US-China Trade War: China Gains Leverage as US GDP Contracts and Trade Tensions

Robin Brooks, Senior Fellow at the Brookings Institute, commented:

“The US spent this week negotiating with itself on China tariffs, calling them unsustainable & saying they’ll come down. Meanwhile, China holds the Yuan steady, portraying itself as stable and predictable. China exploits erratic US policy to the max. It’s winning the trade war…”

China Pressures BRICS to Resist US Trade Outreach

For China to keep the upper hand, US progress in reaching trade agreements poses a risk to China’s negotiating position. If Washington and US trading partners reach trade agreements favoring the US, China could lose its footing and risk becoming isolated in global trade.

This week, Beijing urged BRICS nations not to rush into trade agreements with the US. CN Wire reported:

“At a BRICS meeting, Chinese Foreign Minister Wang Yi warned countries against yielding to U.S. tariff threats, saying appeasement would only embolden the “bully,” and urged emerging-market nations to resist U.S. levies. His stern remarks signaled China’s intention to resist pressure for trade talks even as U.S. Treasury Secretary Scott Bessent suggested Washington might ban certain exports to China for leverage.”

US Markets Narrow the Gap as Beijing Stays Silent on Stimulus

Mainland China’s equity markets closed April in negative territory, reflecting market disappointment over Beijing’s silence on stimulus. The CSI 300 fell 3%, while the Shanghai Composite Index declined 1.7%. Hong Kong’s Hang Seng Index came under selling pressure, sliding 4.33%.

By comparison, the Nasdaq Composite Index ended April with a modest 0.85% gain, narrowing its 2025 performance gap with Chinese markets. Year-to-date, the Nasdaq Composite Index has fallen 9.65%, while the CSI 300 has dropped 4.18%. Despite the month’s pullback, the Hang Seng Index ended April up 10.27%, underscoring optimism that Beijing will deliver stimulus if needed.