China did not take too long to respond. However, its reaction was not as tough as expected but moderate. On only nearly $60 billion worth of American goods would be imposed tariffs of 25%, instead of the current 10%, as a retaliatory measure. But China's tone was strong and resolute, implying more steps would be taken to cause pain and harm to the US. Almost immediately after that, US president Donald Trump made clear that he has not yet decided to slap 25% tariff on further $325 billion worth of China's products and the White House indicated that the next encounter between Trump and China's president Xi Jinping on the sidelines of the coming G20-Summit in Osaka (Japan) in June are now in preparation. All that sounded more conciliatory than aggressive. It seemed that both sides continue their game of increasing pressure and tit-for-tat retaliation while keeping in mind that bilateral trade wars must be prevented and therefore rooms should be reserved to maneuver back the whole conflict or at least the present confrontation.
Photo: The New York Times
For both sides, wanting to do something is quite different to having to do something in their present situation. Trump wants to reduce the huge and long lasting deficit in the trade balance of the US with China and to win the comprehensive strategic competition with China. Sparking trade conflict with China is instrumentalized by Trump with the aim of achieving this goal. But China is not easily defeated by all means and weapons the US are having now. For the US itself, the counterproductive effects would be very harmful and for Trump's presidency, very dangerous. That is why Trump wants and has to seek consensus with China while carrying out his "strategy of maximum pressure" on China.
China has the same interest and need to avoid trade wars with the US. Trade disputes, alone, with the US, not necessarily trade wars, would very harmful for China's economy and even reputation in the world. Until now, China already achieved a very impressive rise towards becoming a political, military and economic world power but it still believes it needs more times to be able to mess with the US on all aspects. In order not to lose face and to keep face, China has no other choice than to take reciprocation actions but avoiding trade war. China's retaliations are set to counterattack the US, to deter it and to push it accept its terms Therefore China's new measures on the US were as tough as China could do. Like the US, China always cares about preserving chances to scale down the rhetoric and to deescalate the whole conflict.
For both of them, this is the strategy of selected and controlled escalation.