The 19th century belonged to the United Kingdom, the 20th to the United States. And the 21st? Throughout the world, there are many who take it for granted that it is certain to be dominated by China, a country which boasts an enormous population that is as talented and industrious as any on Earth. To reach the goals set by their ambitious and increasingly autocratic president Xi Jinping, the Chinese would only have to be a bit more than a quarter as productive as their North American rivals.
For understandable reasons, the prospect thus opened up has never gone down well in Washington. Like the British before them, North Americans have grown accustomed to the idea that nature has decreed that they should always be top dogs and that it would be terrible for humankind if they were to be pushed aside. Though some North Americans of a philosophical bent allow themselves Kipling-esque thoughts about the transience of power which, sooner or later, will “melt away” so “all our pomp of yesterday is one with Nineveh and Tyre,” most prefer a less gloomy approach to the challenges facing their country. In his often outlandish way, Donald Trump embodies the optimism so many want to feel.
Trump’s strategy towards China is broadly similar to those of Barack Obama and Joe Biden; both assumed that the huge Asian country’s rapid economic rise posed an existential threat to the “rules-based” order the United States put together after the defeat of Germany and Japan in World War II and seemed to have consolidated itself when the Soviet Union imploded and bit the dust in December 1991. The difference is that, in Trump’s view, any arrangement that does not guarantee continued US supremacy must be worse than useless, which is why he is using a sledgehammer to smash the one his predecessors tried so hard to defend. Needless to say, the principal target of his onslaught is China. He evidently hopes to cripple her by denying her access to the lucrative US consumer market.
As far as Trump is concerned, almost everything can be seen as a zero-sum game in which one side wins and the other loses. He is distinctly unimpressed by those who tell him that international trade can benefit everyone involved. His economic ideas, such as they are, seem to be like the ones that prevailed in Europe and the Far East before Adam Smith demolished most of them. At heart, he is what Smith called a mercantilist who believes that, unless a nation sells more material goods than it buys, it will impoverish itself.
Unlike the Europeans, who have no desire to get caught up in a vicious trade war with the US, the Chinese have reacted by swearing to “fight to the end” and slapping big tariffs on their foe. No doubt they will try to make themselves the leaders of an international bloc similar to the one the North Americans have just decided to render obsolete. Unfortunately for them, this will not be at all easy. Most countries, whether they are prosperous like Japan, Australia or those in Europe, or poor like most of the rest, will not take kindly to being swamped with relatively cheap Chinese products, so they too may have little choice but to build protectionist barriers as high, or even higher, than those set up by Trump. After all, they too have companies, and the jobs they provide, that their governments have to take into account.
The gleeful destruction of the “globalist” order by the US president poses Javier Milei with several unpleasant dilemmas. After having gone out of his way in an attempt to make himself a member of Trump’s inner circle, the “anarcho-capitalist” simply cannot run the risk of letting him know that – as a fervent free trader – he is dead against what he is doing and thinks it is utter folly. What is more, by throwing world markets into turmoil, Trump has made it far harder for Milei to repair Argentina’s broken financial structures, something which, until very recently, he was doing with considerable success. Although Argentina is very much a minor player when it comes to international trade, her financial markets suffered more than many in Europe and East Asia the moment Trump got down to business. Milei will also have to choose between kowtowing to Trump by moving away from China or running the risk of annoying him by welcoming Chinese imports and investments.
Many, perhaps most, respected economists agree that the problems Trump is trying to solve are genuine but that his way of going about it is likely to prove counterproductive. There can be no doubt that the running down of the US industrial base had had many harmful social effects by ruining the lives of millions of men and women whose incomes, and sense of personal worth, had depended upon it; the notion that unemployed coal miners or steel workers should “learn to code” was always ridiculous. It has also been bad for strategic reasons; awareness that the US relied on other countries, especially China, to manufacture items needed for military purposes worries those who are unconvinced that hard power is no longer necessary,
Trump says that, thanks to his efforts, the US will be able to rebuild its industrial sector behind insurmountable tariff walls. He insists many big companies have already got the message and are beginning to repatriate their activities. However, for this to happen he would have to persuade almost all businessmen that the new order he is frantically putting in place will last for many decades to come. Presumably this is why he muses aloud about staying in the White House for longer than the constitutional provisions that are now in force permit. He apparently thinks that cunning lawyers will let him bypass them so he can emulate Franklin Roosevelt, who died before his fourth term in office reached its conclusion.
Sceptics warn that, thanks to Trump’s tariffs, consumer prices of most goods in the US will soon shoot skywards, with the result that public support for his policies could nosedive. Seeing that one reason why most North Americans were unwilling to let Biden and his would-be successor Kamala Harris stay in power was their inability to reduce “grocery prices,” a sizeable increase in them would spell big trouble for Trump who, if the opinion polls have it right, still enjoys majority backing because most people like his hard-line approach to illegal immigration and his contempt for everything that can be deemed woke.
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