The Best Possible Outcome for the US-China Trade War — And How to Get There
๐ A Trade War with Global Consequences
The escalating trade tensions between the United States and China are no longer just a bilateral issue—they’ve become a threat to the global economy. With tariffs soaring, markets trembling, and supply chains rattled, the rest of the world watches nervously. But it doesn't have to end in economic wreckage. A better path is possible—one that benefits both Washington and Beijing, and stabilizes the broader international system.
So what would the best case scenario look like? And what steps must be taken—by both nations—to move from confrontation to cooperation?
✅ The Best-Case Scenario: Mutual Gain through Fair Trade and Strategic Cooperation
Restoration of Predictable Trade Relations
The U.S. and China agree to reduce tariffs to pre-2018 levels.
Both commit to transparent trade practices monitored by neutral third parties like the WTO.
The Phase One trade deal is either revised or replaced with a long-term trade agreement grounded in measurable, enforceable goals.
Technological Competition Without Decoupling
The two powers agree on frameworks for fair competition in technology sectors without forcing a global tech “cold war.”
Joint forums are created to discuss ethical AI, data governance, and semiconductor supply chains.
Global Supply Chain Stabilization
The U.S. and China coordinate on diversifying but not severing supply chains.
They build resilience against future disruptions without resorting to zero-sum policies.
A New Economic Dialogue Framework
A high-level, recurring U.S.-China Economic Cooperation Council is established with rotating working groups on trade, technology, and sustainability.
Academic, business, and civil society leaders are included to depoliticize and broaden the conversation.
Global Impact: Economic Recovery and Stability
With the world's two largest economies cooperating, global markets stabilize.
Developing countries no longer suffer collateral damage from trade volatility.
Innovation and investment pick up as uncertainty fades.
๐ค How the US and China Can Deescalate
What the United States Can Do:
Tone Down the Rhetoric: Shift from nationalist framing to pragmatic problem-solving.
Lift Excessive Tariffs: Targeted tariffs may be necessary, but broad-based ones hurt American consumers and businesses.
Rebuild Multilateral Coalitions: Work with allies to ensure a united, rules-based global trading system.
What China Can Do:
Open Up Its Markets: Reduce barriers for foreign firms and improve legal protections for intellectual property.
Curb Industrial Subsidies: Gradually wind down support that creates global distortions in sectors like steel and solar panels.
Enhance Transparency: Especially in data governance, cybersecurity rules, and business operations of state-owned enterprises.
๐ A Call for Global Leadership
At a time when climate change, pandemics, and geopolitical risks demand unified responses, a prolonged U.S.-China economic war is a distraction the world cannot afford. Both nations must show the maturity to see beyond short-term political wins and recognize their shared responsibility as global stewards.
The best outcome isn't one in which one side "wins"—it's one where both sides rise. Economic peace between the U.S. and China would not only lift both economies, but also signal to the world that cooperation, even between rivals, is still possible.
Conclusion:
The U.S.-China trade war has shown us what fracture looks like. It's time to show the world what repair looks like. The stakes couldn’t be higher—and the opportunity, no less profound.
The Trump–Xi Trade Saga: From Tariff Wars to Economic Brinkmanship
Since Donald Trump first assumed the U.S. presidency in 2017, his trade negotiations with Chinese President Xi Jinping have been a defining feature of global economic relations. Spanning two non-consecutive terms, Trump's approach to China has evolved from aggressive tariff implementations to a complex interplay of economic strategies and geopolitical considerations.
First Term (2017–2021): The Genesis of the Trade War
Upon entering office, President Trump prioritized addressing the U.S. trade deficit with China, accusing Beijing of unfair trade practices and intellectual property theft. This led to a series of escalating tariffs:
In 2018, the U.S. imposed tariffs on $250 billion worth of Chinese goods, prompting China to retaliate with duties on $110 billion of U.S. products.
The conflict culminated in the "Phase One" trade deal in January 2020, where China committed to purchasing an additional $200 billion in U.S. goods over two years. However, by the end of 2021, China had fulfilled only 58% of its commitments, falling short of the agreement's targets.
Despite these efforts, the U.S. trade deficit with China continued to grow, reaching record highs by 2020.
Second Term (2025–Present): Renewed Confrontation
Re-elected in 2024, President Trump resumed a hardline stance on China, implementing a series of aggressive trade measures:
Tariff Escalations: In early 2025, the administration imposed a 10% baseline tariff on all Chinese imports, which was subsequently increased to 20%. Additional "reciprocal tariffs" brought the effective rate on some goods to as high as 145%.
Chinese Retaliation: Beijing responded with tariffs of up to 84% on U.S. goods, suspended certain agricultural imports, and initiated investigations into American companies.
