COLUMN: Beijing-Washington, the great paradox — negotiating a tariff peace while Trump threatens 100%

Introduction: Two contradictory headlines, one world

The Thursday and Friday of commercial schizophrenia

Within the space of less than forty-eight hours, the world's two largest economies sent two perfectly contradictory signals about the state of their trade relationship. On Thursday, June 25, 2026, China's Ministry of Commerce announced through its spokesman He Yadong that China and the United States had agreed to establish a bilateral trade council to discuss reciprocal tariff reductions — with a framework potentially covering goods worth more than $30 billion for each side. The following day, Friday June 26, President Donald Trump posted on Truth Social a threat of a 100 percent tariff on "any country that imposes a digital services tax on American companies" — a measure that would "supersede trade agreements made with that country, whether they have been implemented, signed or not."

The commercial and diplomatic world took a moment to digest this sequence. On one side, Beijing and Washington are building institutional dialogue mechanisms to normalize their exchanges. On the other, the American president is using his personal social media platform to formulate tariff threats of cataclysmic proportions that would invalidate all these mechanisms with a stroke of the pen. This column is an attempt to decode this contradiction — and to explain why it is not as paradoxical as it appears.

The US-China trade council: a framework for the future

The June 25 announcement by Beijing deserves careful reading. According to China Daily and Caixin Global, the two trade teams agreed "in principle" to explore a framework for reciprocal tariff reductions on goods of equivalent value, each side covering products worth more than $30 billion. Jointly identified products could benefit from "most favored nation" rates or even lower rates. The aeronautical and agricultural sectors were specifically mentioned as areas of "mutually beneficial and win-win" cooperation.

This language is the classic language of US-China trade diplomacy since the "phase 1" agreements of 2020: formulations carefully calibrated to communicate progress without committing too heavily to details. The fact that the announcement comes from China's Ministry of Commerce — rather than a joint statement from both sides — suggests the American side may have been more cautious in its public communication about the results of these discussions.

What a digital services tax actually is

The DST and its American targets

To understand what is at stake in Trump's tariff threat of June 26, one must understand what a "digital services tax" (DST) is. This type of tax — already implemented by more than a dozen countries according to CNBC data — is designed to tax revenues generated by foreign technology companies that operate economically in a country without having sufficient physical presence there to pay corporate income tax under normal conditions.

The targeted companies are essentially American: Meta, Alphabet (Google), Amazon, Apple. These giants generate billions of euros in revenue in Europe, Asia, and worldwide, often booking it in low-tax countries through tax optimization structures. DSTs are a pragmatic response from states that want to ensure these companies contribute fiscally to the economies in which they operate. France was the pioneer of this approach, the United Kingdom followed, and several European countries are considering similar measures.

The American argument: disguised discrimination

Washington considers DSTs a form of disguised trade discrimination: taxes specifically designed to target American companies while sparing local companies that engage in similar activities at a smaller international scale. This argument is not entirely without merit — the structure of DSTs does make them effectively applicable almost exclusively to American digital giants in most current contexts. Trump's response — a counter-threat of 100 percent tariffs on physical goods — applies the logic of symmetrical commercial retaliation to the American context: "You tax our digital services, we tax your physical exports."

What Trump specified in his Truth Social post of June 26, and which is legally significant: the tariff threat would "supersede trade agreements made with that country, whether they have been implemented, signed or not." This explicitly includes the trade agreement between the United States and the European Union approved by EU member states on June 25 — the very day before the tariff threat. Either the Trump administration did not know that this agreement had just been formally approved, or it deliberately chose to signal that a formal agreement was not sufficient to guarantee the stability of trade relations.

Trump and Truth Social: commercial diplomacy in 280 characters

A social network as an instrument of foreign policy

The tariff threat of June 26 was formulated, like so many other commercial decisions of the Trump era, via a post on Truth Social — the social media platform owned by the Trump Media and Technology Group. This practice — using a personal social network to formulate trade policy threats with immediate market impact — has been elevated to the status of a systematic diplomatic method under Trump.

On June 26, 2026, within a few hours of the post's publication, European financial markets reacted with declines in the sectors most exposed to American tariffs. This immediate and measurable market effect illustrates the transformation of the presidential social media account into a commercial policy instrument of extraordinary power. A 200-word formulation on a social media platform can shift billions of dollars in market capitalization within hours — without going through Congress, without interagency consultations, without a formal negotiation process.

