Zhang Yuyan on the Trump Administration’s Trade War and the Future of the Global Order

Renowned CASS veteran on how Trump’s negative-sum approach to China fits into a wider contest over rules, resilience, and the shape of world order.

Zhang Yuyan is Academician of the state-run Chinese Academy of Social Sciences (CASS), the highest academic title afforded to social scientists by the Chinese government.

A long-time Director of the influential Institute of World Economics and Politics (IWEP) at CASS from 2009 to 2024, Zhang is now Dean of the School of International Politics and Economics at the University of CASS.

Today’s newsletter features his examination of the logic and limits of Donald J. Trump’s trade war - from safeguarding American monetary dominance to redefining globalization, sourcing a recent interview in Contemporary American Review, a leading Chinese mainland journal run by the Institute of American Studies (IAS) at CASS, available in July in the second issue of 2025.

The interviewers are Liu Weidong, Director of the journal’s editorial office, and Hu Ran, both at the IAS.

They and Zhang have agreed to a translation being published in Pekingnology, but haven’t reviewed it before publication.

特朗普政府的贸易战与全球秋序的末来

The Trump Administration’s Trade War and the Future of the Global Order

Abstract

Trump’s foreign economic policy centres on tariffs, aiming to achieve multiple goals simultaneously: boosting U.S. fiscal revenue, reducing trade deficits, and encouraging the reshoring of manufacturing. However, this approach contradicts macroeconomic principles. The deeper rationale behind Trump’s global trade war is to safeguard a core pillar of American hegemony—U.S. dollar supremacy. By bypassing the World Trade Organisation, Trump aims to rewrite the rules of the global economy through trade wars, which are also partly driven by a strategic intent of great power competition. Trump’s China policy adopts a negative-sum strategy. Economic and trade tensions serve as a test of strategic resilience for both countries. Although the Trump administration is unlikely to pursue full-scale decoupling from China, it remains committed to a "small yard, high fence" approach in advanced technology sectors to hinder China’s rise.

Trump rejects the current model of globalisation and challenges the established international rules and multilateral system, yet he offers no coherent vision for a new global strategy. For the United States to become "great again" under his leadership, it must still engage with the global system. At the heart of Trump’s ambition is that the future international order conform to American logic and rules. But aspiration is not the same as capacity. The future shape of global political and economic order will hinge not only on the shockwaves of Trump 2.0, but more critically on how other nations respond. What follows is a drawn-out period of restructuring for global order.

I. The fundamental drivers and underlying logic behind Trump’s global trade war

Q: What are the main objectives Trump aims to achieve through launching a global trade war? Is there a priority hierarchy among these goals, and how are they interrelated?

A: Trump’s decision to anchor his foreign economic policy on tariffs stems from his belief that they are the solution to multiple challenges. His trade war pursues three primary objectives: first, to boost revenue and help close the federal budget gap; second, to reduce or even reverse the U.S. trade deficit; and third, to spur the reshoring of manufacturing to American soil. Although these policies may appear to reflect Trump’s personal agenda, they are actually backed by various interest groups aiming to profit. For example, the white blue-collar workers, who make up Trump's core political base, have high hopes for his promise of manufacturing revival. However, tariffs are no quick fix for bringing manufacturing back to the U.S. Even if tariffs generate tens of billions of dollars in additional revenue annually, that amount is marginal when compared to the massive scale of the U.S. federal deficit.

Trump's tariff policy contains internal contradictions. His bid to address the so-called trade deficit through tariffs rests on shaky economic logic. Fundamentally, the U.S. trade balance is determined by macroeconomic factors such as domestic savings, consumption, and investment. When excessive consumption coincides with inadequate savings and investment, trade deficits naturally result. America’s per capita GDP—now exceeding $80,000—owes much to persistent trade deficits.

These deficits send large sums of dollars abroad, enabling the dollar to function as the world’s reserve currency. By supplying the global economy with liquid, reliable financial assets, the U.S. can draw on global resources to support its own output—particularly consumer spending. If those dollars never return, the U.S. effectively imposes a broad form of "international seigniorage." In this sense, trade deficits are a prerequisite for the benefits of seigniorage. However, the relentless growth of federal debt, as the basis, and the over-issuance of dollars, as the symptom—reflected in trade imbalances—threaten to erode one of America's most valuable assets: the dollar’s dominance in the global monetary system.

Q: What is the relationship between Trump’s global trade war and the preservation of the U.S. dollar’s dominance?

A: At its core, Trump's trade policy is aimed at preserving dollar hegemony—a cornerstone of American global hegemony. U.S. hegemony rests on four key pillars: military force ("soldier"), culture and ideology ("Hollywood"), technological leadership ("Apple"), and financial influence (the "dollar"). These four elements form the acronym “SHAD,” which, incidentally, is also the name of a type of African fish.

The dollar’s international status rests on global trust. Nations need financial assets that are highly liquid, high-yield, safe, and readily available to support trade, investment, and foreign exchange reserves—and for decades, the U.S. dollar has met these requirements. Gold alone cannot serve this function, as it lacks both the liquidity and supply of the dollar.

After the Bretton Woods system collapsed in the early 1970s, fierce debate erupted in the United States. Many feared that severing the dollar's link to gold would erode global demand for it. The opposite occurred: demand for dollars grew. U.S. Treasury bonds became the preferred reserve asset—what I call "fundamental collateral." In the absence of credible challengers, the dollar has maintained its dominance in the global financial market. Even if a country were to sell all its U.S. debt holdings, the proceeds would still be in dollars—cash that earns nothing and even incurs a custodial fee of about 0.3%.