Economic Impact: These actions led to significant market volatility, with U.S. stock indices experiencing steep declines. Former Treasury Secretary Janet Yellen described the tariffs as the "worst self-inflicted wound" on a strong economy.
Diplomatic Dynamics and Future Prospects
Despite the escalating tensions, both leaders have expressed openness to dialogue:
Trump's Position: President Trump has indicated a willingness to negotiate, stating he would "love to make a trade deal with China."
China's Stance: Chinese officials have affirmed that "the door to talks is open," emphasizing the need for mutual respect and equality in negotiations.
However, underlying issues such as technology transfers, market access, and geopolitical rivalries continue to complicate the path to a comprehensive agreement.
Conclusion
The trade relationship between the U.S. and China under President Trump's leadership has been marked by cycles of confrontation and tentative engagement. As both nations navigate the complexities of economic interdependence and strategic competition, the outcomes of their negotiations will have far-reaching implications for global trade and economic stability.
most labor economists now believe that immigrants don’t do much head-to-head competition with native-born workers; they bring different skills and take different jobs. And the past few years, with elevated immigration, have also been an era of exceptional growth in wages for the worst paid.......... immigration is more or less neutral in its effects on inflation: Immigrants expand supply, but they also contribute to demand. In the aftermath of the pandemic, however, the huge sums spent on aid pumped up demand; this burst of demand was easier to accommodate without sustained inflation because immigration made it possible to achieve rapid growth in employment. .............. Adult immigrants tend to be working age, which means that they will spend years paying taxes before they become eligible for Medicare and Social Security, which constitute a large part of federal spending. And while this point is a bit brutal, undocumented immigrants are especially good for the budget, because they pay payroll taxes (which are collected by employers) without being eligible for future benefits. .........
If Hillary had picked Elizabeth Warren to be her running mate, Hillary would have been president. But two women was too much. For Hillary. Warren was electric. That was too much electricity. For Hillary.
She picked some bland white guy whose name or face I can not recall right now.
Kamala had the option to pick the Pennsylvania Governor. Shapiro. And she would have won. People were clamoring for Shapiro. PA was The State where the election was going to be decided. And she picked someone who was not on anyone's list.
I accuse both Hillary and Kamala of internalized sexism.
Some in the Indian media are calling Trump the American Gorbachev, the one who brings the empire down, dramatically so. The WTO was architected and led by the US. Trump is busy dismantling it. There seems to be no economic theory behind his moves. If any exists, it harks back to the days before Adam Smith wrote his book. It is called mercantilism.
The only sane thing to do at this juncture is the effort spearheaed by Senatore Elizabeth Warren in the US Senate. The US Congress has the power to undo the damage and rescind the tariffs.
Some people are attacking Bill Ackman for supporting Trump and then realizing some of his policies are mistaken. But this is better than not realizing it, or realizing it and keeping quiet, which is what practically everyone else who supported Trump has done. https://t.co/OvWtLuGKCq
"..... the first step is disruption: tariffs that shatter the existing economic order and drive countries to the negotiating table. Once at the negotiating table, countries will be asked to take steps via currency agreements to lower the value of the dollar. ......... Should allies refuse to bend to the tariffs and decide instead to retaliate with levies of their own, they may find the United States withdrawing from defense agreements such as NATO. .......... Unlike in 1985, large numbers of U.S. dollars today are held by China. Lowering their value would amount to financial warfare with China, which the plan endorses. ...... Much as the Cold War arms race with the Soviet Union squeezed the Communist system to the point of collapse, this strategy seeks to cut off China from the world economy through punishing tariffs, or a user fee on reserves, which would eventually force transformative change. ..........
If everything goes as planned
, U.S. exports would be more competitive globally, China would be weakened and more of our allies would be sharing the burdens of military spending. The upshot would be more manufacturing in the United States and a reinvigorated American heartland. ..........
