My assessment thus far is that these events will likely boost China's international relations overall. Diplomatically the reasons are obvious, but economically we can take a closer look.
The events since "liberation day" demonstrate three things:
1) The US wants to and is willing to take on China
2) China wants to and is willing to take on the US.
3) The US WANTS to but is UNWILLING to take on the rest of the world at the same time.
The first thing has been fairly obvious for a while now, it shouldn't change many people's calculus. The 2nd point has been a point of contention, as it was unclear if China would be willing to retaliate in kind. But swiftness and magnitude of the Chinese response suggests that China not only is willing, but actually wants and has been preparing for it for a long time.
The 3rd point ties into the 2nd and is the most crucial. Trump likely would've wanted more than just 10% tariffs across the board on the ROW, but he has to hastily back down to it, resulting in no substantial economic gains and definitive diplomatic losses due to the robustness of the Chinese response. This leaves open the transit trade for China, but much more importantly, the ROW now sees China as the shield against the American trade onslaught. They now have a vested interest in China sustaining the trade war because they know that if China folds then in 90 days they'll be next. Furthermore, because they now understand that Trump is not willing to wage trade war on them at the same time, they can expand cooperation with China to a degree without the threat of American retaliation.
Going forward, I don't expect further tariff raises by the US and China. There's no reason for any side to deploy all troops in the first battle. Trump IMO has subtly signalled a desire for the escalation to stop by only levying 25% extra in the latest round. China will IMO most likely retaliate with non-tariff measures to signal its own willingness to stop the escalation. We will then have finished with the first salvos of the war, and then enter the protracted phase. Trump failed to leverage tariffs to reshape the global economic order with a Plaza Accord style agreement, so nothing will fundamentally change as the forces that drove the current trajectories remain.
The specifics of what will happen next remains, but the political stage is set for a repproachment between China and American allies IMO. I predict that China will attempt to boost internal consumption, possibly playing up the nationalist angle as consumption isn't just a money issue but a mood issue as well. Externally I see China broadening investments from the global south to traditional American allies, particularly Europe, who'll be hurt by the 10% tariffs more so than the global south and will want to capture the transit trade diverted from China. Trump will be busy negotiating with various countries, but with the uncertainty in the US preventing reshoring, with everyone being on equal footings tariffs-wise, and with so many individual negotiations needing to be done, nobody is really compelled to strike a deal so I can see the negotiations drag on.
