REPORT: Trump and China — Friend on Monday, Enemy on Friday, Strategist on the Weekend

Introduction: The June 25 Trade Deal and the June 26 100% Threat

Two contradictory headlines in 24 hours

On Thursday, June 25, 2026, the Chinese Ministry of Commerce announces that China and the United States have agreed to establish a bilateral trade council. The two countries' economic teams will discuss cooperation, including reciprocal tariff reductions. Spokesman He Yadong speaks of « mutually beneficial and win-win » cooperation in the aeronautics and agriculture sectors. Markets breathe. A détente seems to be taking hold.

On Friday, June 26, 2026 — twenty-four hours later — Donald Trump posts a message on Truth Social threatening to impose a 100% tariff on imports from any country that imposes a digital services tax on American companies. European countries are directly targeted. But the signal is universal: any fiscal policy perceived as hostile to American tech giants will be immediately punished. And Trump specifies that this tariff will « supersede trade agreements concluded with the country, whether implemented, signed, or not ».

Unpredictability as strategy — or as chaos?

These two headlines in 24 hours raise a fundamental question: is the apparent incoherence of Trump's trade policy toward China a deliberate strategy, or simply chaos? The honest answer is: probably both, in proportions that vary from day to day. Trump genuinely believes in the power of maximum pressure. He thinks that unpredictability gives him an advantage in negotiations — the adversary never knows what he will do next. That theory is not absurd. It has worked in some contexts. But it has limits, and those limits are visible in the American-Chinese relationship of 2026.

The documented reality is as follows. The Supreme Court invalidated the IEEPA tariffs in February 2026. Trump reinstated a 10% global tariff under Section 122. That tariff expires on July 24, 2026. The USTR proposed 12.5% tariffs on China under a Section 301 investigation into forced labor. China maintains a general 10% tariff on American imports. And the two countries just created a trade council to discuss reciprocal reductions. This superposition of contradictory measures — tariffs imposed, tariffs proposed, tariffs expired, reductions negotiated — constitutes an inextricable patchwork whose uncertainties businesses on both sides of the Pacific face daily.

The US-China Trade Council: What the June 25 Deal Really Means

A mechanism, not an agreement

The creation of a trade council announced on June 25, 2026 by the Chinese Ministry of Commerce is an institutional step forward — but a limited one. It is not a trade agreement. It is not an effective tariff reduction. It is the creation of a framework within which discussions can take place. The two countries' economic teams will talk. They will explore « reciprocal tariff reductions ». That does not mean they will achieve them.

The nuance is important. Since November 2025, the United States and China have reduced their mutual tariffs — the US to 30% and China to 10% — as part of a fragile commercial truce. The creation of a trade council in June 2026 signals both parties' willingness to maintain that truce and potentially deepen it. But it comes in a context of multiple contradictory pressures: USTR Section 301 investigations, forced labor tariff proposals, and the permanent threat of new unilateral measures.

China plays the waiting game — and it is patient

Since the beginning of Trump's second term, China's strategy has been relatively legible: do not provoke a different American response, maintain trade flows in mutually beneficial sectors, and wait for the internal contradictions of American tariff policy to resolve themselves. In an analysis cited by CNBC in January 2026, trade strategist Deborah Elms described Beijing's posture thus: « Beijing is watching... there is no need to provoke a different reaction from Washington at this point. »

That strategic patience has paid off: the Supreme Court's decision to invalidate the IEEPA tariffs in February 2026 represented, according to Goldman Sachs, a net reduction of approximately 5% in average US tariffs. According to a Global Trade Alert analysis, China was one of the main beneficiaries of the new tariff regime under Section 122, with a drop of 7.1 percentage points in its tariff rates. China extracted significant concessions without having to formally negotiate — simply by letting American courts do the work.

