US-China trade war: Who blinks first to negotiate tariffs?

In the early hours of Thursday morning, Chinese state media announced that the United States had been seeking to initiate tariff negotiations with Beijing.

It was news the rest of the world had been waiting to hear as astonishingly high tariffs – up to 245% on some Chinese exports to the US – throttle trade between the world’s two biggest economies, raising the spectre of a recession.

President Donald Trump’s administration has used various channels to contact Beijing, according to a post on social media platform Weibo by Yuyuantantian, an account affiliated with China Central Television (CCTV).

The statement, which cited unnamed individuals familiar with the matter, came less than a week after Trump claimed conversations between the two nations were already underway – a suggestion Beijing later denied.

“China has no need to talk to the United States,” Yuyuantantian said in Thursday’s post. “From the perspective of negotiations, the United States must be the more anxious party at present.”

The statement follows a cycle of assertions and denials from both the US and China, as each side refuses to publicly initiate discussions.

The question is not whether the discussions will take place, but rather when, under what circumstances and at whose behest.

Experts characterise the tussle as a game of chicken between Trump and Chinese leader Xi Jinping, as both men attempt to save face while covertly pursuing a mutually beneficial outcome – namely, a de-escalation of the trade war.

“I expect some of this back-and-forth, because neither Washington nor Beijing wants to look like they are the side that’s giving in,” says Ja Ian Chong, assistant professor of political science at the National University of Singapore.

“[But] a de-escalation would be to the overall benefit of both sides, so there is some overarching incentive to do so.”

Wen-Ti Sung, an academic member of the Australian Centre on China in the World, puts it another way: “It’s like two race cars going at each other: whoever swerves first will be seen as the weaker of the two parties. And at this juncture, neither party wants to look soft.”

So the leader who admits that he was the first to initiate tariff talks would be seen as the one compromising his position in negotiations.

“Whoever seems desperate loses bargaining leverage,” Mr Sung says. “Both sides want to portray the other side as the more desperate one.”

This peculiar stalemate – where both parties seek the same outcome, but neither wants to be the first to suggest it – has resulted in a tactic of “constructive ambiguity”: the deliberate use of language or claims so vague that each party could arguably claim to be in the right.

It is this tactic that Mr Sung points to as an explanation for Yuyuantantian’s Weibo post.

“This is Beijing trying to explore the possibility of using word games to create an off-ramp for both sides, so that they can gradually climb their way down from this escalation spiral,” he says.

One way to escape this game of chicken is when a third party mediates, offering both sides an off-ramp. The other option, Mr Sung explains, is a “much looser understanding of what ‘the other side has reached out’ means”.

That way, the side that does indeed come to the table first is still able to characterise it as a response rather than the first move.

In Trump and Xi’s case, it would also mean that tariff negotiations could begin with both leaders claiming to have achieved some kind of victory in the trade war.

The optics here are important. As Mr Chong points out, de-escalation is one thing – but another top priority for Trump and Xi is to “deliver a win for their domestic audiences”.

“Trump obviously wants to show that he has made Beijing capitulate. And on the People’s Republic of China side, Xi probably wants to show his own people and the world that he’s been able to make Trump become more reasonable and moderate and accommodating,” Mr Chong says.

On the domestic front, both leaders are facing tariff-induced headwinds. Trump this week struggled to quell fears of a recession as fresh data indicated the US economy contracted in its first quarter for the first time since 2022.

Meanwhile, Xi – who before the tariffs was already battling persistently low consumption, a property crisis and unemployment – must reassure China’s population that he can weather the trade war and protect an economy which has struggled to rebound post-pandemic.

“Both [Trump and Xi] recognise that at this point of the trade war, it’s not going to be a winner-takes-all outcome for either side anymore,” Mr Sung says.

“Trump recognises he’s not going to get anywhere near 100% of what he wants, so he’s trying to find a concession point where China can let him have just enough winning, especially for domestic purposes.”

And while China is not unwilling, he adds, “they are very much stuck on what’s the right price point”.

For Xi, Mr Sung described the situation as a “two-level game”.

“The China side needs to manage US-China bilateral negotiations, while domestically Beijing needs to save enough face so that the Chinese leadership can hold on to this narrative of ‘the East is rising and the West is declining’,” he says.

“A kowtowing of the East towards the West is not a rising East.”

At the time of writing, the US has not denied China’s claims that it has been attempting to initiate talks. But the fact that both sides have now made that assertion indicates there is “some sort of contact”, according to Mr Chong.

“The two sides are talking,” he says. “And that is a sign that there is some possibility that some accommodation could be reached.”

But the start of negotiations does not mean that the US-China relationship – which was rocky even before Trump kicked off a trade war – is close to being steadied.

Mr Chong isn’t holding his breath. For one, he believes the “posturing” suggests the two sides have not reached the point “where they are both trying to seek a way out”.

“[Each party] may hope that there are concessions from the other side, so they’re going to have this standoff until they see which side blinks first.