Today, President Donald Trump threatened an additional 50 percent tariff on Chinese goods if Beijing did not rescind by tomorrow its retaliatory 34 percent tariff imposed Friday.

The Chinese rate is the same as that Trump slapped on Chinese products on April 2.

The new rounds of American and Chinese tariffs are escalations. Trump in February and March imposed two rounds of 10 percent tariffs on China for its role in the fentanyl crisis. With these three rounds of additional tariffs and other measures, the effective U.S. rate on Chinese goods is about 65 percent. If he goes ahead with the 50 percent levy, the rate hits 115 percent.

People walk past a screen showing Chinese stock market movements in Beijing on April 7. Asian equities collapsed on a black Monday on April 7. People walk past a screen showing Chinese stock market movements in Beijing on April 7. Asian equities collapsed on a black Monday on April 7. WANG ZHAO/AFP via Getty Images

China this year added retaliatory tariffs of 10 percent and 15 percent on certain American products.

The trade war is on. Who backs down?

“Anyone expecting President Xi to come calling and seek a call with President Trump following April 2 tariff announcement is being dangerously naive,” the widely followed Ryan Hass of the Brookings Institution posted on X on Friday. “Anyone advising Trump that Xi will beg for forgiveness is committing malpractice. That is not the mood or the plan in Beijing now.”

Yes, but anyone advising Xi to not beg Trump for forgiveness is also committing malpractice. China is in a precarious position now and desperately needs the American market. Worse for Xi, Trump holds all the high cards.

Nonetheless, Hass has gauged the mood in the Chinese capital correctly.

As Hass indicated, Xi has been looking for a fight. The Chinese leader could have avoided the so-called “trade war” by ending his predatory and criminal practices, especially the deliberate building of manufacturing “overcapacity,” which forces China to flood the world with goods.

Xi, despite best advice from around the world, has continually rejected consumption as the basis of the Chinese economy. In fact, his economic system is geared to depressing consumer sentiment. For instance, deposit interest rates at banks have been kept artificially low to support state lending to, among other things, factories. That, of course, undermines consumer spending.

Xi Jinping certainly does not believe in empowering citizens. Moreover, as Zongyuan Zoe Liu writing in Foreign Affairs notes, the Communist Party leadership also abhors consumer spending, believing “consumption is an individualistic distraction that threatens to divert resources away from China’s core economic strength: its industrial base.”

By bolstering manufacturing, China’s leader is pleasing core Communist Party constituencies, helping struggling state banks, and building China’s war machine. Xi Jinping‘s policies are currently aggravating the overcapacity problem, not mitigating it.

Xi dared a tariff-loving Trump to impose tariffs on China. The trouble for the Chinese leader, however, is that the objective factors show that China cannot win a trade war.

For one thing, China’s economy is less than two-thirds the size of the American one. Last year, the U.S. produced about $29.2 trillion in gross domestic product. China’s National Bureau of Statistics reported $18.8 trillion, a number almost certainly inflated.

Moreover, China is the trade-surplus economy. America’s merchandise trade deficit with China hit $295.4 billion last year. That deficit is 5.8 percent greater than 2023’s.

Trade-surplus countries have no ammunition in trade wars. They are the ones with everything to lose.

Xi Jinping, because he has rejected consumption, has placed almost all his bets on exports to rescue his failing economy, which did not grow at the 5 percent pace reported for last year. At the moment, indicators suggest China is in a deflationary spiral and so may not be growing at all.

“President Trump’s broken their business model with these tariffs,” Treasury Secretary Scott Bessent told Tucker Carlson in an episode of Carlson’s show that premiered on April 4. “They’ve just got such a big deficit with us that they need our markets. They can’t survive without them.”

Xi, in short, has placed the fate of the Chinese economy in the hands of the leader of that irreplaceable export market, the American one. Trump, therefore, can now decide the future of China. “I wouldn’t want to be in Xi Jinping’s shoes right now,” American trade expert Alan Tonelson told Newsweek on Monday “There are empty chambers in his six-shooter.”

Xi’s only way out is to get Trump to back down, and he is hoping Americans can do his work for him. “The market has spoken,” proclaimed the Chinese foreign ministry on Saturday, referring to the global stock market sell-off.

Stock markets around the world are plunging in the wake of Trump’s “Liberation Day” tariffs and Beijing’s defiant response, which also involved a range of non-tariff measures directed against the U.S.

How long can Xi hold out? To stay in the game, he has to spend. A friend told me that the former CEO of a large U.S. energy company said that the company just got bids from suppliers. The Chinese bids were lower than all the others because, among other reasons, the Chinese central government was going to absorb the new Trump tariffs.

In 2018, to keep access to the American market, the Chinese central government and Chinese factories absorbed somewhere between 75 percent to 81 percent of the cost of Trump’s 25 percent tariffs. This time, Xi’s regime has even greater motivation to effectively pay tariffs, yet he does not have the resources to pick up the tab for long.

Trump on Sunday indicated that the trade problems with China go far beyond tariffs. “Hundreds of billions of dollars a year we lose to China, and unless we solve that problem, I’m not going to make a deal,” he said to reporters on Air Force One. Xi, as a practical matter, cannot rebalance trade relations with America until he fundamentally restructures his economy.

Despite what Chinese propaganda organs say year in and year out, there are winners in trade wars. Trump’s tariff announcement today tells the Chinese that he will not be the one backing down.

In this particular trade war, the winner will not be China.

Gordon G. Chang is the author of Plan Red: China’s Project to Destroy America and The Coming Collapse of China. Follow him on X @GordonGChang.

The views expressed in this article are the writer’s own.