Tariffs, Insults & a Window into China's Strategy

How China is outsmarting America in 2025 - and what its culture, mindset and national psyche reveal about its long game.

Apr 12, 2025

Preface

In 2012, as Xi Jinping prepared to ascend to the Chinese presidency, I found myself amid a rare moment of diplomatic optimism. At the time, I was Director of Planning at an organization that hosted Xi and his delegation for the first-ever U.S.-China High-Level Agricultural Symposium on his first official visit to Des Moines, Iowa. Xi had previously lived in Iowa on an exchange program in his youth, even staying with an Iowa farm couple, and had fond sentiments of his time there.

My team and I co-convened the event for the US side alongside the Iowa Governor’s office, the State Department and USDA, with Secretary Tom Vilsack leading the US side. Accompanied by the Chinese Ministries of Agriculture, Foreign Affairs, and Education, it was a historic inaugural event where Xi spoke of his optimism for US and China trade relations, especially given his connection to the state.

Hope was in the air. Energy, excitement and enthusiasm were palpable through every corridor and conversation. Deals were struck. Alliances were formed. Mutual platitudes were exchanged. One of the headline moments: a $3.5 billion soybean trade agreement between Iowa farmers and China—a symbol of mutual benefit and a foundation for what many hoped would be a long and peaceful economic partnership.

My colleague, then-boss and I (upper left) seeing Xi and his delegation off after the Summit (Source: The World Food Prize Foundation)

Fast forward to today: that vision has all but evaporated.

Tariffs imposed during Trump’s first term hit American farmers hard, undercutting the very foundation of that early cooperation. And now, this past week, with the US slapping a staggering 165% tariff on Chinese imports—sparking swift and sharp retaliation from Beijing—the fragile bridge of commerce-driven peace has collapsed by unilateral demolition by the US.

In response, China said that the US is "weaponizing tariffs as a tool of bullying and coercion, turning itself into a joke.”

The “Worse Self-Inflicted Wound”

While Trump announced a 90-day pause on his “Liberation Day” tariffs on other countries, reducing them to a flat 10%, he’s hellbent on dragging out and escalating his trade war with China, announcing a total 165% tariff today (it was 125%, then 145% yesterday). The entire tariff chaos appeared to be a market manipulation tactic: sell high by announcing tariffs, watch the stock market crash, buy low, and then retract the tariffs to make stocks surge.

Former U.S. Treasury Secretary Janet Yellen described this new tariff policy as the "worst self-inflicted wound" in U.S. economic history.

After a deliberately restrained immediate response, China has done the following so far:

Raised its own tariffs against the US to 125%
Held joint discussions with South Korea and Japan (historical adversary) on an aligned regional response to US tariffs.
Export controls on critical rare earth minerals - which are key components in the US tech sector
Blacklisting several US companies it deems a strategic risk in defense and high-tech sectors
Launched antitrust investigations against major US companies like DuPont’s actions in China
The European Union and China have begun discussions to abolish EU tariffs on Chinese electric vehicles - aligned with China’s ongoing pivot to non-American markets
Blocking US products such as soybeans, pork, natural gas
Filed a complaint against the US with the World Trade Organization (WTO)
Curbed imports on Hollywood movies, a huge blow to a major foreign market
Escalating dumping of US debt (e.g. bonds). Japan and China are the world’s #1 and 2 holders of US debt, respectively.
Manufacturers of Western luxury brand labels reaching out directly to US consumers on TikTok to bypass the significant markup of the middlemen

And the US keeps blinking as China calls its bluff. It was just announced that computers and smartphones are now exempt from tariffs.

The "Peasants" Comment: A Catastrophic Cultural Miscalculation

When JD Vance called Chinese citizens "peasants," he revealed a deep ignorance of Chinese cultural memory—and handed Beijing a propaganda gift.

“Peasant” (农民) may literally mean “farmer,” but in context, it’s a classist slur implying poverty, ignorance, and backwardness—akin to “hillbilly” or “country bumpkin” (乡巴佬). It’s not just inaccurate; it’s insulting. And given Vance’s own roots, the hypocrisy is glaring.

Worse, his remark wasn’t aimed at the Chinese government—it demeaned an entire people, echoing colonial-era stereotypes of Chinese as subhuman or primitive.

