In this trade war, both the U.S. and China have their advantages, but when it comes to holding out longer, the U.S. seems better equipped to endure.
China does hold some significant cards. For one, Chinese households boast high savings, totaling 132 trillion RMB, and 92% homeownership, which could help buffer individual consumers in the short term. This cultural tendency toward saving, paired with a massive internal market, gives China a degree of economic resilience that helps offset the immediate pain of tariffs. The Chinese government can also use its control over capital and state-owned enterprises to weather financial instability and stimulate the economy if needed.
However, the U.S. has a few more aces up its sleeve in this trade war. While U.S. households do carry a significant amount of debt, much of it is tied to real assets, like homes, and the U.S. corporate sector is far more liquid and resilient, with giants like Apple, Microsoft, and Google sitting on hundreds of billions of dollars in cash reserves. These companies can adapt, pivot, and continue innovating even in the face of higher tariffs and disrupted trade flows. Moreover, 75% of products in a typical Walmart store are imported from China, but the U.S. market is still critical for China’s economy—14.8% of Chinese exports go to the U.S., and a significant portion of these are high-value goods that fuel China’s industrial growth.
In the long run, though, China’s over-reliance on exports, especially to the U.S., puts it in a precarious position. The U.S. economy has more flexibility to shift away from Chinese imports and start sourcing from other countries or increasing domestic production. Meanwhile, China’s manufacturing is tied heavily to U.S. demand, and any long-term loss in U.S. exports will seriously undermine its economy.
The trade war may hurt both sides, but the U.S. holds more economic leverage over China, and its corporate strength and consumer demand remain powerful tools in forcing China to the negotiating table. On the other hand, China’s heavy reliance on savings and exports might give it some temporary advantage, but economic fragility makes it harder to hold out in the long run.