appear to be playing a high-stakes game of economic and political chess. Trump’s aggressive tariff campaign has generated quick domestic wins, but Xi’s control over critical resources, export markets, and diplomatic engagement means the balance of power remains far from settled.