US President Donald Trump’s large tariffs on Chinese goods — now as high as 145 per cent — were meant to hurt China’s economy and slow its rise. But history and expert analysis show that economic pain doesn’t always lead to a weaker country. In fact, it can sometimes push a country to become stronger and more dangerous.
Some analysts, including officials of the Biden administration, are anxious that these tariffs might actually help China in the long run by encouraging it to invest more in innovation, become more self-reliant and improve its military.
Kurt Campbell and Rush Doshi, writing in Foreign Affairs and economist Keyu Jin in the Financial Times, argue that slower economic growth doesn’t always mean a country is getting weaker. Instead, it can motivate leaders to make big changes that make the country tougher and more competitive. So while Trump’s tariffs were meant to hold China back, they might actually speed up China’s growth as a formidable strategic power.
Tariffs as strategic catalysts
Jin argues that “the Trump shock” is forcing China to become more advanced and high-tech — not because it wants to, but because it has to. Trump’s tariffs may have caused short-term economic harm, but they also pushed China to shift its focus from low-profit manufacturing to more valuable industries like semiconductors, artificial intelligence and quantum computing.
This kind of shift has happened before in history. When countries are hit with sanctions or economic limits, they often respond by developing their own innovations to survive. For China, the tariffs acted like a warning sign. Jin points out that rather than slowing down, the trade war has actually made China double down on growth and competition. As a result, China is now investing in new technologies such as satellite systems, photonic quantum computing and using AI in many industries.
Instead of falling apart under the pressure of tariffs, China has responded with a plan to become more self-reliant. This plan, known as “tech sovereignty,” is about securing key technologies to protect against future problems. This ability to adapt and grow under pressure is what makes China a strong and serious global competitor, even during times of economic slowdown.
Illusion of strategic decline
Campbell and Doshi warn that Washington’s recent confidence — the idea that a slowing China is no longer a serious threat — is just as risky as the fear many had before. They say that even though China is dealing with real problems like high youth unemployment, a housing crisis and a shrinking population, it still has “twice the manufacturing capacity” of the US and a strong lead in key areas such as shipbuilding, missile stockpiles and hypersonic weapons.
This gap between a weaker economy and strong military power shows an important truth: economic growth (GDP) isn’t the only way to measure power. The authors explain that “even if China’s growth slows and its system falters, it will remain formidable strategically”.
In fact, when measuring by purchasing power parity (which looks at how much things cost in different countries), China’s economy is already bigger than America’s — by about 25 per cent. This shows the danger of thinking China is weak just because its economy has slowed down.
Even during hard times, China still makes more than the US in important industries — like drones, electric vehicles, rare-earth minerals and advanced nuclear reactors. China isn’t just surviving the Trump-era tariffs, it’s getting ready to become even stronger in the future.
Tariffs as fuel for industrial policy
One of the most obvious unintended effects of Trump’s trade war is that it has actually strengthened China’s already aggressive industrial strategy. The “Made in China 2025” plan, which aims to grow China’s high-tech industries, has gained new momentum because of the tariffs. As Jin points out, the tariffs have “sharpened [China’s] survival instinct,” pushing the country to move faster toward becoming more technologically independent.
Analysts argue that China can quickly move money and resources — from struggling areas like real estate into advanced manufacturing. This kind of flexibility is something Western democracies often find hard to do, largely due the nature of their political structure. China one-party rule allows its leadership to take decision it thinks fit and execute them without much opposition or accountability.
The government has sent loans and subsidies to key industries for future competition, such as semiconductor factories, automated manufacturing, electric vehicles and clean energy. Right now, China installs half of all the industrial robots in the world each year and is planning to build over 100 advanced nuclear reactors in the next 20 years — far more than what the US is doing.
Unlike democracies that are slowed down by elections, China’s government can navigate through its plans without any political pressure. For example, right now, China is using Trump’s tariffs as a reason to speed up its economic shift. Analysts say Trump’s tariffs might end up boosting China’s domestic economy instead of weakening it — an unexpected result of a policy meant to slow it down.
Technological sovereignty not under siege
A major mistake in the Trump administration’s strategy was thinking that economic problems would slow down China’s growth in technology. But as Campbell and Doshi point out, “American observers tend to underestimate China’s ability to innovate.” While Chinese companies used to be seen as imitators, they are now creating more original ideas. In fact, China now produces more active patents and highly cited scientific papers each year than the US.
Jin agrees, pointing out that companies like DeepSeek have done well even under pressure. China’s approach is changing: instead of depending on foreign suppliers, local leaders like Huawei and BYD are now building everything they need themselves. This makes them stronger and less affected by tariffs or sanctions. China is also building new supply chain networks with nearby countries and investing more in technology that helps it avoid depending on the West.