The history of similar threats and their real effects

To assess the seriousness of the June 26 threat, it is useful to examine precedents. CNBC recalled that the previous year, Trump had threatened to cut off all trade negotiations with Canada following Canada's implementation of a DST — and that Canada had actually canceled the tax just before it came into effect. This precedent illustrates that these threats are not always empty: in the Canadian case, they produced the desired result. They create what economists call a "shadow of the future" — a shadow cast over the political decisions of the targeted countries.

But the context is different with Europe. The EU is not Canada: its retaliatory trade capacity is considerable, its market is too large for the United States to isolate easily, and its institutions are less likely to capitulate under direct pressure than a national government. The European Commission, which manages EU trade affairs, declared it would "respond vigorously" if Trump actually followed through on his threat. This is not bluster: Europe has targeted counter-tariff measures that can hit politically sensitive products in the United States.

The US-China paradox: institutional cooperation vs tariff threat

Why China and the United States keep negotiating despite everything

The creation of a US-China trade council for reciprocal tariff reductions, announced on June 25, 2026, follows a different logic from the tariff threat against Europe. The China-US trade relationship is of unmatched structural complexity: the two countries are simultaneously major trading partners and strategic rivals. China is the United States' largest trading partner by volume of exchanges; it is also the principal geopolitical power that Washington identifies as its primary long-term strategic threat.

This economic co-dependence creates a situation in which neither party can truly afford a total tariff escalation without inflicting considerable economic damage on itself. That is why, despite the tough rhetoric on both sides, trade negotiations continue to progress — slowly, laboriously, with advances and setbacks — because both sides know the alternative is too costly.

The $30 billion and the aeronautical and agricultural sectors

The specific detail revealed by China Daily — a framework for reciprocal tariff reductions on goods exceeding $30 billion for each side, with particular attention to the aeronautical and agricultural sectors — is revealing of the real interests at stake. For the United States, the aeronautical sector (Boeing above all) and agriculture (soybeans, corn, pork) are two domains where access to the Chinese market is economically vital for politically crucial states — the agricultural Midwest and the Pacific Northwest states for Boeing.

For China, American tariff reductions on its manufacturing exports — electronic components, machinery, precision equipment — are important for maintaining the competitiveness of its export industries. This convergence of sectoral economic interests creates a zone of possible compromise that survives broader geopolitical tensions. The fact that both sides agreed to create an institutional mechanism to discuss it — rather than settling for unilateral declarations — is in itself progress compared to the open tariff war period of 2018-2020.

China's position: exploiting Trump's volatility

Beijing plays the institutional reliability card

In this context of American tariff volatility, China has adopted a strategy of positioning itself as the reasonable and institutional actor, in contrast to Trump's twitter/Truth Social impulses. The communiqués from China's Ministry of Commerce on the trade council are measured, formal, and devoid of threats. Spokesman He Yadong emphasized the "mutually beneficial" nature of trade cooperation — deliberately conciliatory language that contrasts with American confrontational rhetoric.

This communication strategy is deliberate. Beijing seeks to attract multinational companies looking for stable and predictable business environments — an argument it can make more easily to partners in the "Global South" and emerging countries if Washington continues to brandish unpredictable 100 percent tariff threats. American trade volatility is, paradoxically, an opportunity for China to build an image as a more reliable trade partner — even if this image is partly built on fragile foundations in its own trade practices.

The 100% threat targets Europe, not China — but Beijing reads the message

It is important to note that the tariff threat of June 26 explicitly targeted Europe — not China. Trump cited "many European countries" in his Truth Social post. The reason is strategic: China does not have a DST in the sense in which the term is used in the American debate — its digital taxation is structured differently, targeting primarily its own domestic companies within its technology sector control policy.

But Beijing reads the message anyway. The demonstration that Trump is willing to unilaterally invalidate a formal trade agreement (the EU-US agreement approved the day before) in response to a tariff policy he disapproves of is a strong signal about what agreements with Washington are worth in terms of guarantees. For Chinese negotiators building a trade council with the United States, this demonstration is a clear reminder: institutional agreements are useful, but they do not protect against American presidential unpredictability.

