Trivium Weekly Recap: In Trump’s Court
Never take a vacation during a trade war.
That’s the lesson I learned this week after coming back from a wonderful two weeks off of work.
The time away was great, but the world moves on while you’re unplugged.
The latest: Trade tensions between the US and China appear to have moved into a new phase over the past couple of weeks.
As opposed to tit-for-tat tariff number shouting — Do I hear 59%? Do I hear 125%? Do I hear 145%? — both sides are now sorting out how long we’ll be facing an effective trade embargo, and whether the other side has any genuine interest in coming to the table.
For its part, the Chinese side spent much of the past week prepping its domestic populace for a protracted fight.
Beijing is convinced, and rightfully so in my view, that showing weakness at this stage will only make Donald Trump smell blood.
State media and official government agencies have waxed poetic on the need to stand firm. A couple of my favorite lines from the past week were:
“Compromise won’t earn you mercy, kneeling only invites more bullying.”
“Bowing to a bully is like drinking poison to quench a thirst.”
And it’s this line of thinking that makes me wonder whether Beijing has Trump figured out.
It’s not necessarily that I think Trump will totally cave in the tariff war — let’s be honest, no one knows what he’s going to do, likely including himself.
But as Trey McArver and I discussed on this week’s Trivium podcast, it does strike me that Trump respects a show of strength.
While he loves to see other countries grovel, he certainly doesn’t respect it.
And showing weakness isn’t likely to get China a better deal in any way.
FWIW: The same can be said for China’s leaders.
I’ve long argued that the only response Beijing respects is one of strength — and China has taken advantage of US willingness to play ball in various arenas over the decades, only to break its commitments later with little fear of reprisal.
Importantly, though, while the US shouldn’t underestimate the extent of China’s resolve to weather the trade storm, Beijing isn’t on a suicide mission.
Despite all the tough talk on holding the line, China has proactively sought to provide a wide range of exclusions for its tariffs on US imports — including for pharmaceuticals, aerospace parts, and semiconductors.
What’s more, on Thursday this week, China’s state media ever so gingerly began to message that there is “no harm” in having trade discussions with the US.
This message was of course couched in the context that the Trump administration has made multiple overtures to begin talks, and according to the China side, is feeling increased pressure and anxiety to find a negotiated solution.
This tentative messaging from state media that Beijing is still interested in talks is positive, in my view.
And on Friday, the Commerce Ministry further indicated that it is “evaluating” Washington’s offer to engage — another sign of a potentially softened stance from Beijing.
Despite these signals, I still think getting a “deal” in 2025 is a remote possibility.
But as is so often the case — the ball is in Trump’s court.
Beijing has clearly let it be known that it is willing to stick this out for as long as necessary.
But Chinese officials have also signaled that they are willing to negotiate under the right conditions.
As ever, the question is whether those messages are fully translating within the White House — and if they are, will it materially impact Trump’s approach?
Andrew Polk, Co-founder, Trivium China
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Check out our podcast! In this week’s podcast, Trivium co-founders Andrew Polk and Trey McArver examine Beijing’s latest thinking on trade tensions with the US — as both sides settle in for a sustained confrontation.
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What you missed
Econ and finance
China’s central bank (PBoC) will encourage commercial banks to exercise forbearance when dealing with firms hit by the trade war.
Following up on support promised at the late-April Politburo meeting, on Monday PBoC Deputy Governor Zou Lan said banks should go easy on exporters with delinquent loans, saying:
“We will guide financial institutions to not…stop lending to small and medium-sized enterprises that are highly dependent on foreign trade and are temporarily experiencing difficulties.”
Tech
The industrial ministry (MIIT) has set up a new working group dedicated to supporting the development and commercialization of AI gadgets.
This comes on the heels of the late-April Politburo study session on AI, where Xi Jinping vowed stronger backing for the sector.
In its inaugural meeting, the working group pledged to formulate AI standards, promote AI adoption, and boost AI gadget sales via the national consumption subsidy program.
Net zero
On Monday, the energy regulator (NEA) issued measures to boost private sector investment in the energy industry.
Energy infrastructure projects are typically financed by deep-pocketed state-owned enterprises (SOEs), but the renewable energy transition requires investment on a scale that surpasses the capacity of SOEs.
Monday’s measures aim to encourage greater private sector participation in key SOE-dominated industries, including nuclear, hydropower, and large-scale desert renewable energy bases.
The State Council approved ten new nuclear power units across five projects at its executive meeting on April 27.
Approvals included the third and final phase of Zhejiang’s landmark Sanmen nuclear power project, which has been stalled for years.
These developments mean China will soon overtake the US as the world’s leader in nuclear energy generation.
Business Environment
On Tuesday, the macro planner (NDRC), commerce ministry, and market regulator (SAMR) launched a seven-month campaign to crack down on local protectionism.
The campaign aims to stamp out local government policies or actions that restrict market access, including unjustifiable delays in market entry approval and predatory practices by SOEs.
Foreign companies stand to benefit from this initiative as the campaign will also root out discriminatory practices against MNCs, such as preventing foreign firms from accessing local policy initiatives.
On April 24, Beijing launched a five-month campaign to cut costs, smooth logistics, and shorten inspection and approval timelines for importers and exporters.
The announcement, helmed by the customs bureau, was cosigned by a whopping 20 ministries and agencies.
Vice Premier He Lifeng kicked off the campaign at a launch event, explaining the initiative aims to mitigate the impacts of the trade war with the US by making it easier and cheaper to trade with China.
US-China
On Monday, a senior official at the macro planner (NDRC) told reporters that US ag and energy imports aren’t critical to China’s food or energy security.
According to the NDRC, in 2024, imports of sorghum, corn, soybeans and other grains from the US were “highly substitutable” and imports of crude oil and natural gas from the US “accounted for a very low share of total energy consumption.”
These remarks are part of broader efforts to signal confidence as Beijing digs in for a protracted trade war.
As always, it was a busy week in China.
Thank goodness Trivium China is here to make sure you don’t miss any of the developments that matter.
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