My only two thoughts there are, China needs to fill that 15% gap, and I don’t know where they’ll do it. China also doesn’t want to sell too many treasuries least it upset their own financial stability in terms of purchasing power for their own citizens.
The economic outlook in China isn’t great right now. The US and China are playing a game a chicken, not sure who blinks first.
That 15% is not going to go away overnight. Some of won’t be sent to the US will be sold to the rest of the world instead. Possibly at a discount, so it is not ideal from the point of view of the Chinese government, but they are still well equipped to weather a temporary dip of 7% in their foreign trade.
Nobody said that it would be painless for China. Just that
1- it will be less painful for China than the US
2- China is more resilient against this particular kind of stress because they have a command economy and have more control on the population.
If the US blinks and caves, it does not matter whether China got a scratch, it’s still going to win the war. And Covid taught us that something would need to be quite dire for China to blink.
Also, it got lost in the noise, but right now there is still a blanket 10% tariff on anything that enters the US, and presumably these 10% can turn to much more when Trumps feels like it. It’s not the US against China, it’s the US against the world.
The economic outlook in China isn’t great right now. The US and China are playing a game a chicken, not sure who blinks first.