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Illustration: Rebecca Zisser/Axios

When President Trump began threatening China with tariffs, the Chinese initially played the role of obsequious couriers in an effort to avoid a head-on conflict. But since raising tariffs to 25% on their goods, China has reversed course and is making clear its intent to take the conflict with the U.S. to the proverbial mattresses.

The state of play: In a commentary published last week on its WeChat account, China's state-owned People's Daily warned the U.S. to "not even think about" concessions.

  • "China does not want a trade war but is not afraid of it," Geng Shuang, a spokesman for the Chinese Foreign Ministry, told a press briefing on Monday. "We will not succumb to any external pressure and have the determination and ability to safeguard our legitimate rights and interests."

Background: Heading into 2018, China's long-held philosophy had been to speak softly and carry a big stick. Its military was working to dominate Southeast Asia by land and sea, it was growing its Belt and Road Initiative globally and making loans to low-income countries to win friends and strategic allies.

  • As Trump began his confrontation, China agreed to many concessions, including buys of more U.S. goods, pulling back cyber-espionage, amending the law to ban forced technology transfers and cracking down on IP infringement in order to get "a bit of elbow room," Keyu Jin, associate professor of economics at the London School of Economics, wrote in January.

But the time for reconciliation looks to have passed and a new, emboldened China is emerging, one that is not afraid to take the fight directly to the U.S.

  • There are differing factions inside China, Jin tells Axios. "Some want to cave in ... some want to stay strong and resist." President Xi Jinping and the country's policymakers appear to now be siding with the latter faction.

What's next?

  • "[W]e will have another type of Cold War," Da Wei, professor at the University of International Relations in Beijing, said on PBS' "Frontline."
  • "I think it is a comprehensive confrontation. ... If that happens it will last for quite a long time. That's a tragedy for everyone."

Why it matters: Market analysts at both Morgan Stanley and Bank of America-Merrill Lynch have predicted a prolonged trade war could lead to an outright global recession.

The bottom line: Tuesday's stock market rebound shows investors haven't quite gotten that message.

Go deeper: Trump's long trade war

Go deeper

Surprising pandemic side effect: Soaring trade deficits

Source: Census Bureau and Bureau of Economic Analysis; Chart: Axios Visuals

Inflation and jobs may get all the economic headlines, but meanwhile a big shift is taking place in the underpinnings of the world economy: The U.S. trade deficit is soaring.

What's happening: Americans' spending on imported physical goods has gone through the roof, while exports are growing slowly, making the U.S. the world's consumer of last resort.

Mike Allen, author of AM
1 hour ago - Politics & Policy

Third Way: "Big Lie" could become "Big Coup"

Graphic: Third Way

Third Way, the center-left think tank, is urging fellow Democrats to respond to the Capitol riot with "the size, scope, and seriousness of a presidential campaign," co-founder Matt Bennett tells me.

Driving the news: "For the first time in U.S. history, a party must mount two parallel presidential campaigns: one to win the election, and the other to prevent its theft," Bennett said, calling this "a Paul Revere moment."

Advocates say Biden has let Haitian migrants down

Photo illustration: Aïda Amer/Axios. Photos: Chip Somodevilla/Getty Images, Christian Torres/Anadolu Agency via Getty Images

Continued turmoil in Haiti is causing a growing number of Haitians to try to make it to American shores — and some advocates say the Biden administration isn't supporting this community in its time of crisis.

The big picture: Haitian-American activists in South Florida told Axios Today they feel like President Biden has gone back on campaign promises he made to the community to stand up for them.