[By Guancha Network columnist Aloizio Mercadante]
Following the "Big Tax Day" in the U.S., known as "Liberation Day," Drew Matus, chief market strategist at MetLife Investment Management, admitted: "I don't know what advice to give my clients," "We are driving on a dark road without headlights."
This sense of confusion is spreading widely, and it's not surprising. What Trump has done has no precedent in history, similar cases only occurred during the Great Depression. At that time, the U.S. enacted the Smoot-Hawley Tariff Act to protect domestic markets and jobs, but the result was counterproductive: it not only exacerbated the economic recession domestically, increased unemployment rates, but also caused a 70% shrinkage of global trade due to a chain reaction of retaliatory measures.
In addition to confusion, more fatally, the unpredictability of policies has caused damage to investment and business activities. The erratic stance of the Trump administration on tariff issues has made it impossible to accurately predict the future. However, one thing is certain: things will not improve.
Even under the most optimistic (or naive) assumptions, limiting the "trade war" to a bilateral confrontation between China and the U.S. still presents a bleak outlook - after all, it's a showdown between the world's two largest economies. The U.S. accounts for 26% of the global economy, while China accounts for 19% by dollar value, with the two countries combined accounting for nearly half the world. China is the world's largest commodity producer, and the U.S. is the largest consumer. The global economy cannot remain unscathed in such a level of conflict. After Trump imposed tariffs, China's export control of key minerals and magnets has already threatened the core supply chains of multiple countries' automobile manufacturing, aerospace, semiconductors, and even military industries.
Although competing with China is indeed the core concern of the U.S. in terms of geopolitical and economic strategy, Trump's storm is unlikely to be confined to a bilateral conflict between China and the U.S. It is necessary to understand the deeper logic behind Trump's fervent actions and irrational means: the initial reactions of various countries to the tariff increases have exposed issues more severe than bilateral trade deficits.
Behind this simple and crude "tariff increase" calculation lies Trump's deep anxiety about America's position in the new world order. As the U.S. finds itself increasingly unable to maintain its hegemony, breaking the waning international political order and economic operating mechanisms may have certain strategic value—especially in response to America's rising debt and China's rise in technological autonomy and financial sovereignty.
Peter Navarro, senior trade advisor at the White House, claimed that the tariff increase would address the "national emergency" caused by the U.S.'s high public account deficit. Currently, U.S. national debt amounts to 120% of GDP (approximately $36 trillion). The U.S. last had a budget surplus in 2001, and a trade surplus dates back to 1975. Military spending and debt interest (expected to reach $952 billion in 2025 and exceed $1 trillion in 2026) consume the majority of the budget, while mandatory expenditures such as healthcare and social security are equally heavy.
In this context, Musk's plan to cut $1 trillion in federal spending without touching these projects appears particularly utopian. So far, the actual effectiveness of measures such as civil servant layoffs, asset sales, and contract cancellations remains questionable, and independent analysts point out significant defects in their calculation methods.
Trump's tariff increase also has an invisible target: transferring the cost of large-scale fiscal adjustments to foreign businesses and consumers. Meanwhile, China is systematically accelerating financial decoupling: it has reduced its holdings of U.S. Treasury bonds for nine consecutive months since December 2024, with foreign exchange reserves dropping to $75.9 billion (far below the peak of $1.3 trillion from 2011-2013), and has completed diversification strategies by aggressively increasing gold holdings (reaching 2,284.55 tons in January 2025). Recent sales of over $50 billion in U.S. Treasury bonds have triggered a chain reaction: pushing up global interest rates, suppressing risk assets, and increasing financing costs for the U.S. government and businesses.
China is leading the global de-dollarization process, directly threatening the fragile yet still supporting dollar hegemony system. It can be foreseen that the "safety rope" of the U.S. economy is corroding and breaking, which may lead to irreversible collapse of its political, economic, and financial hegemony.
Trump's hasty response to this major strategic challenge during his second term not only undermines the stability and predictability of U.S. economic policy, but may also shake the foundation of its geopolitical power—the status of the U.S. dollar as the main international reserve currency and the preferred medium of global trade. Although the renminbi's share in global financial transactions (3.75% in December 2024) still lags far behind the dollar (49% in the same period), the trend of replacing the dollar with the renminbi and other currencies in regional and bilateral transactions is clearly visible. The U.S. weaponizing the dollar to sanction Russia, Venezuela, Iran, and other countries is accelerating this process.
Clearly, solving the current account deficit problem solely by considering goods trade simplifies analysis and is destined to fail. The so-called "reciprocal tariffs" are actually indiscriminate sanctions, which directly increase global economic uncertainty and may trigger a global economic recession. Although Trump claims he will stimulate investment in the U.S., such expectations appear wishful thinking amidst the market turmoil he created. Unpredictable policies and crude economic calculations often produce counterproductive results.