On the global stage, this was reckless. Diplomats choose words carefully because language shapes perception. When a US senator uses a racialized slur, it undermines American credibility and fuels China’s anti-Western narrative.

China took it seriously. Their official response—calling it “ignorant and biased”—is strong language in diplomatic terms.

The Narrative War behind the Trade War

What China's history, culture and language reveal about its long game — and how America keeps losing the plot.

This ongoing conflict, instigated by Trump, between the US and China hinges on more than trade and transactions; it’s about narrative control, historical memory, and strategic patience.

How China navigates and endures this trade war offers a revealing glimpse into its resilient mindset, national psyche, and evolving global strategy.

This isn't merely about trade deficits and manufacturing. It's about competing worldviews, historical memory, and psychological warfare. And China is playing a long game most Americans can't even see.

China’s Key Mindset Advantages Over the US in the Trade War

1. Historical Resilience as Strategic Posture

China has a deep, lived memory of hardship.
From famine and revolution to rebuilding a war-torn nation, China has collectively endured and adapted. The historical capacity for Chinese people to Chī Ku “吃苦“ (a commonly-used term meaning “Eat Bitterness”) is a badge of national pride and serves as a collective memory of the hardship and poverty they’ve endured over generations to get to where they are today. That legacy builds resilience and unity. Unlike the U.S., which hasn't faced large-scale national hardship in recent generations, China still remembers what it means to suffer and survive together.

Such collective memory of suffering—from the Opium Wars and “Century of Humiliation,” through famine, Cultural Revolution, and war—has created a political culture that values long-term endurance over short-term comfort. That plays into a willingness to:

Absorb economic pain strategically for long-term goals.
Frame external pressure as a national humiliation, which fuels domestic unity and nationalism.
Invest in self-reliance rather than depend on Western access or approval.

Contrast that with the U.S., where public tolerance for economic pain and discomfort is lower and where political leadership shifts every few years. For China, this is a war of attrition and positioning, not just policy.

2. “Suffering Together” → Unity Against Foreign Pressure

The Chinese Communist Party (CCP) has long leaned on the narrative of “enduring hardship to achieve national greatness.” The trade wars allow the CCP to:

Rally domestic support using anti-Western sentiment.
Frame U.S. moves as containment, reinforcing the legitimacy of the Party’s control.
Stimulate internal calls for technological sovereignty (like “Made in China 2025”).

This cultural framing becomes a political weapon, turning trade pain into patriotic fuel.

3. A Higher Pain Threshold

Chinese industries and consumers, shaped by generations of scarcity, hardship and “making do,” are often more adaptable to constraints. This means:

Chinese firms may pivot faster, invest in alternative markets (like Global South), or undercut US firms abroad.
Consumers are more tolerant of austerity than in the US, lessening internal popular pressure to “end the trade war.”

4. Civilization-State Thinking vs. Nation-State Tactics

The US often sees tariffs as a lever to strong-arm and bully their way to negotiation. China, as a civilization-state with a long memory, sees them as part of a historic pattern of Western attempts to suppress Chinese rise. So the response is:

Strategic patience rather than reactive retaliation.
Doubling down on de-Americanization of supply chains and tech ecosystems.
Investing in new alliances to bypass U.S.-led systems (e.g., BRICS expansion, more Belt and Road investment, increasing China’s soft power in countries where the USAID shutdown left a void in humanitarian response and development assistance).
China operates from civilizational confidence — dynasties may fall, but Zhongguo (中国), “the Middle Kingdom,” endures. Its strategy is grounded in cultural continuity and long-term thinking.
“We’ve been here for 5,000 years, most of that time there was no USA.. and we expect to survive for another 5,000 years.”
— China analyst Victor Gao
The U.S., by contrast, shows institutional fragility — each election brings policy upheaval. From Obama to Trump to Biden, trade strategy has swung wildly, undermining consistency and global trust.
While the U.S. reacts with moral panic and chaos, China moves with coded calm. Through 留有余地 (liú yǒu yúdì) — “leaving room to maneuver” — it communicates flexibly: cooperative abroad, firm at home.

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How China’s National Psyche & Culture Reveal Strategic Thinking

One of the most misunderstood asymmetries in US–China relations is the perspective of time in each nation’s psyche.

China plays the looooooong game — because it remembers it. All of it.

