China’s Stark Warning to Trump: They’re Prepared for Full-Scale Trade War

China is ramping up pressure on the United States as tensions over trade deepen under President Donald Trump’s second administration. According to deVere Group CEO Nigel Green, Beijing is now fully prepared for a prolonged economic confrontation — and is signaling its intent in ways that could have global consequences, including for Australian businesses and the broader economy.

The clearest indication came through China’s quiet but deliberate move to let the yuan weaken — a strategic shift that Green describes as a calculated warning to Washington.

“The weakening yuan is not simply market mechanics at work; it is Beijing putting Washington on notice that far more forceful actions are in reserve if escalation continues,” Green said.

The shift marks a broader strategy by Beijing to fortify its economy against external shocks, diversify supply chains, and strengthen key domestic industries. At the same time, Washington continues to push forward with tariffs and trade restrictions aimed at forcing policy concessions.

“This is now a battle of endurance,” Green added. “Trump is ratcheting up the pressure, believing he can force concessions through intimidation. Beijing, however, is determined to show that it will not be cowed.”

While the standoff is playing out between two superpowers, analysts warn the fallout could reach far beyond. For Australia — China’s largest trading partner and a key ally of the U.S. — the economic and strategic implications are significant.

Implications for Australia

The weakening yuan could affect Australian exports by making Chinese goods more competitive globally while reducing China’s purchasing power for imported commodities. With over a quarter of Australia’s exports flowing to China — including iron ore, coal, wine, and agricultural products — even marginal shifts in demand or trade terms could reverberate across key industries.

Australian sectors such as education, tourism, and critical minerals could also face turbulence if Chinese policy turns inward or if broader global instability affects cross-border flows.

Furthermore, volatility in currency markets and shifting capital flows may add pressure to the Australian dollar and complicate inflation forecasts at a time when the Reserve Bank of Australia is navigating its own delicate policy balance.

Green warned that markets are already adjusting for a more fractured global economy.

“Investors are recalibrating risk models to account for a world where supply chains stretch even further away from the US, where capital flows shift, and where currency volatility spikes as part of a broader realignment of global power,” he said.

A Strategic Chess Game

Behind the scenes, both governments appear to be testing each other’s red lines. Trump’s White House has resumed pressure tactics, while Beijing is showing what Green calls “strategic patience” — signaling it is willing to absorb short-term pain in exchange for long-term leverage.

“The timing and nature of the yuan’s movement underscore the seriousness of Beijing’s position,” said Green. “It is a carefully calibrated message to the White House: escalation will not come without consequences.”

Australian policymakers are closely watching developments, wary of being caught in the crossfire between their two largest strategic and economic partners. Business leaders are urging contingency planning for further disruptions, especially in export-heavy sectors.

As tensions mount, the global financial system is increasingly being shaped by geopolitical power plays rather than purely economic fundamentals. Analysts say this trend could reshape global trade patterns for years to come — with middle economies like Australia needing to rethink trade diversification and resilience strategies.

“We’re entering a period where tactical moves like yuan weakening aren’t just financial signals; they’re part of a bigger geopolitical chess game,” Green said.

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