Maximum Pressure: When the Lever Turns Against Its User

The limits of the permanent pressure strategy

The maximum pressure theory applied by Trump to China rests on a premise: if you apply enough economic pressure, the adversary eventually yields. That theory has its successes. It led to the November 2025 commercial truce. It forced China to sit at the table. It maintains pressure on Beijing on issues of intellectual property, industrial subsidies, and market access.

But permanent maximum pressure has documented perverse effects. It compels trading partners — allies and adversaries alike — to prepare for a world without access to the American market. It accelerates China's efforts toward economic independence, particularly in semiconductors and critical technologies. It pushes intermediate nations to diversify their trade partnerships. And it creates permanent uncertainty that penalizes American companies as much as their foreign competitors.

The temptation of the deal: Trump and Xi in the same frame

Trump and Xi Jinping met in May 2026, reiterating a North Korea denuclearization objective and a trade management agreement. Markets reacted positively. That meeting illustrated a constant dynamic: Trump wants a deal with Xi — an agreement he can present as a personal victory. Xi wants trade concessions and recognition of China's status as an equal power. Those two objectives are potentially compatible — and potentially incompatible, depending on the day.

The creation of the trade council on June 25, 2026 fits into that logic of potential cooperation. The announcement of the 100% tariff the following day is a reminder that Trump always keeps a lever up his sleeve. It is a permanent dialectic between cooperation and threat that defines American trade policy toward China — and toward virtually all its trading partners.

The Trade Council and Reciprocal Reductions: A Narrow Window

What the council can accomplish — and how fast

The US-China trade council announced on June 25, 2026 has a specific mandate: discuss reciprocal tariff reductions, explore cooperation in the aeronautics and agriculture sectors, and maintain communication between the two countries' economic teams. These objectives are realistic but modest. Reciprocal tariff reductions in targeted sectors are possible — they have been part of discussions since May 2026, when Trump and Xi were already discussing reductions on 30 billion dollars of imports as part of « managed trade ».

But the timeline is tight. The global 10% tariff under Section 122 expires on July 24, 2026. The USTR could propose new tariffs under Section 301. And Trump can post a Truth Social message at any moment threatening new tariffs. The trade council will have to operate in this environment of permanent volatility — and produce results concrete enough to justify its existence before the next tariff storm breaks.

China in the global supply chain: mutual dependency that tariffs will not resolve

One of the paradoxes of the US-China trade war is that the two economies are deeply interdependent. The United States massively imports manufactured goods from China. China imports technology, semiconductors, agricultural products, and American services. High tariffs hurt both parties — they redistribute costs, they do not eliminate them. American companies that import from China pay more. Chinese companies lose American markets. American consumers pay more for products. And both governments collect customs revenue that does not offset overall economic losses.

The CFR pointed out in a May 2026 analysis that the United States maintains a trade surplus in services with China of 33 billion dollars in 2024 — a figure that the debate focused on goods deficits tends to ignore. That reality nuances the picture of a trade relationship uniformly unfavorable to the United States. The economic complexity of the Sino-American relationship far exceeds what unilateral tariffs can address.

Unpredictability as Systemic Risk

The effects on Washington's allies

The 100% threat announced on June 26 — targeting European digital taxes — illustrates a structural problem with Trump's trade policy: it often strikes its allies as hard as its adversaries. The European Union had just signed a trade deal with the United States. Twenty-four hours later, Trump threatened to « supersede » it if Europe imposed a digital tax. That volatility erodes partners' trust and complicates future trade negotiations — not only with Europe, but with all countries that see that signed agreements are not guaranteed.

For America's Asian allies — Japan, South Korea, Australia — this unpredictability is particularly difficult to manage. They depend on the United States for their security but trade massively with China. A permanent trade war between Washington and Beijing forces them to choose between their economic interests and their security alliances — a tension that Trump seems little concerned with resolving.

The real stakes: who will shape the rules of twenty-first-century global trade?

Behind the Thursday trade council / Friday 100% threat sequence lies a much larger issue: which country or coalition will shape the rules of global trade for the coming decades? China is actively pushing its own standards in international organizations, developing alternative trade routes via BRICS and the Belt and Road Initiative, and seeking to reduce its dependence on the dollar. The United States defends a trade order centered on its rules and institutions. That battle of trade standards is more important than any individual tariff — and it plays out over a decade, not a tweet.

