[Source/Observer Network, Liu Chenghui] Trump tried to play politics with tariff policies but ended up sinking himself, spreading anxiety and worry across the U.S.

"What if China wins the trade war?" Rogé Karma, a columnist for The Atlantic, published an article titled "What If China Wins the Trade War?" on April 20, pointing out that the Trump administration had botched everything, mistakenly believing they were at an advantage in this contest, while in reality, the U.S. is more dependent on China than vice versa, not to mention that China has been preparing for years and building a series of economic countermeasures.

Karma candidly admitted that Trump was losing the trade friction with China and would likely be forced to concede, from which China would benefit: Trump's risky actions would strengthen China's geopolitical position while weakening America's global standing and economic strength.

"China Has Long Been Prepared for Battle"

In the article, Karma wrote that the Trump administration believed they were at an advantage in this contest. For instance, Treasury Secretary Beasant recently said that U.S. exports to China account for only one-fifth of China's exports to the U.S., so China "must lose." But this view was completely wrong.

"America's dependence on Chinese goods is a huge vulnerability for the U.S., not an advantage," Karma said. For many categories of goods, China is not only the largest supplier to the U.S., but also dominates globally, meaning the U.S. cannot simply obtain these goods from other countries.

Tariff policies under Trump triggered a buying spree of "Made in China" baby products. Visual China

Shifting domestic production of these goods would take years or even decades: it involves setting up new companies, building new factories, creating supply chains from scratch, and training large numbers of workers. To achieve this, businesses must be convinced that tariffs will remain in place for the long term. By contrast, China is highly dependent on the U.S. for only a small number of imports, most of which, such as soybeans and sorghum, can be imported from other countries.

Chinese enterprises will indeed suffer losses due to losing the U.S. market, but this is a problem that is easier to solve.

Karma believes that China can redirect some of its export goods to European and East Asian countries, whose people also need smartphones, toys, and toasters. China can also subsidize its citizens to stimulate more domestic consumption and provide funds to its own enterprises to help them maintain operations. Adam S. Posen, chairman and economist of the Peterson Institute for International Economics (PIIE), calls this an "escalation dominance" asymmetrical advantage, where "one side has the ability to escalate conflicts in ways that are disadvantageous or costly to the opponent, while the opponent cannot retaliate in the same way."

Posen previously pointed out in an article that Trump thought he was the "escalation dominator" in what he called an economic war equivalent to the Vietnam War, but in fact, China was the true dominator. Before reducing dependence on Chinese products, the U.S. initiated a trade war, virtually destined to fail and at great cost. He said, "Washington, not Beijing, is betting on a losing hand."

"China's advantage stems from years of careful preparation," Karma wrote, several Chinese observers told him that the trade frictions initiated by Trump during his first presidential term made the Chinese side realize the need to be prepared for economic confrontation at any time. Since then, China has invested heavily in industries such as energy, agriculture, and semiconductor production to reduce reliance on U.S. imports, while adopting a coordinated strategy to expand domestic consumer demand and seek new non-U.S. export markets.

In May 2024, China Northern Rare Earth (Group) High-Tech Co., Ltd. exhibited various types of rare earth materials, rare earth metals, and rare earth oxides. Visual China

Moreover, China has built a series of "offensive economic weapons." For example, China strengthened control over rare earth exports; launched anti-monopoly investigations against DuPont and Google; and ceased all business with Boeing, the top U.S. aircraft manufacturer. If the situation escalates further, China may completely ban well-known American companies like Apple and Tesla from doing business in China and even use the "nuclear option" of selling off U.S. Treasury bonds.

"China is ready for this battle," said Tan Yeling, a professor at Oxford University specializing in Chinese political economy, "for a long time, China has been preparing for a prolonged economic conflict with the United States."

"The U.S. still had a chance, but Trump did everything backward."

In Karma's view, Trump wasn't without a chance if he had done everything right. But the problem was that the Trump administration messed everything up.

For instance, allies are堪称 America's "secret weapon." The article argues that if the U.S. teamed up with traditional allies in Europe, North America, and East Asia to collectively cut off trade with China while deepening their own trade relationships, this alliance could cause greater harm to China while minimizing its own pain.

This requires extensive planning and preparation. The U.S. and its allies must launch a large-scale coordinated economic mobilization, rapidly develop new industries, establish a global supply chain monitoring system composed of a large number of trained officials, implement trade restrictions step by step according to a gradual timetable to allow businesses and investors time to adjust, and clarify the conditions for ending the trade war.

Clearly, Trump did almost everything backward. Instead of investing in American industries for years or even months, he tried to cancel major investments made during the Biden administration in semiconductor and clean energy manufacturing. The Trump administration did not gradually implement tariff measures but raised tariffs to 145% within weeks. The Trump administration did not provide clear guidance to businesses and investors but changed positions daily and sometimes hourly. Moreover, Trump did not build an alliance; in recent months, he has threatened, quarreled with allies, and imposed tariffs on them.

Even if the U.S. suddenly realized its mistake and tried to form an "anti-China coalition," it might already be too late. Which country would voluntarily bear economic risks for an "ally" who has treated it poorly and repeatedly proven unable to keep any agreements?

"Trump Will Likely Be Forced to Concede, and China Will Benefit Significantly"

Domestically, Trump faces increasing problems.

Karma said that the tariffs Trump imposed during his first term were relatively low, so they did not lead to a significant increase in prices. But this time, the impact of skyrocketing prices will be impossible to ignore. Voters have consistently listed inflation as one of the most important issues in the 2024 election. How will voters react when a politician who promised to lower prices causes prices to rise?

According to recent polls, most voters were already dissatisfied with Trump's tariffs before they took effect. Worse still, China's countermeasures against U.S. exporters and the uncertainty caused by tariffs may also lead to broader economic slowdowns. Many economists warn that the U.S. may experience the "stagflation" of the 1970s: the terrifying combination of soaring prices and rising unemployment rates.

Even Trump may not have enough stubbornness to persist through such severe economic difficulties. He has already broken the basic principle of trade wars—never reveal your bottom line to your opponent. As U.S. financial markets become turbulent, Trump has postponed most of the "reciprocal tariffs."

S&P 500 index value changes from November 2024 to April 2025. Reuters chart

"The Chinese are very good at waiting," said Wang Dan, a researcher at the Hoover Institution, "they may not be able to persist forever, but certainly longer than a U.S. election cycle."

Karma concluded that Trump would likely be forced to concede, possibly in the form of an agreement where China agrees to make some essentially symbolic concessions, allowing Trump to save face. But China may not easily give Trump an easy way out.

In either case, the outcome is the same: the U.S. will cause significant economic pain to itself without gaining much in return.

"However, China will benefit significantly," Karma noticed that recently Spain announced its intention to strengthen ties with China; the EU recently agreed to restart negotiations to resolve trade disputes over Chinese electric vehicle imports and plans to send a delegation to China in July; South Korea and Japan recently revealed that they will restart long-stalled free trade agreement negotiations with China; Vietnam signed dozens of new economic agreements with China this week.

"Trump's tariff policy sounds a bit like the 'disastrous' U.S. military adventures he often criticizes. Only this time, he is leading the charge," Karma wrote.

This article is an exclusive piece from Observer Network and unauthorized reproduction is prohibited.

Original source: https://www.toutiao.com/article/7495673006358921769/

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