Market effects: when Truth Social moves billions

The market as a barometer of unpredictability

The immediate effect of the June 26, 2026 Truth Social post on financial markets illustrates the transformation of presidential communication into an instrument of economic policy. In the hours following publication, shares of European companies exporting to the United States declined, American technology sector values exposed to Europe were volatile, and currency traders reassessed exchange rate risks linked to a relaunched transatlantic trade war scenario.

This phenomenon — the immediate and measurable impact of a social media post on global financial markets — is one of the most destabilizing features of Trump-era economic policy. It creates what economists call "economic policy uncertainty" — the inability for businesses to anticipate with sufficient reliability the regulatory and commercial environment in which they will operate. This uncertainty has a real economic cost, documented by academic studies: it reduces corporate investment and creates additional risk premiums.

American tech companies in the crosshairs

The main target of the European DST — major American tech companies — greeted Trump's tariff threat with mixed reactions. On one hand, it protects their short-term fiscal interests in Europe. On the other, a US-China or US-Europe tariff escalation could have complex consequences for supply chains and European advertising markets on which platforms like Meta and Google depend.

The paradox is that the companies on whose behalf Trump brandishes the 100 percent threat are not necessarily seeking a total tariff escalation. They generally prefer stability of rules to volatility of threats — even when those rules are less favorable to them than the threats made in their name. The absence of public comment from Meta, Alphabet, and Amazon following Trump's declaration is probably intentional: these companies know that publicly aligning with the presidential threat would create diplomatic problems they do not need.

Section 122 and the constitutional limits of Trump's threats

The Supreme Court has already reined in tariff ambitions

One of the most significant — and least covered — aspects of the June 26 tariff threat is its fundamental legal uncertainty. As CNBC recalled, the US Supreme Court had previously struck down Trump's "reciprocal" tariffs, which had sought to impose individualized rates on almost every country in the world. The Court held that the International Emergency Economic Powers Act (IEEPA) did not allow the administration to unilaterally impose such sweeping tariffs.

In response to this defeat, Trump signed an executive order imposing a global 10 percent tariff under Section 122 of the Trade Act of 1974 — but this law limits tariff duration to 150 days, with any extension requiring Congressional approval. A threat of an "immediate" 100 percent tariff on specific countries in retaliation for DSTs would likely run into the same legal limitations. "It is not clear what law would give Trump the authority to immediately impose massive tariffs on individual countries," CNBC notes soberly.

The gap between rhetoric and execution

This gap between Trump's tariff rhetoric and his effective capacity for implementation is at the heart of what observers call the policy of the "unverifiable credible threat." Markets and governments react to the threat because they do not know whether it will be followed up — and under uncertainty, they take precautions. But the legal uncertainty about the basis for these tariffs is real and documented.

France had canceled its DST in 2020 under American pressure — a Trumpian tariff victory. But it reversed that decision after the change of administration and ultimately maintained a form of digital taxation. Canada canceled its DST in 2026 under American pressure. Other countries, particularly within the EU, maintained theirs. The consistency of results is limited — some countries capitulate, others do not, and the threat progressively loses its deterrent force as it is repeated without always producing consequences.

What it means for the global economy in 2026

Structural commercial uncertainty with measurable effects

The state of global trade relations in June 2026 can be described as structural instability with peaks of uncertainty tied to episodes of American presidential communication. Companies operating at an international scale have learned to integrate this uncertainty into their planning models — with contingency reserves, supplier diversification strategies, and alternative scenarios for different tariff regimes.

The cost of this adaptation is not negligible. Economists estimate that elevated trade policy uncertainty reduces overall investment by several percentage points. In a context where the structural challenges of developed economies — demographic aging, energy transition, public debt — already demand massive investments, an additional layer of commercial uncertainty is far from neutral. It translates into jobs not created, projects not launched, industrial capacities not developed.

Europe facing the ultimatum: resist or cave again?

For Europe, the June 26 threat creates a political dilemma that goes beyond the sole question of DSTs. If it capitulates — by canceling plans for digital services taxes — it validates Trump's method and establishes a precedent that will weaken it in all future negotiations. If it maintains its DST plans and Trump actually follows through on his threat, it will have to decide how far it is willing to go in a tariff escalation with its principal military ally.

