Last week, White House press secretary Karoline Leavitt said – “The ball is in China’s court: China needs to make a deal with us, we don’t have to make a deal with them”. But the fact that Donald Trump sent her to make the statement instead of crowing it himself shows that the president was both desperate and anxious for a phone call from Chinese President Xi Jinping.

 

The joke was that Mr Xi had decided to keep the ball, which was made in China anyway, and refused to return it. And the legend has it that Mr Trump is still waiting for a call, a ball and a deal in his Oval Office. Because the White House has arrogantly said it doesn’t have to make a deal with the Chinese, Beijing is ignoring calls from Washington, which has been ringing off the hook.

 

The U.S. has a very funny logic why China has to appease Uncle Sam – the Chinese need American’s money. It was the same argument used by Treasury Secretary Scott Bessent, who said Beijing made a mistake by matching Trump’s 34% tariff. He arrogantly said – “What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them.”

Yet, despite enjoying nearly US$300 billion trade surplus with the U.S. in 2024, Beijing refused to kowtow, retaliating with 125% tariffs on American goods – stunning both Trump and Bessent. They talked as if the U.S. was giving free money to China, when in reality the Chinese “peasants” have been working very hard producing goods that the Americans were too lazy to produce.

 

Precisely one week after Karoline Leavitt announced that China needs to make a deal with the U.S. because the “Chinese need our money”, her boss is chickening out. Alpha Male Trump, who claimed trade war is easy to win, now said high tariffs (up to 245%) on China “will come down substantially” – even though Beijing doesn’t bother to call the U.S. president.

 

The best part is Scott Bessent told investors that he believes a trade deal with Beijing can be reached, admitting that a trade war with China is not sustainable – even though Beijing had done nothing but watching with popcorn. It’s absolutely hilarious that economic superpower United States who slapped a 245% tariff on its rival is now surrendering even before a negotiation could begin, let alone striking a deal with China.

Yes, clueless and incompetent Bessent is panicking and forced to make a spectacular U-turn, after previously laughed at Beijing for panicking because according to the genius Treasury Secretary, the Chinese were playing with a pair of twos. Trump’s dream team must be incredibly dumb for folding to a poker player with a losing hand. Donald Trump blinks when China was just warming up.

 

Suddenly, Mr Genius Bessent wanted the U.S.-China battle to de-escalate and denied a complete decoupling between both nations, despite weeks of tough posturing and bragging. Beijing, amused with Trump’ blunder, lectures the U.S. – “China’s position on the tariff war initiated by the United States is very clear: We do not want to fight, but we are not afraid to fight. If it’s to fight, we’ll fight till the end. If it’s to talk, our door is wide open,”

 

What had China done that terrified the U.S.? Instead of kissing Trump’s ass, defiant China has merely retaliated by raising tariffs on American goods to 125%, adding more U.S. companies on its export control list and unreliable entity list, restricting the export of critical minerals used in everything from iPhones to missile systems, limiting Hollywood movies, and returning Boeing jets to the U.S.

On Tuesday (April 23), Trump again expressed his hope for Xi to come to the negotiation table – and promised to “be very nice”, suggesting that the U.S.’ financial and economic meltdown has begun even before China could unleash its nuclear options such as dumping U.S. Treasuries or bonds. Now that Trump has blinked, there’s more reason for Xi not to entertain his phone call.

 

Domestically, Donald Trump has enough problems on his plate than to childishly threaten China – the “world’s biggest factory” that makes everything that Americans desperately need, from underwear to iPhones, and from rare earth metals to medical instruments. The biggest problem is the coming recession if the president continues to fight a war he can’t win.

 

After crashing the stock market and the bond market, the U.S. dollar – supposedly a safe global reserve currency – tumbled, so much so the panicked president suddenly reversed his earlier intention to fire U.S. Federal Reserve Chair Jerome Powell. It was only  last week when Trump attacked his handpicked Powell, calling him “a major loser” –  sparking a selloff of stocks, bonds and the U.S. dollar.

National Economic Council Director Kevin Hassett revealed that Trump was looking into whether it would be possible to sack Powell – who he first nominated to lead the central bank in 2017. Historically, no other US president has tried to do so. Investors feared that pressure on Powell to lower interest rates could cause prices to rise at a time when trade tariffs are already seen boosting inflation.

 

In his effort to encourage factories and jobs to return to the U.S., which is easier said than done, Mr Trump wanted Mr Powell to cut interest rates to reduce the cost of borrowing for Americans. But that also means a weaker dollar (which makes imported goods become more expensive) as it’s not rocket science that investors would flee due to lower demand, made worse by Trump’s tariffs on more than 180 countries.

