Billionaire hedge fund manager Bill Ackman said China will need to strike a trade deal with the US quickly as it can’t win a drawn-out trade war that will do severe damage to its economy.

In a post on X, Ackman said Beijing “should be highly incentivized to make a trade deal as quickly as possible” because the longer high tariffs persist, the greater the likelihood that companies will lose faith in China as a market in which they can source or produce goods on economically viable terms. If a deal is not struck soon, “every company that has a supply chain based in China relocates it to India, Vietnam, Mexico, the U.S. or some other country,” he said.

“If instead China stubbornly decides to hold out and not negotiate due to pride or other emotional issues, China will suffer that much more severe and permanent economic consequences,” Ackman said. “Time is the friend of the US and the enemy of China’s in this negotiation.”

The hedge fund manager’s assessment flies in the face of those who say China will be able to withstand President Donald Trump’s trade war and the general tone of defiance that has marked Beijing’s position. President Xi Jinping has rebuffed Trump’s efforts to get him on the phone, and China has said the US must show respect and rein in disparaging remarks before talks between the two countries can commence.

Trump has hit China with tariffs of 145% on most goods since taking office, prompting Beijing to retaliate and threatening to wipe out most of the trade between the world’s biggest economies. Still, Bloomberg News reported on Friday that the Chinese government is considering suspending its 125% tariff on some US imports as the economic costs of the trade war weigh on certain industries.

Given the economic harm posed by the tariffs, both China and the US have good reasons to take the levies down “to a more sensible level” of 10% to 20% as quickly as possible, said Ackman. The only thing stopping the reduction in tariffs “is the fear on the part of both countries’ leadership of looking weak,” he said.

“Both countries know that the 145% tariffs have to come down now,” Ackman said. “They are just trying to manage the diplomacy in such a manner to make clear that it is a mutual decision as opposed to one country ‘going first’.”

Ackman, a long-time donor to Democrats, has in recent years become a supporter of Trump, backing him on issues ranging from foreign policy to combating antisemitism.

Bill Ackman says ‘time is the friend of the U.S. and the enemy of China’ in trade war