Global Geopolitics and Declining US Power: How China Is Winning the US-China Economic War
Interview with Einar Tangen
The Bluff That Failed
Donald Trump’s trade war, particularly targeting China, was rooted in a flawed bluff. By imposing unilateral tariffs and treating global trade as a zero-sum game, U.S. President Trump sought to intimidate countries into economic submission. Einar Tangen points out that the President’s strategy mirrored “a schoolyard bully” demanding tribute, hoping to create a world where America was the central hub and all other nations acted as dependent spokes. However, the transparency of trade data meant that other nations could clearly see the U.S. had no "royal flush" and called its bluff.
Economic Decline in the United States
Contrary to President Trump’s claim that foreign nations would pay the tariffs, American consumers and businesses would bear the brunt. Importers face higher costs, pass them on to consumers, and, as we’ve seen over the past several weeks, even stop shipments due to risk, leading to inflation and empty shelves. Middle—and working-class Americans, many living paycheck to paycheck, suffer deeply, resorting to payday loans for groceries. The middle class, once a majority in 1971 at 61%, had fallen to just 40% by the last census.
Global Distrust and Financial Instability
Trump’s erratic trade policies led to a profound erosion of global trust in the United States. Countries and markets viewed the U.S. as an unreliable partner, undermining institutions like the WTO. The fallout extended to concerns over the U.S. dollar’s future as the global reserve currency. Bond markets began to tremble as debt soared, expected to surpass $38 trillion. Investors fear rising interest payments and a potential run on bonds.
China’s Measured Diplomacy
In contrast, China has been the adult in the room. Rather than escalating tensions, it removed tariffs on certain goods and invited discussions on a "Phase Two" deal, meeting in Geneva, home of the WTO. While not perfect, China emphasized stability, multilateralism, and global economic cooperation—values that starkly contrasted with Trump's extractive and transactional approach.
Lessons for the Future
Trump's strategy has shown the dangers of populist economic nationalism disconnected from reality. The economic pain it inflicted on average Americans, the distrust it bred globally, and the instability it created in financial markets serve as a cautionary tale. Responsible leadership rooted in cooperation, trust, and long-term planning is urgently needed to restore America's economic and moral credibility.
Donald Trump’s tariff-driven trade war, especially against China, has become a strategic miscalculation based on bluffing and intimidation. Attempting to recast America as a dominant global hub surrounded by tributary nations, Trump’s unilateral actions backfired when other countries, seeing through the bluff, retaliated or withdrew. Contrary to his claims, American importers and consumers, not China, would pay the tariffs, leading to inflation, halted imports, and growing economic insecurity.
Domestically, the middle class has been disappearing further as many Americans struggle to afford basic necessities. Globally, Trump’s erratic policies eroded trust in the U.S. as a stable economic partner, raising concerns about the long-term credibility of U.S. Treasury bonds and the dollar as the global reserve currency.
Follow Einar on X: https://x.com/ehtangen and Substack, Asian Narratives: https://asianarratives.substack.com.
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