 

While the U.S. dollar falls to three-year low due to Trump’s tariff war and attack on the Federal Reserve, combined purchases of bonds from Germany, France, Italy and Spain – the euro zone’s four largest sovereign issuers – reached the highest level since March 2019. Clearly, eurozone government bonds have benefitted from investors’ loss of confidence in U.S. assets.

Still, the U.S. 10-year Treasury remains stubbornly high at 4.36% even after Trump backtracked on his plan to fire Powell and the possibility that tariffs on China could come down to between 50% and 65%, thanks to volatility and fear as a result of the Trump administration’s policy changes. Make no mistake – Trump might change his mind again if he thinks he’s losing too much face.

 

Trump is also considering exemptions for automakers from tariffs announced by his own administration, especially auto parts from China. Obviously, his half-baked trade war with Beijing is destroying the U.S. more than it hurts the Chinese. Heck, the president can’t even fix a problem as simple as shortage of eggs to the extent that people were smuggling eggs across the border from Mexico.

 

But China isn’t in a hurry for a trade deal. The best strategy now is to do absolutely nothing, and wait for the U.S. to capitulate. Sure, there was a huge US$300 billion trade surplus. But the U.S. dependency on China is so entrenched that the Americans simply can’t live without the Chinese goods. Trump and Bessent still think they were the smartest people alive, and everyone else is stupid.

But the fact doesn’t lie. The U.S.’ exports of fuels and agricultural products to China are easily replaceable, but China’s exports of consumer electronics, home appliances and rare earth metals to the U.S. cannot be sourced elsewhere. The Chinese can shift to buy LNG from Russia and soybean from Brazil overnight, but the Americans can’t find alternatives for iPhones, clothing, games, computers and Yttrium.

 

That’s why China said today (April 24) that there are absolutely no negotiations with the U.S. on tariffs, despite Trump caving in and Bessent waving white flag. Beijing wants Washington to cancel all unilateral tariffs first, before any talks can begin. It knew very well not to trust Trump’s team, and is ready to play the long game of brinkmanship, which Trump has already started blinking non-stop as if he is having eye infections.

 

Miscalculating Beijing’ retaliation and underestimating China’s importance had also led to Scott Bessent arrogantly said that China couldn’t sell U.S. Treasuries to destabilize the U.S. financial markets as it would hurt the Chinese too. As a former global fund manager, he must be retarded to think Beijing must buy RMB (Renminbi or Yuan) in exchange of dollar after selling Treasuries.

By quietly – and deliberately – dumping some of the US$759 billion of U.S. bonds China has in its possession, the Middle Kingdom can buy “GOLD” instead of RMB, as buying its own currency would strengthen the Yuan and make Chinese exports expensive. China can also buy European or Japanese bonds rather than American bonds. Regardless, the market has lost faith in U.S. assets.

 

The final straw that broke the camel’s back was the panic warnings from the CEOs of Walmart, Target, Home Depot and Lowe’s during a private meeting this week in the Oval Office – store shelves across America could “soon be empty”. Doug McMillon, the CEO of Walmart bluntly told Trump that the trade war with China had already started to disrupt the supply chain.

 

Like it or not, Trump, who bragged that dozens of countries were queuing to kiss his ass, appears to be kissing Xi’s ass now – begging for a call and a deal as his MAGA turns into “Make Asia Great Again”. The more China drags its feet, the more domestic pressure will pile on the U.S. president, turning the table in favour of Beijing to extract more concessions.

The White House might think slashing tariffs on China to between 50% and 65% would hoodwink Beijing to negotiate. However, nothing short of ZERO tariffs can move China. The Chinese’s maths is better than Trump – increasing the tariff from zero to 245% and then cut it to 50% is still extortion. China also hopes to project strength to the world by playing hardball with the bully U.S.

 

Crucially, Xi Jinping wanted to use this period to rally the Chinese people to band together and become more self-sufficient to counter “U.S. aggression”, while giving more time for the U.S. economy to self-destruct and more rope for Trump to hang himself. China is eager to see Donald Trump makes more U-turns and flip-flopping to further damage the American financial markets and currency.

 

Other Articles That May Interest You …

• Trump Has Already Lost His Trade War Against China – But He Can’t Find Ways To Climb Down And Save Face
• White House Privately Begging Xi To Call Trump First – But China Slapped 125% Tariff Instead
• Beijing Raises Tariffs To 125% – American Goods No Longer Marketable In China
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• Trump Crashes Stock Markets, Dollar & Oil – Here’s Why China Retaliates With 34% Tariff, And Wiped Off $6.6 Trillion
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April 24th, 2025 by financetwitter

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