This dilemma is particularly uncomfortable in the current context where Europe is simultaneously engaged in a massive rearmament effort, continues to support Ukraine against Russia, and needs American cooperation in numerous security domains. Trade policy and security policy are normally distinct domains — but the Trump administration has deliberately intertwined them, using commercial levers to extract concessions in non-commercial areas.

The US-China trade relationship in 2026: pragmatism despite rivalry

A trade council does not resolve a strategic rivalry

The announcement of the US-China trade council on June 25 is good news — modest but real. It indicates that both sides recognize the need to maintain institutional dialogue mechanisms even in a period of intense strategic rivalry. But it would be naive to overestimate its significance. A trade council discussing tariff reductions on $30 billion in goods does not resolve the fundamental tensions around technology, Taiwan, the South China Sea, and China's support for Russia in its war against Ukraine.

These tensions are deep, structural, and go far beyond what a commercial mechanism can resolve. They reflect a competition for technological primacy (semiconductors, AI, clean energy), for geopolitical influence in the Indo-Pacific, and for the definition of the norms and standards that will structure the global economy of the 21st century. A trade council is useful for managing tariff frictions at the margins — it cannot resolve these deeper stakes.

What the immediate future suggests

In the short term — the coming weeks — markets will watch closely whether European countries announce the suspension or abandonment of their DST plans in response to the June 26 threat. If several European countries back down, Trump's strategy will be validated once again. If Europe holds firm collectively — through the European Commission, which coordinates commercial responses — tariff escalation becomes more likely, and its economic consequences will be real for consumers on both sides of the Atlantic.

For the US-China relationship, the trade council established on June 25 will need to pass the test of its first actual meetings. So far, these are only announcements. What will matter is whether the technical teams of both countries can find concrete areas of compromise on the aeronautical and agricultural sectors — and whether progress in these domains gradually extends to other sectors or bogs down in the broader political contradictions of the bilateral relationship.

The data war: how Beijing exploits Trump's uncertainty

China's strategic calculation in the face of Trump's volatility

China has developed remarkable expertise in navigating the volatility of American trade policy under Donald Trump. Since the first term (2017-2021) and now the second (2025-), Beijing has learned that Trump's threats via Truth Social have a variable shelf life: some materialize within hours, others evaporate within days. The mistake would be to react identically to every tweet or post.

China's strategy therefore consists of compartmentalizing institutional commercial negotiations — conducted by Vice Premier He Lifeng with the American Trade Representative — from Trump's public political threats. Chinese negotiators continue to sit at the table even when Trump publicly threatens new tariffs. This dissociation between public discourse and the reality of negotiations is a form of strategic discipline that Beijing has perfected.

The use of financial markets as leverage

Financial markets have become an involuntary feedback mechanism in the US-China trade war. Every Trump tariff announcement immediately triggers market movements that affect the American economy itself: rising mortgage rates, dollar depreciation, stock index corrections. These domestic consequences create political pressure that Trump cannot entirely ignore.

China carefully observes these feedback mechanisms and calibrates its own announcements accordingly. When Beijing hints that it might reduce its purchases of US Treasury bonds — China holds approximately $760 billion in American debt — the threat does not even need to be explicit to move markets. This capacity for indirect financial influence is one of the most powerful weapons that Beijing holds in the trade relationship with Washington.

American companies caught in the crossfire: Silicon Valley vs tariffs

America's technological dependence on China

Despite the rhetoric about US-China "technological decoupling," the industrial reality is far more nuanced. Companies like Apple, Qualcomm, Intel, and Tesla still depend significantly on Chinese supply chains for their production. Apple manufactures approximately 90 percent of its iPhones in China through partners like Foxconn and Pegatron. A 100 percent tariff increase on Chinese imports would directly translate into a massive rise in the cost of American smartphones on the domestic market.

Lobbying by Silicon Valley within the Trump administration is intense but largely underpublicized. Major tech companies have learned not to cross Trump publicly, but their representatives quietly negotiate sector-specific exemptions — the same mechanism that allowed certain categories of electronic products to be partially exempted during the first term. These behind-the-scenes negotiations reveal that American tariff policy is not as unified as it appears.

