How US–China Tariff War Is Shaking Up Beijing

A security guard stands at his post during the opening session of China's rubber-stamp legislature, the National People's Congress, at the Great Hall of the People in Beijing on March 5, 2024. Wang Zhao/AFP via Getty Images

Commentary

The ongoing U.S.–China tariff war is poised to significantly influence the political dynamics of the Chinese Communist Party (CCP), shaping its strategies and responses in unprecedented ways.

U.S. tariffs on Chinese imports hit a new high in April after the Trump administration imposed 125 percent reciprocal duties, in addition to an earlier 20 percent fentanyl-related levy, bringing the total on most goods to an unprecedented 145 percent. The new tariffs took effect on April 10.

The tariffs are expected to significantly affect China’s economy. On April 10, Goldman Sachs reduced its GDP forecasts for China, lowering the 2025 estimate from 4.5 percent to 4.0 percent and the 2026 estimate from 4.0 percent to 3.5 percent, citing tariffs as the reason. Two days earlier, Fitch downgraded China’s long-term foreign currency rating from “A+” to “A”.

Tariff War Deepens Divisions Within CCP

As the U.S.–China trade conflict escalates, internal divisions within the CCP regarding how to respond are becoming increasingly apparent, undermining the regime’s image of a so-called unified leadership.

He Bin, the former deputy director of the Public Policy Research Center at the Chinese Academy of Social Sciences, recently criticized Beijing’s tit-for-tat strategy on Chinese social media. He described this approach as “entirely mistaken” and likened it to “shooting ourselves in the foot.” He called for a shift toward complete economic liberalization, including the unilateral removal of all import tariffs.

On Dec. 4, 2024, former central bank governor Yi Gang made similar remarks at the Tokyo–Beijing Forum. He suggested that avoiding retaliation against U.S. President Donald Trump’s tariffs is a sensible strategy. However, he acknowledged that from a political standpoint, not retaliating may make it difficult to satisfy public opinion. His comments underscored the growing divisions within the top ranks of the CCP.

Many people in Beijing view the trade war as a consequence of policy missteps by CCP leader Xi Jinping, which has fueled internal criticism. Xi’s anti-corruption campaign has alienated important factions within the Party, and his 2018 removal of term limits has increased tensions. His hardline agenda—which includes the Hong Kong National Security Law, the “zero-COVID” policy, and tacit support for Russia—has pushed the Party further to the left.

These actions have intensified internal rivalries and increased political polarization. The combination of power struggles and policy disagreements has brought the regime to a critical point, with many analysts warning that a significant political showdown may be on the horizon.

US Uses Tariffs as Leverage for Change

During President Donald Trump’s first term, his tariff campaign pressured Beijing into signing the “phase one” trade deal, though China ultimately failed to meet its commitments under the agreement. Meanwhile, Beijing faced accusations of concealing pandemic data and misleading the global community, as well as interfering in the 2020 U.S. presidential election, eroding trust and fueling what many dubbed a “new cold war.”

The Trump administration escalated its stance by directly questioning the legitimacy of the CCP. On July 23, 2020, then–Secretary of State Mike Pompeo delivered a landmark speech at the Richard Nixon Presidential Library and Museum in California, calling on the international community to support the Chinese people in confronting the CCP. He said the Party’s “biggest lie” was claiming to speak for 1.4 billion citizens “who are surveilled, oppressed, and scared to speak out.”

While the Biden administration adopted a more measured tone on China starting in 2021, Trump’s return to office in 2025 has revived—and intensified—his hardline strategy. The “Tariff War 2.0” is widely seen as a carefully crafted pressure tactic of the White House aimed at exposing and deepening internal fractures within the CCP.

5 Scenarios for Political Shifts Within CCP

On top of political infighting, the CCP now faces immense pressure from Trump’s hardline trade agenda. Based on my analysis, five potential scenarios could arise to affect the CCP’s political trajectory under this dual strain.

Scenario One: A reformist figure akin to Russia’s Boris Yeltsin could emerge, break away from the CCP, and lead China toward democratic transformation. This outcome is an ideal scenario.

Scenario Two: The CCP may shift from Xi’s hardline stance to former Party leader Deng Xiaoping’s “hide your strength and bide your time” strategy, restoring U.S. ties—an approach favored by Party elites and beneficiaries of China’s globalized wealth who seek mutual benefits from the cooperation.

Scenario Three: Party leaders may curtail Xi’s power while retaining him as a figurehead, restoring collective leadership as a transitional step toward stabilizing politics and deciding on his successor.

Scenario Four: The Chinese regime may escalate tensions with Taiwan to divert attention from a costly tariff war with the United States. Reports suggest war preparations are underway, possibly leading to limited military actions—such as the Taiwan Strait Crises or the 1969 Sino–Soviet border conflict—to pressure Washington into talks.

Scenario Five: In a worst-case outcome, the CCP officials could lose all restraint and initiate full-scale military action against Taiwan, potentially triggering direct military conflict with the United States in a desperate bid to distract Chinese citizens from domestic discontent and geopolitical pressures.

On a final note, this year has seen rapid and unexpected shifts in the communist regime. The unexplained disappearance of General He Weidong, vice chairman of China’s Central Military Commission, has fueled speculation that Xi may be losing control over the military and facing serious internal challenges. The Trump administration’s renewed tariff war is gaining momentum, leaving Beijing increasingly isolated on the world stage.

As the political situation in China becomes increasingly unstable, I believe this is the moment for the Chinese people to take action and pursue their own path to salvation, rather than allowing the CCP to continue controlling the country’s destiny. As the saying goes, “God helps those who help themselves.” This moment may very well be that critical time.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.