Tariffs, tactics and trade myths: Unpacking the Trump–China deal
Key topics
Trump’s tariff war aimed to isolate China economically via global pressure
China “blinked” as countries feared Trump’s unpredictability and stayed neutral
Despite bluster, US remains uncompetitive; no real trade gains were achieved
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By Steven Boykey Sidley*
This week’s announcement of a trade agreement between the US and China has opened up a rift among commentators. One side says that US President, Donald Trump, got badly beaten down and had to back off. The other side says that Trump’s strategy worked. I suppose only those in the negotiating room would know, but let’s take a closer look.
In previous columns, I have mentioned my frequent political sparring with writer/commentator Rian Malan. In a private exchange, he proposed a theory of Trump and China which is worth considering.
Herewith his argument from a private email (with permission, and edited for clarity):
As Don sees it, China is a deadly threat to the USA. Because dumb Americans have deindustrialised themselves into feebleness and now depend on China for everything, including almost all the materiel they will need to wage war on China. The Democrats and EU elite don't care because this is the world they designed, so it falls to Donald to save the free world.
I think it is time to reconsider the shit about universal tariffs for everyone. Trump's main objective was always to cripple the Chinese economy by excluding it forever from the money river controlled by white men in the West. The rest (of the world) barely mattered.
But Donald could not declare this openly, partly because showing his hand would enable Beijing to mount an effective counterstrike.
If you tell the Chinese you are planning to cripple their economy they are going to want to cripple you back by appealing to sympathetic countries to join them in fucking up the Americans and breaking their dollar forever. China has a lot to offer those it wishes to seduce, including cheap loans, development aid, security guarantees and leading roles in the New World Order. Russia and Iran have already signed up for this along with the usual suspects in Africa and South America but Canadians and Europeans and New York Times subscribers could easily be persuaded to remain neutral.
Rather than accept this and give up, Donald and Navarro cook up an insane plan that looks roughly like this from outside.
They declare that the entire world is cheating the USA and that the USA therefore declares tariff war on everyone. The entire world says, Geezers, this guy is completely bonkers.
This universal derision emboldens the Chinese to take a firm and noble stand. We will not be bullied! We will fight to the death etc etc. Donald responds by doubling the size of his China tariffs even as he puts the rest of the world on pause. This divides the entire world into three camps. One is Donald. Two is China. And three is all other countries.
They have all been warned that the US demands a level playing field and will smite them with mighty tariffs if they don't' play ball. Publicly they say tariffs will hurt America more than anyone else because that is the lesson of history and 15 Nobel laureates agree --- but in private they think Trump is a mad dog and maybe it is best to stay on his right side. Which means that when the Chinese whisper in other countries' ears about joining the campaign to break America they all say, sorry, dude, we can't risk it.
And that's where we are right now. Things are looking pretty good for Donald at the moment. It is entirely possible that China didn't realise US retailers would cancel orders rather than pass enormous tariffs on to their customers. This caused China more pain than anticipated, which is surely why they are willing to negotiate.”
Read more:
China blinked
In short, Malan is postulating that China blinked because they could not get others to climb aboard an anti-American trade coalition – they were all terrified of the “mad dog” Trump. And then China started losing business for their export factories.
Perhaps. If this was indeed Trump’s plan, it would be part of a genius move, perhaps the cleverest in geo-political history and would cement Trump’s tattered reputation as a master deal maker.
But Trump is not a strategic planner (by all accounts, even his own in which he boasts his “gut feel” approach to business). His Senior Counselor for Trade, Peter Navarro, is “dumber than a sack of bricks”, according to Elon Musk. And Treasury Secretary Bessent is a middle-of-the-road financial conservative who would never have come up with this wild, risky plan. Commerce Secretary Howard Lutnick? Maybe.
But perhaps this trade deal was not planned at all and just sort of unfolded as everyone on both sides realized that cooler heads are a better idea than lashing out.
Not competitive
But that still leaves us with the following problem – China still makes better hi-tech stuff at better prices than the US, so their manufacturing plants will continue to export as before. Also, the US cannot re-industrialize because of decades of outsourcing, neglect, and the thinned-out industrial skills base. They are simply not competitive at a whole lot of critical stuff, and the cost of getting there is prohibitive. Even if China agrees to open its market, those facts remain.
So what has been achieved in terms of re-establishing US exceptionalism and trade balance? Other than the remaining reduced tariffs imposed on China (which will be passed on to consumers and eventually into inflation), the answer is…nothing.
Trump will no doubt disagree and loudly claim victory. But nobody won. We have returned to where we were before the tariff kerfuffle.
As you were.
*Steven Boykey Sidley is a professor of practice at University of Johannesburg, columnist-at-large for Daily Maverick and a partner at Bridge Capital.
This article was first published by DailyFriend and is republished with permission