Trump will negotiate with China, and China holds three trump cards, ready to retaliate with doubled tariffs.

President Trump responded to China's increased import tariffs sanctions, and the Chinese authorities did not back down, imposing higher tariffs on products imported from the United States, blacklisting American companies, and restricting the U.S. access to rare earth (Rare Earth Elements), which are essential materials for manufacturing high-tech products.

Trump has recently seemed to show goodwill, stating that he will engage in discussions with a friendly attitude towards China. China is prepared to retaliate against Trump’s earlier aggressive stance and is ready to double down on Trump's sanctions, engaging in a tit-for-tat approach.

CNBC interviewed several officials and experts who suggested that China could impose tariff sanctions and further retaliations against the United States. CNBC spoke with Brad Setser, a researcher at the Council on Foreign Relations, who stated that China is the second-largest supplier of products to the U.S., and the importance of Chinese exports to the U.S. cannot be underestimated. Before April this year, the average tariff imposed by the U.S. on China was 20%. By the end of April, some goods had already risen to 124%, leaving many traders' businesses in a standstill, unable to devise strategies for the current situation.

Trump is ready to engage in dialogue with China's national leader Xi Jinping, threatening to adopt a friendly approach, but the flames of this trade war have already ignited. China is prepared to counterattack, and experts say that China will take back the negotiating power from Trump's hands. Below are the explanations of the trump cards that China holds.

The first trump card: U.S. debt (Bonds)

The United States borrows money by issuing bonds, and the national debt exceeds 36 trillion dollars. According to the (U.S. Treasury Department) data by country and region as of February 2025, the largest foreign holder of U.S. national debt is Japan ( 1.126 trillion dollars), followed by mainland China ( 784.3 billion dollars), and the United Kingdom ( 750.3 billion dollars). Taiwan ranks tenth ( 294.8 billion dollars).

Holding U.S. bonds has given China a certain influence over the U.S. financial market. Brad Setser stated that the U.S. bonds in China's hands account for 4% of U.S. GDP. He believes that if a large amount of U.S. debt is dumped and the Federal Reserve is prepared to do nothing, those who need financing for home loans will be greatly affected.

On April 11 this year, the yield on government bonds has increased, with the 10-year rate at 4.48% and the 30-year rate at 4.85%. If China were to dump a large number of bonds it holds, it would disrupt the U.S. financial market.

Daniel Drezner, a professor of international politics at Tufts University, said that if both Japan and China throw out bonds, it will cause panic in financial markets. Japan, which recently held trade talks with the United States, said Finance Minister Katsunobu Kato, the country with the largest holdings of U.S. bonds, said the bonds were a bargaining chip in Japan's hands.

The second ace: Restricting the export of rare earths

China possesses the rare earths needed for its high-tech industry. These rare earths are essential raw materials for both national defense and technology, and China has begun to restrict exports of these rare earths to the United States.

The third ace: Refusing to buy American oil and natural gas

China is the third largest exporter to the United States. China has stated that it will not continue to purchase oil and natural gas from the United States, and they will use their own domestically produced crude oil.

China has three powerful trump cards: holding a large amount of U.S. Treasury bonds, restricting rare earth exports, and refusing to purchase American oil and natural gas, which can have a dramatic impact on the U.S. trade and financial markets. This gives China considerable leverage in the U.S.-China trade war. Although Trump has stated he will adopt a friendlier approach for dialogue, experts believe that China may regain the upper hand in future negotiations and is prepared to launch a stronger counterattack.

This article Trump will start negotiations with China, China's three trump cards in hand, ready to double the return of tariff sanctions first appeared in Chain News ABMedia.