| Hi, this is Philip Glamann in Beijing, where the Chinese government responded to Donald Trump’s pledge to play nice in trade talks with pretty much sweet nuthin’. That’s not entirely true. A Chinese diplomat did say the nation’s “doors are open, if the US wants to talk,” although the Commerce Ministry dismissed Trump’s suggestions that trade negotiations were underway. Read more about Trump’s shift in tone here. But otherwise it was business as usual in Beijing. Xi told a visiting dignitary that tariff wars hurt everyone, repeating a line his nation has used since the start of the latest conflagration over commerce. His foreign minister, Wang Yi, signaled more of the defiance that has marked China’s stance since Trump once again took aim at Beijing. He said in a call with his British counterpart David Lammy that his nation had “stood up” to Trump’s tariff broadside and would continue to serve as a protector of the global trading system. So why the air of calm from China when Trump’s moves have rattled so many others? The short answer: pressure from big business, mounting public unhappiness in the US and markets tumbling like dropped dice. Trump’s comments that he believed a deal with Beijing would “significantly” reduce the mammoth tariffs he’s placed on Chinese goods came right after he met with executives from major retailers at the White House. Read more about that gathering here. Those companies included Walmart, Home Depot and Target – big players in the retail sector serving as a driver of the American economy. All three indicated the talks were positive, a sign Trump took on board some of the problems they are facing. Warnings about the potential for empty store shelves within weeks seemed to resonate, one of the people familiar with the meeting said. Additionally, tariffs on all trading partners and across a broad swathe of industries threaten to raise prices on, well, a whole lot of what Americans buy. Read about the $2 trillion hit the global economy risks here. For a president elected partly because of public frustration with inflation, that’s a problem that could start costing him public support. Protests have been held around the US recently because of anger over issues such as dwindling pensions, the deporting of immigrants and a perceived assault on democracy. California, the US state with the biggest GDP, has sued the Trump administration on the grounds tariffs are hurting its economy. A dozen other states did the same. The discontent could cost lawmakers loyal to Trump their jobs in midterm elections next year, possibly even handing control of the House to Democrats. Trump has another big headache that Xi doesn’t right now: markets. US stocks and Treasuries have been battered since Trump rolled out sweeping tariffs on April 2. This week a Bloomberg gauge of the US dollar fell to the lowest since 2023 before paring. The “American exceptionalism” trade that some investors hoped would pay out when Trump returned to office looks DOA. In contrast, China’s markets have been more stable. While the benchmark CSI 300 Index of Chinese equities is down less than 1 percent since Trump was inaugurated, the S&P 500 has slid more than 8%. While China's currency, the yuan, hit a record low in offshore trading, its decline was no where near as fierce as slumps in the dollar. Part of the reason for steadier markets is due to a tool Xi wields that Trump can’t, for better or worse. Earlier this month, China’s stock market rebounded after a big selloff as state-linked funds known as “the national team” bought assets. Such state-linked buying distorts prices, but it does buy Xi’s team time. Wall Street predictions that the US faces a greater chance of recession and the IMF slashing its forecasts for world growth this year and in 2026 only add to the pressure on Trump as his administration tries to negotiate trade deals with dozens of countries in the coming weeks. Alicia Garcia Herrero, chief Asia Pacific economist at Natixis, summed up the situation well, saying Trump “needs a deal and quick.” “China does not need to offer anything big in such circumstances,” she said. What We’re Reading, Listening to and Watching: China has started reining in smart driving in the wake of a fatal accident involving a Xiaomi electric car. The government held a meeting last week with at least a dozen automakers where it issued tighter rules for driver assistance technology — a move that could slow the deployment of the systems, which have been a hit with Chinese drivers. Automakers were told to be clearer about what the tech can and can’t do and improve safety precautions. Manufacturers were told not to exaggerate or falsely advertise driver assistance features. One person familiar with the meeting said officials also set out rules to encourage drivers to keep their hands on the wheel while using the features, and that carmakers shouldn’t let drivers use the self-parking feature unless they are actually in the vehicle. Several carmakers have functions that allow a driver to step outside their car while it parks itself — a sight that’s been increasingly common in Chinese cities.  Xiaomi’s YU7, left, and its SU7 in Wuhan in March. Photographer: VCG/VCG The latest rules come after an accident involving a Xiaomi SU7 killed three people. The electric sedan had the “Navigate on Autopilot” function turned on less than 20 minutes before the crash. In that episode, alerts were issued because the driver apparently wasn’t holding onto the steering wheel. Seconds later, another warning was sent about obstacles in the road and the driver took control of the wheel, but the car crashed into concrete fencing. Police are still looking into the matter. The meeting with government officials left carmakers scrambling to update their marketing materials and presentations for the Shanghai auto show this week, several representatives of carmakers and suppliers said. For example, printed materials describing self-driving tech or autonomous driving had to be scrapped for the big event. Huawei changed the wording for its driver assistance tech to “moving toward L3” because only its L2 version is allowed now. Read about Chinese carmakers showing off their wares in Shanghai here. Also, Xiaomi reportedly pushed back the debut of its first SUV, the YU7, dealing a blow to its ambitions to rival Tesla and BYD. Read about Tesla inching toward its robotaxi launch here.  Influencers at the Shanghai auto show this week. Photographer: Nicholas Takahashi/Bloomberg The new rules are a setback to most automakers given smart cars packed with intelligent driving features have been a big selling point with Chinese buyers. Tesla launched a product it markets as “Full Self Driving” in China this year — tech that came under scrutiny in the US after multiple crashes. The Chinese name for FSD, which initially was a literal translation of the English version, was changed to “Advanced Driver Assistance Function” in March. BYD also said it plans to make advanced driver assistance systems available in most of its models at no extra cost. That all puts pressure on Huawei and other intelligent driving software providers given the extra scrutiny on the claims around assisted driving technology and how such features are marketed. There have been signs officials are getting uneasy. Back in February, the government issued guidelines about over-the-air software updates that carmakers use for in-car smart cockpit and driver assistance systems. One of the goals was to reduce the frequency of the updates, which authorities have come to see as hasty fixes for defective products. China’s EV makers have become world-beaters but they still have some growing pains to get through. | 
