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China and everyone else I think knows that this is just another round of market manipulation. He will back down since 130 percent tariffs are effectively a trade embargo and the US is still not positioned to be able to do that without economic calamity.
So the question is when he will back down and how. I think the same trick will work. He will implement it, do a whole song and dance about how he super duper means it this time, do a few other things to tank the stock market, and then he and his insiders will make big buys before backing down on everything.
Most likely he will back down, but it's false to claim everybody "knows".
Because there is a level of uncertainty, and even if he does, it shows negotiations are not going smoothly.
Trump is creating disruptions in the American market, and disruptions are harmful, especially they are extremely harmful to investments.
So whether he TACO out or not doesn't really matter for the harm he is doing in the meantime.
~~just another round of market manipulation.~~
FTFY:
another round of market disruption.
The disruptions and chaos are the only the worst part of this because everyone knows he will back down. Otherwise Chinese trade embargo itself would be far worse. If he actually did this the stock market would crash instead of just a hiccup, and the entire economy wouldn't be far behind. So it absolutely matters whether he chickens out or not.