It should be emphasized that reducing the deficit and revitalizing manufacturing are not inherently irrational choices. The problem lies in the fact that the U.S. currently lacks a long-term strategy for participating in the formulation of multilateral trade rules and also ignores the necessity of negotiations and maintaining global value chains—no one can rebuild an industrial system overnight through temporary excessive protection. We will see disruptions in supply chains, shortages of materials, and inflationary pressures—because logistics and other infrastructure are not prepared, the entire process is full of haste and contradictions.
This requires carefully designed industrial policies, just as Brazil attempted during Lula's third term: building long-term national and regional value chains within agreed multilateral rules. Similarly, China became the world's largest economy by purchasing power parity and the world's factory not by relying on crude protectionism or Trump's所谓 "taking advantage of the U.S." China's rise stems from rejecting the neoliberal paradigm imposed by the U.S. on the world (and to some extent on itself) and choosing a development path centered around state action.
In fact, China achieved economic takeoff through complex and sophisticated economic, political, and technological strategies, rather than through intimidation and threats. As early as 2005, China elevated self-innovation to a national strategy on par with "reform and opening-up," setting the goal of becoming a global technology leader by 2050. Over the past twenty years, China has not only consolidated its existing value chain positions but also achieved a qualitative leap in industrial foundations—significantly improving production complexity and establishing advantages in strategic fields such as new energy, aerospace, and microelectronics. China's current leadership in artificial intelligence (with the highest number of patents and papers globally) and generative AI research (neck-and-neck with the U.S.) challenges traditional perceptions of irreversible technological advantages, signaling a more dynamic and unpredictable global competition ahead.
This has caused deep fear among the U.S. and its tech giants. De-dollarization and the loss of future technological leadership may weaken the U.S. economy and even have catastrophic effects on its defense industry and military hegemony. However, the key issue does not lie in Trump's hasty and harmful measures to respond to fundamental changes in geopolitics and geoeconomics, but in the essence of geopolitics—he shattered a "precious vase" that is difficult to repair.
Trump's wild unilateralism completely destroyed the old "rules-based world order," attempting to establish a "Hobbesian" new order through force, recreating the spectacle of U.S. unipolar hegemony from the dissolution of the Soviet Union to the first decade of this century. In other words, his reckless actions not only destroyed economic predictability but also undermined political trust in the minimum functional world order. Now, countries must fend for themselves.
As UK Prime Minister Keir Starmer analyzed the dramatic change in circumstances in his article in The Sunday Telegraph: "The familiar world we knew no longer exists." He wrote that Britain is preparing to use proactive industrial policies to protect national interests, ready to shield businesses with industrial policies at any time. This "storm" primarily impacts the Global South and vulnerable countries.
On April 5th, UK Prime Minister Starmer wrote in The Sunday Telegraph: "The familiar world has disappeared; there are no winners in a trade war." Network screenshot
Trump's required "reciprocal" tariffs treat unequal parties equally, effectively killing the "right to development" for developing countries that multilateral trade rules were meant to safeguard. When the strongest country in the world levies a 50% tariff on a destitute country like Lesotho (which has already suffered greatly due to the U.S. government's reduction of aid), the absurdity of "reciprocity" becomes evident. His approach of "bilateralizing" disputes is essentially replacing real negotiation with unilateral imposition under conditions of disproportionate power (as evidenced by the Panama case).
Theodore Roosevelt once said: "Speak softly and carry a big stick, and you will go far." Trump abandoned soft words and soft power, brandishing economic, political, and military threats. This is the naked return of empire, entirely dependent on shameless displays of force. Even the ghost of colonialism, threatening invasion of other countries' territories, reappears, making us seem to regress to the 19th century.
This path is doomed to fail.
Finally, there is a fundamental question: when the world's number one superpower may quickly slide into authoritarianism, how will global democracies pass this "stress test"? No one knows the answer.
We are driving on a dark road without headlights, possibly heading towards an abyss of economics, politics, and civilization. Redemption may lie in the great symphony of the international community—to illuminate another path toward global balance, climate stability, international cooperation, and permanent peace, establishing a fair new order based on the understanding of "non-zero-sum games in inter-state relations."
As the ancient Chinese saying goes: "If the heart has light, people will have beauty; if people have beauty, families will have harmony; if families have harmony, nations will have peace; if nations have peace, the world will achieve great unity." Trump, who boasts of intimidating immigrants and threatening other countries, obviously lacks such light in his soul.
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Original source: https://www.toutiao.com/article/7501217044897989159/
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