Trump intuits that issue but his method — pressure plays, personal deals, unpredictability — is not suited to this long-term structural competition. Winning that battle requires consistency, coalitions maintained over time, and robust multilateral institutions that Washington seems increasingly unwilling to support. China plays the long game. The United States plays the next tweet.

Section 301 and the Permanent Tariffs on China: The Real Continuity

What the invalidation of IEEPA did not change

While media cover the spectacle of Trumpian unpredictability — trade council on Tuesday, threat of 100% on Wednesday — a structural reality remains in place: the tariffs based on Section 301, which constitute the core of the American commercial apparatus against China, were not touched by the judicial decisions of 2026. Those tariffs, established since 2019 on hundreds of billions of dollars of Chinese goods, at rates ranging from 7.5% to 25% depending on the category, remain fully in force. They constitute the durable foundation of American commercial pressure on Beijing.

That permanence is important to understand. When Trump announces a US-China trade council on June 25, 2026 and markets get excited about a « thaw », the reality is that Section 301 tariffs do not move. What is potentially being discussed are marginal adjustments — reciprocal reductions in targeted sectors, exemptions for certain product categories. The structure of American commercial pressure on China remains intact regardless of the week's rhetoric.

The US-China trade council announced June 25: substance or spectacle?

The June 25, 2026 announcement of a US-China trade council aimed at « discussing reciprocal tariff reductions » was presented by both sides as an advance. Chinese state media, notably CGTN, covered the announcement with controlled optimism. Markets briefly rose. And the next day, Trump posted his 100% digital services threats. This ballet is perfectly characteristic of Trumpian trade policy: create hope on Monday, create fear on Tuesday, and leave both parties in an uncertainty that maximizes American negotiating power.

The real substance of the trade council remains to be demonstrated. Officials from both countries will sit around a table and discuss. Proposals will be exchanged. Perhaps a few sectoral agreements will be announced — on agriculture, on rare earths, on semiconductors in certain categories. But the structural transformation of the US-China trade relationship — which would require concessions on Chinese state subsidies, on forced technology transfers, on access to public markets — is not on this trade council's agenda. What Trump is looking for is a victory headline, not a substantive treaty.

China Facing Trump: How Beijing Manages American Unpredictability

Xi Jinping's strategy of patient resistance

Xi Jinping has adopted toward Trump a strategy of patient resistance that contrasts with American unpredictability. Beijing does not immediately retaliate against every threat. It analyzes, calculates, and responds in a targeted way — often by targeting politically sensitive American economic sectors (soybeans, corn, automobiles) to maximize pressure on electorally strategic states. That approach is methodical and it has proven its effectiveness in creating internal political friction within the United States.

In response to the 100% digital services threat announced on June 26, 2026, Beijing's response will likely be calibrated. Xi has an interest in keeping the trade council open while refusing the most draconian conditions. He has an interest in presenting China as a reasonable trading partner to the rest of the world — particularly to Europe, which is seeking to diversify its dependence on both superpowers. And he has an interest in avoiding an escalation that would weaken a Chinese economy already under internal pressure (real estate market, youth unemployment, growth slowdown).

Asian economies held hostage by American unpredictability

It is the intermediate Asian economies that suffer most from American commercial unpredictability. Vietnam, Indonesia, Thailand have all benefited from the realignment of supply chains away from China since 2018. Factories that produced in China have relocated to those countries. But this relocation is now threatened by the possibility that Trump will target these countries with the same massive tariffs he used against China — on the grounds that some of them serve as conduits for Chinese exports to the United States.

That uncertainty makes medium-term economic planning practically impossible for these economies. A Korean or Japanese company considering investing in Vietnam to supply the American market cannot know whether the applicable tariffs in twelve months will be 10% or 50%. Trump's unpredictability is not just a bilateral US-China problem: it is a systemic risk for global trade as a whole.