Chinese companies and the substitution market

On the Chinese side, companies that depend on exports to the United States have accelerated their diversification toward other markets: ASEAN, Africa, the Middle East, Latin America. Beijing's "Digital Silk Road" aims precisely to create alternative outlets for Chinese companies in emerging markets. This diversification strategy progressively reduces the vulnerability of the Chinese economy to American tariffs — even if the dependence remains significant in the short term.

Companies like Huawei, BYD, and CATL have succeeded in building solid market positions in countries that do not participate in American technology restriction policy. This international presence is geopolitical insurance: the more China is present in Global South markets, the less American tariffs can economically isolate it.

Western allies in the vise: Europe, Canada, and the impossible choice

Europe facing dual pressure from America and China

The European Union finds itself in an uncomfortable position: on one side, a Trump administration that threatens tariffs over digital services taxes and other measures perceived as discriminatory toward American companies; on the other, a China that offers expanding markets but whose trade practices — massive industrial subsidies, forced technology transfers, asymmetric market access — violate the free trade rules that Europe theoretically defends.

The EU-China Comprehensive Agreement on Investment (CAI), frozen since 2021 following mutual sanctions, illustrates this European paralysis. Europe wants to deepen its economic relations with Beijing while maintaining its principles of reciprocity and rule of law. China does not want reciprocity — it wants asymmetric access. And Trump's America tells Europe to pick a side, under threat of tariffs.

Canada under pressure from both great powers

Canada perfectly illustrates the position of middle powers in this bipolar trade war. A member of USMCA (the United States-Mexico-Canada Agreement), Canada is directly affected by any modification to American trade policy. But it is also the second-largest Chinese trading partner among G7 countries, with massive exports of raw materials — grains, potash, oil, liquefied natural gas.

The Canadian government must navigate between these two giants with limited diplomatic resources. When Ottawa tried to adopt a digital services tax similar to those of European countries, it immediately received negative signals from Washington. And when it tried to strengthen its economic ties with China, Washington reminded it of its security obligations. Canada is an example of the pressure that US-China rivalry exerts on all countries that do not want to choose.

The rules war: who will define the rules of global trade after 2030?

The WTO's decline and the fragmentation of the trade system

The World Trade Organization (WTO) is experiencing the most serious crisis in its history since its creation in 1995. Its dispute settlement mechanism — theoretically the pillar of rules-based international trade — has been paralyzed since the United States blocked the appointment of new Appellate Body members in 2017. Without functioning arbitration, trade disputes between major powers are settled through unilateral retaliation, exactly as before the creation of the GATT in 1947.

This WTO paralysis benefits those with the economic strength to practice unilateralism: primarily the United States and China. Small and medium states — which most need a predictable rules-based system — are the primary victims of this fragmentation. The rule-governed globalization of the 1990s-2010s is being replaced by a geopolitical fragmentation of trade, with trade blocs defined less by economic efficiency than by strategic alliances.

Digital norms: the battlefield of the future

If the trade in goods is today's trade war, digital trade — data, AI, online services, intellectual property — is tomorrow's. The question of who defines the technical standards of generative AI, 5G/6G networks, cloud computing, and cybersecurity will determine who controls the world economic infrastructure from 2030 to 2050.

China is actively pushing its technical standards through organizations like the ITU (International Telecommunication Union). The United States and its allies try to counter this influence through forums like the Quad and bilateral initiatives. Europe, with its GDPR and AI Act, tries to impose its own standards as a global baseline. This battle of norms may be more decisive than the tariff wars themselves for the architecture of the global economy of the future.

Strategic raw materials: Beijing's real leverage over Washington

China's dominance over critical minerals

Behind the war of tariffs and digital taxes lies an even more fundamental dependence: the West's reliance on China for critical minerals essential to the energy transition and defense industry. China controls approximately 60 percent of global lithium production, 85 percent of rare earth refining, and 70 percent of cobalt production through its operations in the Democratic Republic of Congo. These figures are not abstractions — they translate into a concrete American strategic vulnerability.

In 2025, Beijing demonstrated its willingness to use this lever: after the announcement of new American restrictions on semiconductor exports, China restricted exports of gallium, germanium, and graphite — materials essential to the production of advanced semiconductors. This move immediately triggered alerts in the American defense and high-technology industries, revealing a dependence that years of rhetoric about "supply chain resilience" have not resolved.