China draws from a 5,000-year civilizational memory, steeped in dynastic cycles, Confucian statecraft, Daoist fluidity, and a culture that treats strategy like poetry and patience like power.

The US, by contrast, is barely 250 years old — and often struggles to learn from even that, due to the politicization, anti-intellectualism or erasure of its past. As a result, America stumbles forward with a kind of historical amnesia and revisionist stories over actual truth, clinging to the illusion of eternal supremacy.

China isn't reacting with impulsive countermeasures but executing a sophisticated playbook refined through centuries of statecraft.

Decoding Language as Geopolitical Strategy

To understand China’s response to the escalating trade war, you need more than economic analysis. You need cultural fluency.

In the West, power is often stated outright in loud posturing and main character syndrome. In China, it’s just as often implied—wrapped in idioms that carry strategic intent and generational memory.

Looking back, I’m glad my grandfather, a Chinese language and literature teacher, made me memorize a book of idioms as a kid. I didn’t realize then that I was learning how the Chinese national and historical psyche operates.

These aren’t just sayings. They’re strategic code. Let’s decode a few shaping this moment that come to mind:

1. 韬光养晦 (Tāo guāng yǎng huì)

"Hide your strength, bide your time"

This adage, popularized by China’s market reformer president Deng Xiaoping, represents strategic patience at its finest. While American politicians posture with aggressive rhetoric and punitive measures, China responds with calculated restraint:

Deepening economic integration with Europe, ASEAN nations, and the rest of the world
Accelerating self-sufficiency in critical sectors like semiconductors and EVs
Allowing America to bear the consequences of its own economic decisions

China has been strategically de-dollarizing by passively letting the RMB weaken and keeping US dollars offshore. This gradual, controlled exit from the dollar system allows China to stay export-competitive without triggering market panic. It’s a long-term, patient strategy that avoids confrontation while preparing for future influence.

Rather than matching every American escalation, Beijing conserves energy while Washington exhausts itself in a fight largely of its own making. Almost like letting a toddler exhaust itself after a long tantrum.

This pattern isn't random but follows historical precedent: after the 1999 Belgrade Embassy bombing, China responded with diplomatic protest rather than military action—applying the same principle of strategic restraint.

2. 坐山观虎斗 (Zuò shān guān hǔ dòu)

"Sit on the mountain and watch the tigers fight."

While America divides its attention between multiple fights it picks with different countries (Canada, Mexico, Greenland (territory of Denmark), etc.) as well as domestic turmoil and controversies, China enjoys the strategic advantage of focus. As the US appears increasingly unstable on the world stage, China positions itself as the stable, rational observer - the “adult in the room”. The US’s mounting pressure, particularly with its tariffs and the conflict over bonds, opens an opportunity for China to navigate the storm without being directly swept into a full confrontation.

This isn't passive observation; it's active positioning. China's posture toward the US? Let it exhaust itself. Why interfere when your rivals weaken themselves?

3. 将欲取之，必先予之 (Jiāng yù qǔ zhī, bì xiān yǔ zhī)

"To take, one must first give."

Instead of matching American protectionism with equal measures, China employs sophisticated asymmetric responses. The long list above of various different complementary measures reflects the following geopolitical positioning:

Extending economic olive branches to Europe, creating wedges in Western unity
Offering limited trade concessions that cost little but generate significant goodwill
Maintaining measured diplomatic language internationally while rallying nationalist sentiment domestically

China engages, withdraws, offers, and retreats — all to lure rivals into overextension. Each apparent concession sets the stage for greater strategic advantages. When China appears to give ground, it's usually preparing to gain territory elsewhere.

4. 宁为玉碎，不为瓦全 (Nìng wéi yù suì, bù wéi wǎ quán)

"Better to be broken jade than intact tile."

This powerful idiom speaks to China's resolute stance on matters of national dignity. For Chinese leadership, the current confrontation evokes the painful national memory of the "Century of Humiliation" (1839-1949)
China sees US tariffs not just as economic aggression, but as a public insult—especially after years of being framed as a “cheater” or global villain in U.S. political rhetoric. This idiom suggests that China would rather absorb short-term economic pain than appear weak, subordinate, or desperate to please the U.S. It’s about saving face, preserving dignity, and playing a longer game—even if it means retaliation that hurts both sides in the short run.
China’s refusal to back down reflects this sentiment. It's not purely about soybean sales or EVs—it's about sovereignty, pride, and not being treated as a disposable piece in someone else's narrative.