What Trump's Unpredictability Does to the Credibility of American Agreements

When the leader of a superpower is himself a random variable

The most lasting effect of Trumpian trade policy may not be in the tariffs themselves — it is in the erosion of confidence in American agreements. When the President of the United States can, in the same week, announce a trade council and threaten 100% tariffs, partners around the world integrate a new uncertainty premium into their calculations. Long-term contracts with American companies are renegotiated with broader exit clauses. Countries that depend on exports to the United States diversify their destination markets. And allies counting on stable American trade agreements are planning alternatives.

That erosion of confidence is not immediately reversible after the Trump presidency ends. It becomes embedded in the risk models of investors, governments, and businesses. It creates a permanent risk premium on everything American — an invisible but real cost to the economy and influence of the United States in the world. That may be this presidency's most durable commercial legacy: not specific tariffs that can be cancelled, but a reputation for unpredictability that will take years to rebuild.

The dollar and reserve currency status: the next frontier?

Some economists are starting to ask a more radical question: is American commercial unpredictability and the judicial turbulence around tariffs beginning to erode, very marginally, the dollar's status as global reserve currency? The answer is: not yet in any significant way. The dollar remains dominant, supported by the depth of American financial markets and the absence of a credible alternative. But countries like China, India, and the BRICS are accelerating efforts to diversify their reserves and develop payment systems alternative to SWIFT.

This is not an immediate risk. It is a trajectory risk — a slow erosion whose effects will only be fully visible in a decade. But in a trade war where Trump uses the dollar and access to the American market as weapons, every country that develops an alternative marginally reduces the power of those weapons. Trumpian unpredictability, paradoxically, accelerates the de-dollarization movement that his adversaries had sought for years.

Conclusion: Unpredictability Has a Cost That Nobody Fully Calculates

What the June 25-26 week reveals about Trump's trade policy

The June 25-26, 2026 sequence — trade council announced on Thursday, threat of 100% tariffs on Friday — is a time capsule of Trumpian trade policy: one step toward cooperation, one leap toward confrontation, in the same breath. It is both a negotiation strategy and a source of permanent disruption for markets, businesses, and trade partners. The cost of that unpredictability — in deferred investment decisions, weakened trade alliances, and eroded institutional credibility — is real, even if difficult to quantify.

China, for its part, remains stable in its ambition

Meanwhile, China maintains a coherent, patient, long-term-oriented foreign and commercial policy. It welcomes a trade council favorably. It resists pressure on its industrial development program. It diversifies its trade partnerships. And it waits for the contradictions of the American system — judicial, legislative, presidential — to resolve themselves to its advantage. That asymmetry of patience between Washington and Beijing may be the most determinative factor for the future of Sino-American competition.

Signed Maxime Marquette, columnist

Columnist's transparency box

My sources and my method

I am Maxime Marquette. This report draws on open sources: official statements, think tank analyses, specialized press. I do not have access to the internal deliberations of the Trump administration on its trade policy toward China. My analysis of « deliberate strategy vs. chaos » is an editorial interpretation, not a factual conclusion.

Acknowledged limits

I am skeptical of Trumpian unpredictability as an effective long-term strategy. That bias may lead me to underestimate cases where this unpredictability produces positive diplomatic results. I acknowledge that the Trump administration has obtained certain trade results with China — notably the November 2025 truce — that other approaches had not produced.

Sources

Primary sources

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

CNBC — Trump threatens 100% tariff on countries putting Digital Services Tax on US companies — June 26, 2026

ASIL — The U.S. Court of International Trade Invalidates Trump's 10% Global Tariff — May 2026

Secondary sources

Bloomberg — Trump Vows 100% Tariff on Countries Over Digital Services Taxes — June 26, 2026

Council on Foreign Relations — The U.S.-China Trade Relationship — June 2026

Foreign Policy — Trump trade policy analysis — June 2026