Ackman warns China faces risks in prolonged US trade war

[WORLD] Billionaire hedge fund manager Bill Ackman has cautioned that China must act swiftly to secure a trade agreement with the United States, warning that a prolonged conflict would severely damage its economy.

In a post on X, Ackman argued that Beijing is under significant pressure to reach a resolution, as sustained high tariffs risk undermining confidence in China as a reliable hub for manufacturing and sourcing.

“China should be highly incentivized to make a trade deal as quickly as possible,” Ackman wrote. “The longer high tariffs remain, the more likely it becomes that businesses will abandon China in favor of other countries.”

Without an agreement in place soon, Ackman said, companies with supply chains in China could shift operations to nations such as India, Vietnam, Mexico, or even back to the United States.

“If China stubbornly refuses to engage in negotiations out of pride or emotional reasons, the economic damage it suffers could be more severe and long-lasting,” he added.

Ackman emphasized that time favors the United States in this standoff, calling it “the friend of the U.S. and the enemy of China in this negotiation.”

His remarks contrast with those who argue China can weather the economic storm brought on by former President Donald Trump’s trade policies, and with Beijing’s generally unyielding stance.

President Xi Jinping has so far declined Trump’s overtures for direct talks, insisting that the U.S. demonstrate “respect” and curb inflammatory rhetoric before meaningful discussions can begin.

Since taking office, Trump has imposed sweeping tariffs—reaching as high as 145%—on Chinese goods, prompting retaliatory measures from Beijing and threatening the stability of trade between the world’s two largest economies.

However, Bloomberg News reported on Friday that China is weighing the suspension of its 125% tariff on select U.S. imports, a sign that economic pressures may be pushing Beijing toward compromise.

Ackman suggested that both sides now have a shared interest in reducing tariffs to a more sustainable level, ideally between 10% and 20%. But he said political pride remains the biggest obstacle.

“The only thing stopping progress is fear of losing face,” Ackman noted. “Both countries know the 145% tariffs need to come down now—they’re simply trying to frame it as a mutual decision, rather than one side backing down.”

Ackman, a longtime Democratic donor who has recently thrown his support behind Trump, has backed the former president’s positions on foreign policy and the fight against antisemitism.

The ongoing U.S.-China trade tensions have far-reaching implications. Last year, bilateral trade totaled roughly $585 billion, with the U.S. importing significantly more than it exported—a core grievance behind Trump’s trade agenda. The growing tariff battle is already disrupting global supply chains and pushing firms to seek alternative manufacturing bases, particularly in Southeast Asia.

In a strategic move, Trump recently announced a 90-day freeze on planned tariff increases for most countries, excluding China. The decision appears aimed at isolating China while maintaining diplomatic engagement elsewhere. In response, China reiterated its resolve to “fight to the end,” though its contemplation of tariff relief signals a potential opening for negotiations.

Experts warn that the economic toll of a prolonged trade war would extend beyond the two nations, affecting global markets and particularly impacting Southeast Asian economies dependent on trade. Countries like Vietnam and India stand to gain as companies diversify away from China.

Diplomatic hurdles remain substantial. China has demanded mutual respect and an end to hostile rhetoric as conditions for constructive talks, underscoring the delicate balance of political and economic interests in the negotiation process.

Beyond trade, the conflict is shaping global alliances and strategic partnerships. As the rivalry intensifies, both nations are likely to deepen ties with other countries in a bid to fortify their positions—potentially reshaping the international economic order for years to come.