The Trump administration’s handling of the trade war with China could lead to serious setbacks for the United States—economically, diplomatically, and strategically. As the article notes, “If Donald Trump were trying to lose his trade war with China, it’s hard to see what he would be doing differently.”
Earlier this month, the administration imposed “tariffs on all goods from China to 145 percent.” In retaliation, “China responded with 125 percent tariffs on American goods, plus more targeted measures.” The result is a full-blown “tit-for-tat escalation of trade barriers,” with each side aiming to force concessions.
Trump’s team sees this imbalance in trade as an advantage. “We export one-fifth to them of what they export to us,” Treasury Secretary Scott Bessent stated. But that logic, the article explains, is flawed: “The fact that the American economy is hooked on Chinese goods is a massive weakness for the U.S., not an advantage.”
China dominates global supply chains. Jason Miller, a supply-chain professor at Michigan State University, provided the data: “China produces more than 70 percent of the world’s lithium-ion batteries, air conditioners, and cookware; more than 80 percent of the world’s smartphones, kitchen appliances, and toys; and about 90 percent of the world’s solar panels and processed rare earth minerals.”
Rebuilding this capacity in the U.S. would take “years, if not decades.” Meanwhile, “China is only heavily dependent on the U.S. for a small fraction of its imports,” and can source products like soybeans and sorghum elsewhere. “Chinese businesses will be hurt by losing access to the American market,” but Beijing has tools to soften the blow—redirecting exports, boosting domestic consumption, and subsidizing industries.
This structural imbalance gives China what economist Adam Posen calls “escalation dominance: the ability to inflict disproportionate harm on its economic enemy.”
China’s Strategic Playbook
The article underscores that “China’s advantage has been bolstered by years of meticulous preparation.” Trump’s first trade war in 2018 was a wake-up call. Since then, “China has invested heavily in such industries as energy, agriculture, and semiconductor production” while also “pursuing a concerted strategy to consume more goods at home and find new non-U.S. export markets.”
President Xi Jinping described the goal as ensuring “the normal operation of the national economy under extreme circumstances.”
And China’s preparations extend beyond defense—they include economic weapons. Beijing has already “banned exports of several rare earth minerals,” and has “launched antitrust investigations into DuPont and Google,” while “halting all business with Boeing.” If tensions escalate further, China might even “block certain high-profile U.S. companies, such as Apple and Tesla, from doing any business in China at all.”
Then comes what the article refers to as “the nuclear option:” China could sell off a significant portion of its $760 billion in U.S. Treasuries. That would “send interest rates soaring, spook investors, and perhaps even trigger a financial crisis.”
As Oxford public-policy professor Yeling Tan summarized: “China is ready for this fight… It has been busy preparing for an entrenched economic conflict with the U.S. for a long time.”
What the U.S. Could Have Done
Despite China’s advantages, the article argues that “the United States could still defeat China in a trade war if it does everything right.”
America’s secret weapon isn’t tariffs—it’s allies. By forming a united bloc with Europe, North America, and East Asia, “the U.S. could inflict much more damage on China… while minimizing its own pain.” That strategy would demand “considerable planning and preparation,” including industry development, global supply chain monitoring, and a well-timed rollout of restrictions.
Instead, Trump “has done nearly the opposite.” Rather than investing in key industries, he aims to “get rid of the major investments in semiconductor and clean-energy manufacturing implemented under the Biden administration.”
Rather than carefully phasing in tariffs, the administration “jacked up tariffs to 145 percent over the course of a few weeks.” And rather than working with allies, Trump has been “threatening, feuding with, and tariffing them.”
Even if the administration tried to reverse course and build a coalition now, it may be “too late.” As the article asks, “What country would sign up for economic hardship for the sake of an ‘ally’ that has not only treated it poorly but has also repeatedly demonstrated that it can’t be trusted to honor any bargain?”
Will American Voters Endure the Pain?
“The outcome of a trade war is determined not only by the pain inflicted but also by each country’s tolerance for that pain.” On that front, the U.S. has some political advantage: “Voters generally support taking on China.”
In fact, during Trump’s first-term trade war, “voters in places that were most exposed to the effects of import tariffs became more likely to vote for Trump in 2020.” And as of February, “56 percent of voters supported placing new tariffs on China.”
But will that support hold up when prices skyrocket? “Trump’s first-term tariffs against China were relatively modest,” but this round’s “sticker shock will be impossible to ignore.” Inflation is already the top concern for voters—and these new tariffs could bring back “1970s-style stagflation: the toxic combination of soaring prices and rising unemployment.”
Trump himself seems wary. He already “paused” a global tariff plan “in the face of chaos in the bond market,” breaking the cardinal rule of trade war strategy: “never tell your opponent where your breaking point is.”
And as Dan Wang of the Hoover Institution noted, “They [China] might not be able to last forever, but they can certainly last longer than a single election cycle.”
The Exit Strategy—and Its Cost
Eventually, the article predicts, Trump may be “forced to back down.” That might come via “a deal in which China agrees to largely symbolic concessions that allow Trump to save face,” as occurred previously. Or through “a series of tariff carve-outs to different industries,” diluting the original policy until “the exceptions exceed the actual tariffs.”
Either way, the result is clear: “The U.S. would have inflicted considerable economic pain on itself without getting much in return.”
China, however, may emerge stronger. Recent developments support this: “The Spanish government declared its intent to strengthen relations with China.” The EU is “sending a delegation to Beijing in July,” and “South Korea and Japan recently revealed that they will be reopening negotiations over a long-stalled free-trade agreement with China.”
Xi is also “on a tour of Southeast Asia to solidify relations with other countries in the region.” Vietnam alone “signed dozens of new economic deals with China.”
A Strategic Miscalculation With Global Consequences
The article warns that a failed U.S. trade war could lead to broader consequences. “A Chinese trade-war victory would also embolden Beijing in noneconomic matters.” For years, the threat of economic retaliation has helped deter actions like an invasion of Taiwan. But “if Beijing demonstrates that it can withstand such a barrage, that threat will lose credibility.”
In that sense, the piece concludes, “Trump’s tariff policy sounds a bit like the ‘disastrous’ American military adventures that he has so often criticized. Only this time, he’s the one leading the charge.
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