Steep U.S. tariffs are starting to squeeze the Chinese economy.

China's solar manufacturers reported losses this week as U.S. President Donald Trump's trade war put further pressure on demand in an industry where top manufacturers were already facing low prices and tariffs on exports to the United States.

The view that the Chinese leadership was desperate to negotiate a trade deal, to avoid economic pain that could destabilize Chinese society and threaten the Chinese Communist Party’s monopoly on power, is common among China hawks in the United States. This analysis is partly accurate, but it has led many to draw false conclusions.