China is now heavily focussed on areas like artificial intelligence, quantum communication and making microchips. The US pressure may push China to make self-reliance a top priority.
Even if China’s economy keeps slowing down, it still works on a huge scale that gives it major strategic advantages. Campbell and Doshi say that “quantity has a quality all its own,” using an idea from the Cold War to explain how power works today. China now produces three times more than the US in manufacturing—and more than the next nine countries combined.
This massive production ability directly affects its military strength. In five years, China’s navy is expected to be 50 per cent bigger than America’s. It has made major advances with hypersonic missiles, has the world’s largest supply of regular ballistic missiles and builds 100 advanced fighter jets every year.
Tariffs without allies
Trump’s go-it-alone approach adds to the mistake in strategy. Campbell and Doshi point out that in today’s world, only teamwork and combined efforts can match China’s size and strength. But by threatening allies and using economic pressure, Trump has weakened the partnerships that are most needed to push back against China’s growing power.
If the US had worked with its allies, shared tariffs could have acted like a strong “defensive moat” around the global economy—protecting industries and encouraging shared innovation. Instead, Trump’s focus on protectionism and nationalism has broken trust. This presents China an opportunity to forge new relationships for deeper strategic reach. However, there is a general suspicion in the West and other parts as well over economic engagement with China.
Currency as strategy
One way China is responding is by using its own currency, the yuan, as part of its strategy. The People’s Bank of China recently set the yuan at its weakest level in 18 months — just under Rmb7.2 per dollar — its lowest since September 2023. This move, reported by the Financial Times shows that China is willing to let the yuan weaken in order to stay competitive in exports while also focussing on building up its economy at home and strengthening trade ties with nearby countries and European partners.
Although some fear that a sharp drop in the renminbi’s value could create new global problems — like sparking currency wars or causing money to flow out of China — most experts believe Beijing will move carefully. China wants to keep its currency flexible, but still stable enough to avoid shaking public confidence or threatening growth.
This isn’t the first time China has used the yuan this way. During Trump’s earlier rounds of tariffs, China let the yuan fall more than 10 per cent against the dollar. That caused some companies to move production to countries like Vietnam and Cambodia.
However, those places are now facing tariffs too, which leaves China looking for new ways to protect its economy—mainly by building it from the inside and strengthening trade ties with its neighbours.
Strengthening domestic economy and regional ties
China’s internal challenges, such as weak consumer spending and reduced factory output after Covid-19, make the current situation even more difficult. But instead of panicking, Beijing is responding with long-term planning.
Premier Li Qiang recently held a high-level meeting with economists and business leaders, where he emphasised the need for “more proactive and effective macroeconomic policies,” as reported by Bastille Post Global. He said that China needs to put current policies into action and, when necessary, introduce new ones—especially those that expand the domestic economy.
Li’s comments reveal a bigger shift in China’s economic thinking. Chinese leaders now see outside pressure—like Trump’s tariffs—not as temporary problems, but as signs that China must change its model. Instead of depending mainly on exports, they’re working to increase local demand, raise incomes and support key industries. This is a long-term move to help China adapt to a more divided global economy.
Part of that plan also involves making it easier for Chinese businesses to grow. Li stressed the need to “stimulate the vitality of various market entities” and create better environments for business development. These actions are not just about surviving US pressure—they’re part of a flexible, strategic plan to keep China strong and competitive in the future.
China is also looking outward, especially to its neighbours. President Xi Jinping recently hosted the country’s first major meeting on neighbourhood diplomacy since 2013. According to Channel News Asia, Xi spoke about managing differences, improving supply chains and building “a community of a shared future” with nearby countries.
These relationships are not only political — they are vital for China’s new export strategy, especially as many Chinese companies move operations to Southeast Asian countries like Vietnam and Cambodia to avoid tariffs. President Xi is planning visits to Vietnam, Malaysia and Cambodia from April 14 to 18 showing that China is making regional diplomacy a top priority.
China is also reaching out to India, asking for unity against what it sees as unfair US trade actions. On April 9, the Chinese Embassy in New Delhi criticised the US tariffs as an “abuse” that hurt developing countries. Embassy spokesperson Yu Jing said the China-India relationship is built on “complementarity and mutual benefit” and encouraged both countries to “stand together” against US pressure.
Tariffs as strategic boomerangs
Trump’s tariffs were meant to hurt China, but instead, they’ve worked like strategic boomerangs. Rather than slowing China down, they’ve encouraged it to make important changes. By pushing Beijing to speed up its efforts in becoming more technologically independent, shift its industrial focus and strengthen its economy, US pressure might end up making China a more formidable strategic competitor.