China will not compromise its sovereignty for short-term gain — especially on Taiwan, tech sovereignty, or historical dignity. It would rather endure economic pain than lose moral ground.

5. 以其人之道，还治其人之身 (Yǐ qí rén zhī dào, huán zhì qí rén zhī shēn)

"Return the favor using the opponent's own method."

The US bond dumping and reciprocal 125 tariffs against the US? This is mirroring, not madness. A Confucian clapback — calm, deliberate, symmetrical. It demonstrates that China will respond to American economic warfare with precise retaliation, neither escalating unnecessarily nor backing down.

6. 唇亡齿寒 (Chún wáng chǐ hán)

"If the lips are gone, the teeth feel the cold."

If you let your strategic neighbor fall, your own survival becomes uncertain. This is the message to Tokyo and Seoul: Washington's economic warfare today isn't just about China. It's a dress rehearsal for how allies may be treated tomorrow. Despite centuries of conflict, complex relations and ongoing territorial disputes between China, South Korea, Japan, China has successfully positioned the US as a common economic threat.

When US policy begins to unify old Asian rivals into collective defense, it's not a win. It's an unintended alliance — written in idioms, not ink.

7. 乘风破浪 (Chéng fēng pò làng):

"Ride the wind and break the waves"

China’s currency devaluation, market diversification and its targeted tariff strategy are clear moves to leverage favorable conditions (i.e., the ongoing trade war).

Given this complex, multi-pronged strategy, China demonstrates that it is not only patient and strategic, but also resilient in its approach to the ongoing trade war. The combination of patience, strategic alliances, and flexible economic responses hows China’s long-term vision and its understanding that the US does not have the same patience or flexibility.

When describing its economy, Chinese president Xi Jinping even used poetic metaphors that reflected this “ride the wind and break the waves” idiom:

“It’s vast like the ocean, not a pond. The ocean has currents and storms, but it also has peace and calm. Storms can damage a pond, but they can not disable the ocean…”

The Hard Facts: Why the US Needs China More Than China Needs US

The fundamental reality that many American policymakers refuse to acknowledge is that the US has become profoundly dependent on China—and this dependency gives Beijing extraordinary leverage that tariffs cannot diminish:

1. The Manufacturing Addiction the US Can't Break

Despite decades of talk about reshoring, America's manufacturing dependency has only deepened:

The Everyday Economy Runs on Chinese Goods: From furniture to kitchen appliances, electronics to children's toys—China produces approximately 80% of all consumer goods Americans purchase
The Hidden Supply Chain: Even "Made in America" products often rely on Chinese components, materials, or machinery
Irreplaceable Production Scale: China possesses manufacturing capacity that cannot be quickly replicated elsewhere

As one manufacturing executive put it: "We can talk about moving production elsewhere, but where exactly? Vietnam's total manufacturing capacity is less than 5% of China's. Without China, American store shelves would be half-empty within months."

2. Critical Supply Monopolies the US Can’t Replace

China has strategically positioned itself as the essential supplier for tomorrow's economy:

Rare Earth Dominance: China controls approximately 85% of global rare earth processing—materials essential for everything from smartphones to military equipment
Medical Supply Dependence: Approximately 80% of active pharmaceutical ingredients in American drugs come from China
Green Technology Supply Chain: The batteries, solar panels, and components needed for America's clean energy transition are predominantly made in China

To put it bluntly: China can find other customers for its goods, but America cannot quickly find alternative suppliers for these critical materials. Through the Belt and Road Initiative, China has also secured resource access through Central Asia via land routes largely immune to potential American naval interference, while simultaneously deepening integration with ASEAN economies through the Regional Comprehensive Economic Partnership (RCEP).

Beyond the Idioms: Additional Cultural Frameworks Shaping Chinese Strategy

Understanding China's approach requires appreciation of additional cultural frameworks:

1. 厚黑学 (Hòu Hēi Xué): "The Study of Thick Face, Black Heart"

This philosophy embraces pragmatism over idealism:

Thick Face: The ability to withstand criticism and maintain composure in the face of hostility
Black Heart: The pragmatic willingness to pursue national interests without sentimentality

China's calculated, multi-pronged responses to American provocations exemplifies this approach—absorbing immediate blows while systematically advancing core interests without emotional, knee-jerk reactions.

