Who wins the trade war? Every time you think you understand the state of play, President Trump simply flips the game board. The result: American economic uncertainty is now off the charts, registering highs well past the peak of pandemic panic. Economists are expecting a recession, automakers are already rolling through layoffs, and fund managers hadn’t been so bearish on American assets in decades. The stock market looks more and more like a meme coin, heading for a possible rug pull, and the president looks like someone who simply enjoys inflicting pain on almost anyone while unable to feel any of it himself.
It used to be a fantasy of the global left that a new world system could be forged to exclude or at least fence in the rapacious American imperium. Trump would have been no one’s pick to make it happen — acquisitive, grandiose, indifferent in the best of times to traditions and norms. Yet these days the dream is being entertained not just by radical intellectuals or by the leaders of developing nations but also by our closest neighbors and erstwhile allies. They aren’t even being subtle about it; they’re talking about just walking away.
Last week Spain’s democratic-socialist government proudly announced plans to intensify relations with China, after Treasury Secretary Scott Bessent warned that doing so would amount to “cutting your own throat.” President Emmanuel Macron of France urged European companies to stop investing in the United States, and the European Union as a whole, which is developing a retaliatory tariff response and plotting potential tax increases on American tech companies, announced it is sending a delegation to Beijing in July. It is now sending trade negotiators here with burner phones, as it did when negotiating there, and E.U. officials are declaring the entire trans-Atlantic alliance dead in the pages of The Financial Times. Canada’s prime minister, Mark Carney, who may emerge from this month’s elections as the new face of global liberalism, declared the eight-decade-old economic order — on which the modern American empire was built — simply “over.”
Tourist travel from Canada is down more than 70 percent compared with the same period last year, according to flight-booking data. From many countries in Europe, it’s down around 30 percent. In some, America’s favorability ratings have plummeted, and in the single week since “Liberation Day,” exports from the United States dropped by almost one-third; imports to the United States fell by nearly two-thirds. When British intellectuals tried a decade ago to place Brexit in historical context, they sometimes pointed to centuries of anti-imperialists pushing for a Little England. When Trump embarked on his trade war, it was intended as a performance of global dominance, but what he is showing us looks more like a Little America. (Build the wall, indeed.)
What comes next? Perhaps it shouldn’t be so hard to imagine, given the drift of what’s now called geoeconomics. Already, China commands global trade, and modeling from Bloomberg shows that, as constituted today, the tariffs will only add to the lead — pushing many more countries to work more with China and less with America. According to one model, 30 percent of American trading partners would fully recover from even total cessation of U.S. trade within one year; within five years, more than half would. This is why chaos is rarely the chosen strategy for a hegemon: Barring what Trump calls a “beautiful deal,” the biggest single beneficiary of the whole crusade may well end up being its intended target. Twenty-five years ago, eight out of 10 countries in the world conducted more trade with the United States than with China. Today seven out of 10 count China as their larger trade partner.
Probably we needn’t think in such zero-sum terms, though across four administrations, our leaders and wonks have often urged us to, presenting as a new cold war what looks more like a national rivalry with only a veneer of ideological conflict. And China is facing headwinds, too — slowing economic growth, a shrinking population, mass youth unemployment and a lack of comfort with those projections of soft power that for so long sustained the hologram of unshakable American pre-eminence. Which means that the hologram of a Chinese century is looking shaky as well, even if you’re the kind of person who sees the world’s future as a neatly forking binary.
China’s share of global manufacturing has grown so much that by 2030, it is expected to reach seven times what it was in 2000; America’s will have fallen by half. And while Trump’s supporters describe the trade war as an effort to reverse that pattern, they’ve done so little beyond erratic tariffs — with no major pledges of government investment and no real commitment to policy stability — it all looks more like policy by culture-war meme. And yet the best memes of the past week appeared to come from China: satirical A.I. reels of slop triumphalism showing obese Americans struggling to piece together electronics on grimy factory floors. The Chinese Ministry of Finance predicted that the United States “will become a joke in the history of the world economy.”