Will it work? Few economists think so. Many prophesize disaster
........... There is an even bigger problem with the plan, though, than its slim prospect of success. Perhaps the United States could manage in a world that does not run on the dollar. But the dollar is the world’s reserve currency because it is considered the most reliable place to store assets and to invest — a haven from expropriation, political retribution and economic unpredictability. Foreign states and individuals alike invest in the United States because they believe our political system is stable, our legal system is fair and private property is valued. ............ The dollar became strong after World War II when the United States committed to supporting a web of economic and military alliances intended to stave off conflict and ensure peace through trade. The dollar remained strong because, as other nations entering the global trading system fell prey to corruption, cronyism and civil unrest, the U.S. economic and political system stood out as a beacon of security, innovation and enterprise. ............. The most valuable asset of the United States is not the dollar but our trustworthiness — our integrity and our values. If the world envisioned by the Mar-a-Lago Accords comes to pass, it will be a sign that not only our currency but our nation has been devalued. "
Why Did So Many People Delude Themselves About Trump? Donald Trump’s 2024 election sent many finance types into spasms of anticipatory ecstasy as they imagined freedom from regulations, taxes and unfamiliar pronouns. “Bankers and financiers say Trump’s victory has emboldened those who chafed at ‘woke doctrine’ and felt they had to self-censor or change their language to avoid offending younger colleagues, women, minorities or disabled people,” The Financial Times reported a few days before Trump’s inauguration. It quoted one leading banker crowing — anonymously — about finally being able to use slurs like “retard” again. The vibes had shifted; the animal spirits were loose............. “We’re stepping into the most pro-growth, pro-business, pro-American administration I’ve perhaps seen in my adult lifetime,” gushed the hedge fund manager Bill Ackman in December....... The surprising thing isn’t that Berezin saw the Trump tariff crisis coming, but that so many of his peers didn’t. .......... Trump believes, firmly and ardently, in taxing imports, and he thinks any country that sells more goods to America than it buys must be ripping us off. .......... most of the people who make a living off their financial acumen had less understanding of Trump’s priorities than a casual viewer of MSNBC. .......... many investors who pride themselves on their savvy are in fact just creatures of the herd. “All these cognitive biases that amateur retail investors are subject to, the Wall Street pros, are, if anything, even more subject to them because they’ve got career risk associated with bucking the trend” .......... “You don’t get fired for being bullish, but you do get fired for being bearish on Wall Street,” said Berezin. ............ When wokeness was ascendant, plenty of people in tech and finance quietly seethed at being guilt-tripped and forced to feign concern about social justice. “When the opportunity came to jettison all that, they were happy to do it,” said Berezin. “And Trump enabled them to do it.” ............. So last October, when Scott Bessent, soon to become Treasury secretary, said that Trump was really a free trader who used tariffs as a negotiating tactic, Wall Street was eager to believe him. “It’s escalate to de-escalate,” Bessent told The Financial Times. ...........
This claim was obviously absurd. Trump has been obsessed with tariffs, which he called “the most beautiful word in the dictionary,” for decades.
............. When he makes sales, whether of Trump University courses or Trump-branded cryptocurrency, he is usually taking advantage of the buyer, and he views global trade through the same zero-sum lens. .......... during his first term, the so-called adults in the room thwarted some of Trump’s most destructive whims. There have been far fewer such figures in the Trump sequel, resulting in the wholesale degradation of American governance. ............ The conspiracy theorist Laura Loomer just directed a purge of the National Security Council. ....... There’s no one in the executive branch willing to publicly push back on Trump’s threats to take over Canada. Somehow, traders failed to recognize that there would eventually be economic fallout from such profound misrule. ........... Wall Street professionals, like so many other ostensibly smart people, refused to see Trump clearly, mistaking his skill as a demagogue for wisdom as a policymaker. .......
What an odd assumption to make about a man who bankrupted casinos.
................ we might have passed the event horizon, meaning that even if Trump backs off from the tariffs, there’s been enough damage done to the U.S. economy, to the global economy, to investor confidence, consumer confidence, that we’re probably going to see a recession regardless of what happens” ..........
while public attention is focused on the stock market, there are alarming signs in the bond market
............. Usually, if stocks go down, so do yields on U.S. Treasuries, because they become more desirable to people looking for a safe place to park money. At least right now, that’s not happening, which he thinks could signal a crisis of confidence in the stability of the U.S. government and the debt it issues. ............. “Do we really want to use the dollar as a reserve?” It turns out that there’s a price for taking all the soft power America has accrued since World War II and setting it on fire.
For Republicans, Tariffs Pose a Risk Like No Other Trump’s political strength is built on the economy. If it sinks, he could drag his party down with him........ over the last two decades, the post-election period hasn’t offered any clarity at all about the future of American politics. The winning party repeatedly convinces itself it has won a mandate, or even a generational advantage. The shellshocked losers retreat into internal debate. And then just a few months later, it becomes clear that the next phase of American politics will not be what the winners imagined. ........... In one key respect, the elections on Tuesday were not significant: They do not suggest that Democrats solved any of the problems that cost them the last election. Instead, they mostly reflect the party’s advantage among the most highly informed, educated and civically engaged voters. This advantage has allowed Democrats to excel in low-turnout elections throughout the Trump era, even as he made enormous gains among the disaffected and disengaged young, working-class and nonwhite voters who show up only in presidential elections. ............ No party or politician is recession proof. Historically, even truly dominant political parties have suffered enormous political defeats during major economic downturns. .......... In New York Times/Siena College national surveys last fall, more than 40 percent of voters who backed Mr. Trump in 2024 but not 2020 said that the economy or inflation was the most important issue to their vote. ............ Consumer confidence was falling, inflation expectations were rising, and polls found that tariffs themselves were generally unpopular. ............ Already, a half-dozen Republican senators have supported legislation to rein in the president’s authority to impose tariffs. This is nowhere near enough to overcome a presidential veto, but it is an unusual level of Republican opposition to Mr. Trump, and the time for opposition to build is nowhere near over.