2. 实事求是 (Shí Shì Qiú Shì): "Seek Truth from Facts"

This cornerstone of Chinese political philosophy, and a common mainstream saying in China, prioritizes empirical reality over ideological purity:

While American policy often reflects domestic political imperatives, Chinese strategy remains grounded in objective economic facts and long-term thinking
Beijing's response to tariffs is calibrated based on actual impact analysis rather than ideological reaction

3. 大局观 (Dà Jú Guān): "Big Picture Thinking"

Chinese strategic culture emphasizes holistic, systems-based perspective, with a long collective memory, over isolated incidents:

Individual provocations like insults and tariffs are assessed within the broader geopolitical context
Short-term economic issues are evaluated against century-long development goals
Tactical, temporary losses are acceptable when they serve strategic permanent victories-

The Digital Silk Road: Technology as Strategic Leverage

Beyond traditional economic measures, China's technological strategy represents a crucial dimension:

Digital Infrastructure Development: While American sanctions target Chinese tech giants, China expands digital infrastructure across the Global South
Alternative Financial Architecture: Development of Cross-Border Interbank Payment System (CIPS) reduces dependence on SWIFT. The BRICS alliance, of which China is a member, is also discussing its own digital currency and alternative payment system to bypass the hold of the US dollar on global trade.
Technological Self-Sufficiency: "Made in China 2025" initiative accelerates domestic capacity in strategic sectors

China is building parallel technological ecosystems, where every step makes it less dependent on the West and harder for American pressure to stick. This isn’t just defense—it’s creating a whole new game where US tariffs don’t matter.

This is a Long-term Narrative War, Not Just a Short-term Trade War

China's idiom-guided strategy blends restraint, historical memory, moral legitimacy, and psychological judo.

While Washington acts with short-term emotion and tantrum-throwing, China:

Waits patiently – 韬光养晦 (Tāo guāng yǎng huì) “Hide brightness, nourish obscurity”
Watches enemies burn their own bridges – 坐山观虎斗 (Zuò shān guān hǔ dòu) “Sit on a mountain and watch tigers fight”
Prepares strategic reversals – 将欲取之，必先予之 (Jiāng yù qǔ zhī, bì xiān yǔ zhī) “If you want to take, you must first give”
Refuses moral compromise – 宁为玉碎，不为瓦全 (Nìng wéi yù suì, bù wéi wǎ quán)“Better to be broken jade than intact tile”
Returns aggression with mirror logic – 以其人之道，还治其人之身 (Yǐ qí rén zhī dào, huán zhì qí rén zhī shēn) “Return their methods unto themselves” –
Responds to shared threats with mutual interest logic – 唇亡齿寒 (Chún wáng chǐ hán) “If the lips are gone, the teeth feel the cold”

And above all — draws from 5,000 years of strategic learning...
Not 250 years of selective amnesia.

The most profound distinction may be this: American strategy asks "How do we win this confrontation?" while Chinese strategy asks "How do we shape the world that emerges after this confrontation?"

As tensions between the world's two largest economies continue to escalate, understanding the deeper patterns behind China's responses becomes crucial. To paraphrase an ancient Chinese proverb: when the storms of conflict rage, the willow bends while the oak breaks. In 2025's geopolitical tempest, China is deliberately choosing to be the willow—and now, it's not bending alone.

Final Thoughts

The hopeful spirit I witnessed in 2012—a vision that business and collaboration could transcend politics—has been replaced by zero-sum logic and brinkmanship. The dream that economic interdependence would keep us from conflict is fading. What replaces it could be far more volatile.

In this moment, we’re not just watching history—we’re witnessing a generational shift in trajectory. The choices made now will determine whether we slide into prolonged rivalry or rediscover the potential for pragmatic partnership.

China approaches this economic conflict as an iterated game rather than a one-time confrontation, with each move considering how it shapes future interactions rather than focusing solely on immediate outcomes.

The US tariff strategy is grounded in a transactional, election-cycle mentality. China’s counterstrategy is grounded in a civilizational, long-memory worldview. The deeper story isn’t just about EVs or solar panels—it’s about two worldviews clashing: one of short-term dominance, the other of long-term revival and regeneration.

The question isn’t just how China responds to US actions.

It’s whether we’re ready for the consequences.

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