It has been a decade since China started its Made in 2025 industrial policy. America bet big on artificial intelligence and an economic future in which it reigns. China went big on building more stuff, and it turns out that over 10 years a country like that can build quite a lot (including, apparently, competitive A.I.). Probably you have heard about its dominance in clean energy. The country is now routinely installing as much solar power as the rest of the world combined while producing 90 percent of the world’s solar panels and more than three-quarters of its electric batteries. (As part of its tariff response, it has halted the export of several rare-earth metals and magnets; it produces 90 percent of the world’s supply of those, too.)
China is piling up a dominant position in new patents as well, surpassing the United States, and though patents are just a crude measure of technological progress, the gap is only widening. Chinese spending on university and government research had surpassed that in the United States, even before Trump declared war on the country’s elite universities. And then along came Elon Musk and his so-called Department of Government Efficiency to reduce the American budget by billions of dollars and Immigration and Customs Enforcement to deport international students here on visas or with green cards.
As recently as 2010, China produced a truly negligible part of the world’s medicine; now it is the world’s second-biggest developer of new drugs, and from 2020 to 2024, the value of drugs licensed worldwide from China grew fifteenfold, as The Economist recently noted. From 2013 to 2023, China’s share of global clinical trials grew to 28 percent from 4 percent. The country has surpassed Europe and the United States in the number of high-quality scientific papers published and has opened up leads in materials science, engineering, chemistry and computer science — all domains in which China is responsible for more than 60 percent of cutting-edge research. These seem like important fields. In one recent analysis of data comparing the composition of national economic elites, America’s leadership class was dominated by financial capital workers and China’s much more by engineers.
For most of Trump’s second term, an electric-car billionaire has been at least the second-most-powerful man in government, but Tesla’s stock price has fallen by nearly half since December, with liberal backlash in America and sales in European countries falling almost 50 percent compared with last year. China’s electric vehicle powerhouse, BYD, meanwhile, expects sales in Europe to double in 2025, having grown its global sales almost 15 times over since 2020. “The first China shock was when China was incorporating into our supply chains,” the economic historian Adam Tooze proclaimed in November. “The second China shock is when we beg to be incorporated into theirs.”
We’re not there yet. But the president is choosing an entirely new phase of pretty cutthroat geoeconomic competition by stiff-arming every potential ally to the left of Nayib Bukele of El Salvador, slashing public investment in research and development and announcing that the country’s plan on commerce — as on climate and science and public health — is to go it alone. How long will it last? As recently as the fall, the American economy was often described as the envy of the world. Now? “The World’s Hot New Trade Is ‘Sell America,’” Axios declared on Friday. The pattern is bigger than Treasury bonds. Some 30 percent of Vietnam’s G.D.P. has derived from exports to the United States. This week it signed 45 new deals with China.
Further Reading and Listening
“The United States is no longer a reliable country”: Thomas Piketty’s “Rethinking the World Without the U.S.”
“We now know that investors don’t trust Trump to reinvent the trade system, and neither do many people in his own party”: my brother, Benjamin Wallace-Wells, on the trade war.
Adam S. Posen: “Trade Wars Are Easy to Lose.”
“Underestimating China” by Kurt M. Campbell and Rush Doshi.
My colleagues Ezra Klein and Thomas L. Friedman on the same risk. (And Friedman alone on the Chinese future.)
Tyler Cowen’s counterpoint: China as free rider on American power.
“The Strange Triumph of a Broken America: Why Power Abroad Comes With Dysfunction at Home” by Michael Beckley.
Max Read on Trump’s — and Musk’s — “speculative politics”: “sowing chaos to reap power.”
Martin Wolf on “The Economic Consequences of a Mad King.”
Liz Franczak of TrueAnon on the sadism of tariff policy.
Naomi Klein and Astra Taylor on supremacist survivalism and the rise of “end times fascism.”
A psychoanalysis of “tariff obedience” by David Z. Morris.
“Something has happened to American political culture that divorces large parts of it from social reality”: Adam Tooze on the increasingly virtual aspects of politics. (Related: “World Builders: Technology and the New Geopolitics” by Bruno Maçães.)
John Ganz on the precedent of Samuel Francis (and Joshua Tait on the same).
Anusar Farooqui of Policy Tensor on how we got here.
For Polycrisis, from December, Kate Mackenzie and Lara Merling on the same.
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