Experts say she survived the fall because she was strapped into her seat.
Trump Is Selling Jews a Dangerous Lie Taking a break from her work dismantling her own department, Secretary of Education Linda McMahon last week threatened roughly $9 billion of grants and contracts with Harvard because of “the school’s failure to protect students on campus from antisemitic discrimination.” ............ Jew hatred is real, but today’s anti-antisemitism isn’t a legitimate effort to fight it. It’s a cover for a wide range of agendas that have nothing to do with the welfare of Jewish people. .......... Jews who applaud the administration’s crackdown will soon find that they do so at their peril. ........ Among the first high-profile targets of the anti-antisemitic push have been a recent Columbia graduate and a current Tufts University graduate student, one a lawful permanent resident of this country and the other one here on a student visa, who spoke out in favor of Palestinian rights. Both have been handcuffed, driven off and indefinitely detained. Neither has been charged with a crime. ......... Abductions by government agents; unexplained, indefinite detentions; the targeting of allegedly dangerous ideas; lists of those under government scrutiny; official proclamations full of bluster and bile — Jews have been here before, many times, and it does not end well for us. ............ “A country that has pushed one group out of its political community will eventually push out others.” What our government is doing now is wrong in itself, but beyond that, it poses a bigger threat to Jewish people’s safety than all the campus protests ever could. ................. the forces of anti-antisemitism. ......... But not some of MAGA’s most prominent representatives, including Matt Gaetz and Marjorie Taylor Greene, who had no objection to fighting antisemitism but observed that the language of the bill would interfere with Christians’ ability to accuse Jews of killing Christ. At other times, agreeing with Vladimir Putin, Ms. Greene has said that the Jewish president of Ukraine was running “a Nazi army.” .......... As for Mr. Trump, he declared that Senator Chuck Schumer is “not Jewish anymore” .......... Karl Lueger, a raging antisemite and fin-de-siรจcle mayor of Vienna, who declared, “I decide who is a Jew.” .......... Leo Terrell, the head of Mr. Trump’s antisemitism task force, shared a tweet by a prominent white supremacist that lauded the president’s “ability to revoke someone’s Jew card.” ........ As Oscar Hammerstein II put it in “The King and I”: “If allies are strong with power to protect me/Might they not protect me out of all I own?” .......... In the Long Island town where I grew up, Jews were a minority. My father taught me how to punch antisemites before getting hit — when I was in elementary school! And he emphasized to me that I should expect to encounter such people wherever I went, especially as I moved into unfamiliar professional or social settings. ............ Like the white supremacists liberated by mainstream anti-D.E.I. language, these antisemites hear perfectly legitimate criticism of, say, the Israeli government and regard it as an opportunity to unfurl the true extent of their prejudice. .............. The president hadn’t been in office a full day before the Anti-Defamation League spoke up to defend Elon Musk for throwing what sure looked to me like a Sieg heil. After weathering intense criticism over its support for Mr. Khalil’s abduction, the organization’s chief executive last week restated the need for due process. How did we get to the point where that’s even in doubt? ......... The Anti-Defamation League was founded in 1913, in the wake of the case of Leo Frank, a Jewish man accused of murdering a 13-year-old Christian girl. Most historians today agree that Frank, who was lynched in 1915, was wrongly convicted after a sham trial, but the MAGA folks on X can’t help but celebrate the lynching of a Jew. “He got exactly what he deserved,” exclaimed Lauren Witzke, a 2020 Republican Senate nominee, “and everyone in that crowd should have received medals for protecting their community.” ..................... “The ‘vibe shift’ is not necessarily that more people on the right are antisemites compared to eight years ago, but that much of the right now appears to reject the basic notion that there should be any stigma against even the vilest bigotry.” ............. In the second and first century B.C., the Jewish kingdom of Judea aligned itself with Rome to protect itself from the domination of Greek culture. Rome obliged and conquered Judea for itself. The enemy of our enemy was not our friend.
Trump Has Everything Under Control .... and an America that has dethroned itself from global economic leadership. And don’t be surprised if it leads to war, as global economic upheavals often do. ....... Like millions of other Americans, I barely noticed losing a big chunk of my net worth. Can’t wait for all the price increases to kick in.