The American race to reduce dependence on critical minerals

The Trump administration made securing critical minerals a strategic priority, with massive investments through the Inflation Reduction Act — maintained despite initial Republican criticism — and bilateral agreements with countries like Canada, Australia, Chile, and Zambia to diversify supply sources. But these efforts run up against reality: rebuilding a complete mining industry cannot be done in a few years — it takes decades.

This structural dependence on critical minerals is the Achilles' heel of the American maximum pressure strategy on China. Trump can threaten 100 percent tariffs, but if the Chinese response is a restriction on rare earth exports, it is the American defense industry that immediately pays the price. This paradox explains why, despite all the rhetoric, US-China trade negotiations have never truly stopped.

Conclusion: The paradox is the strategy

Understanding the underlying coherence beneath the apparent incoherence

The paradox this column has sought to explore — building a trade council with China while threatening Europe with 100 percent tariffs — is not as absurd as it seems when analyzed through the framework of Trump-era American trade policy. The underlying coherence is that of a differentiated approach: negotiate institutionally with China because bilateral economic stakes require it; apply maximalist pressure on Europe because Europe is traditionally more likely to capitulate under threat than to confront it directly.

This coherence is not without flaws. It assumes that Europe will keep capitulating, that China will not withdraw its trade cooperation in response to other American pressures, and that financial markets will continue to absorb shocks without permanently altering their investment structures. None of these assumptions is guaranteed — and if any of them were to prove false, the economic consequences would be significant.

What businesses and governments must take away

For businesses and governments seeking to navigate this turbulent commercial environment, the main lesson is clear: diversify trade dependencies, maintain response capabilities for different tariff scenarios, and avoid building business strategies on the assumption of stable American trade relations in the current era. That is not pessimism — it is strategic prudence adapted to reality. The only commercial certainty in 2026 is that unpredictability is the norm. Adapting to it is wiser than hoping it will disappear.

Signed Maxime Marquette, columnist

Columnist's transparency box

Sources and position

This column is based on reporting from CNBC, CBS News, The New York Times, Al Jazeera, CGTN, China Daily, Caixin Global, Fibre2Fashion, and The Epoch Times. Trump's original post on Truth Social from June 26, 2026 is documented in numerous journalistic sources. My bias: I am in favor of free trade governed by multilateral rules and skeptical of unilateral and unpredictable trade approaches, regardless of which power practices them — whether the United States, China, or any other actor.

I acknowledge that the American position on DSTs has legitimate foundations — these taxes raise real questions of international tax justice that deserve to be addressed in multilateral frameworks like the OECD. My disagreement concerns the method (unilateral tariff threat) and not the objective (resolving taxation issues for digital giants).

What I do not know

I do not know whether Trump will actually follow through on the threat of a 100 percent tariff on European countries that adopt DSTs. Recent history suggests precedents in both directions. I do not know whether the US-China trade council announced on June 25 will produce concrete results, or whether it will remain at the level of declarations of intent. I do not know the exact legal basis the Trump administration would use for the threatened tariffs — legal experts themselves are divided on this question. These fundamental uncertainties limit the scope of my predictions.

My method: cross-reference official sources with independent analyses, distinguish rhetoric from established facts, and maintain analytical caution in the face of evolving political situations. If subsequent developments invalidate some of my analyses, I will revise them publicly.

Sources

Primary sources

CNBC — Trump threatens 100% tariff on countries putting 'Digital Services Tax on American Companies' — June 26, 2026

CGTN/Xinhua — China, US to discuss reciprocal tariff cuts under trade council — June 25, 2026

China Daily — China, US to hold further talks on reciprocal tariff cuts — June 25, 2026

New York Times — Trump Threatens to Impose 100% Tariff on European Countries Over Tech Taxes — June 26, 2026

Secondary sources

Al Jazeera — Trump threatens tariffs for countries that levy digital tax on US firms — June 26, 2026

CBS News — Trump vows immediate 100% tariff if countries levy digital services tax — June 26, 2026

Fibre2Fashion — China, US agree on new trade council for reciprocal tariff cuts — June 26, 2026