However, global confidence in the U.S. dollar is weakening. The first contributing factor is the continued rise in U.S. sovereign debt. Kenneth Rogoff, professor of economics at Harvard University and former chief economist of the International Monetary Fund, has pointed out that while the U.S. share of global GDP is gradually declining, its debt-to-GDP ratio continues to climb. This structural divergence is gradually eroding the dollar's international credibility—what I refer to as the "Rogoff Dilemma."

The second factor is the increasing weaponisation of monetary and financial instruments by the United States. Following the outbreak of the Ukraine crisis in February 2022, the U.S. and the European Union imposed sweeping financial sanctions on Russia. This has led many countries to reassess the security of holding dollar-denominated assets. During field visits in recent years, I observed that such concerns are notably present in a number of Central Asian and Latin American countries.

Finally, several potential competitors to the U.S. dollar have recently emerged. First, with China's growing comprehensive national strength, many countries have placed high expectations on the accelerated internationalisation of the renminbi and its more prominent role in the future international monetary system. Second, in 2020, the European Union launched the NextGenerationEU recovery plan, issuing €750 billion in bonds for the first time under the EU's name. This was widely seen as a major step toward deeper EU fiscal integration. Although EU member states share a central bank and a single currency, they lack a unified fiscal authority. Sovereign debt crises in individual eurozone countries have previously undermined the stability of the entire bloc.

While signs of accelerating de-dollarization have grown more visible in recent years, neither the euro nor the renminbi is likely to replace the U.S. dollar as the world’s core currency within the next decade. EU bonds still have far to go before they can match U.S. Treasuries in safety, liquidity, return stability, and scale. The renminbi faces an even longer journey toward full internationalization.

Q: What impact will Trump’s trade war have on the United States? Does it represent more of an opportunity or a crisis for the country? Could Trump’s actions, to a certain extent, reshape the global trade system and potentially affect the international security and supply chain systems?

A: Tariffs are the primary tool of Trump’s foreign economic policy. In a sense, his decision to launch a trade war is a high-stakes gamble—an attempt to achieve a breakthrough through unconventional means. In the long run, his "Make America Great Again" rhetoric essentially reflects a drive to enhance U.S. power relative to other countries, with the preservation of American global hegemony at its core.

Trump’s strategy combines external confrontation with internal consolidation, but in the short term he has prioritised external challenges. However, pursuing a global trade war through tariffs comes with heavy domestic political costs. According to a poll jointly conducted in April 2025 by ABC News, The Washington Post, and Ipsos, Trump’s approval rating after his first 100 days in office was 39%—down six percentage points from February and the lowest for any U.S. president at this milestone in nearly 80 years. The same survey found that 72% of respondents said they think it’s very or somewhat likely that his economic policies will cause a recession in the short term, 53% said it’s gotten worse since Trump took office and 41% said their own finances have worsened.

For the United States, the short-term impact of Trump’s trade war has been mixed. While some countries have made partial concessions or policy adjustments, most of Trump’s objectives remain unmet. At the same time, economic damage from tariffs is evident.

According to the World Economic Outlook: A Critical Juncture amid Policy Shifts released by the IMF in April 2025, U.S. GDP growth is projected to slow to 1.8% for the year, 0.9 percentage points lower than the IMF’s January forecast. This is the sharpest downgrade among all advanced economies, with even the probability of a recession increasing. The report attributes the weaker outlook mainly to rising policy uncertainty, escalating trade tensions, and weakening demand momentum.

The IMF also lowered its forecast for global growth in 2025 to 2.8%, a drop of 0.5 percentage points from its January projection. The Trump administration's trade war will inevitably weigh on China's economy as well, resulting in a "lose-lose" outcome.

At this stage, the sustainability of the current global trade system appears doubtful without major reform. Trump has sought to reshape the international trading system through his trade war, including attempts to redefine China's status as a developing country. Yet his vision for the future global trade order remains only tentative.

For example, Trump and his economic team have stressed the need to tackle overcapacity, floated the idea of forming a tariff alliance, and even proposed issuing a $1 trillion interest-free "century bond." However, none of these initiatives has yet taken shape as mature and coherent blueprints.

Q: Since the Trump administration launched its trade war, public protests and demonstrations in the United States have persisted as expressions of discontent. Yet within the Republican Party, few voices have openly opposed him. More striking still, congressional Democrats have failed to impose any effective checks on his actions. During the campaign, Trump derided Biden as "Sleepy Joe," but it now seems that the Democratic Party as a whole has fallen into a kind of political slumber. How do you view this phenomenon in American politics?

A: This question brings to mind an article published in The New York Times on January 18, 2025, titled Two of the World’s Leading Thinkers on How the Left Went Astray. The conversation featured Michael Sandel, professor of political philosophy at Harvard University, and Thomas Piketty, the prominent French economist, and centred on the future of the left in the West. For the sake of discussion, we may broadly consider the U.S. Democratic Party and Europe’s social democratic parties as representatives of the left. In the view of these two thinkers,

“One of the greatest political vulnerabilities of social democratic parties is that they have allowed the right to monopolise some of the most potent political sentiments, namely patriotism, community and belonging.”

“Immigration is an issue that forces us to ask questions about the moral significance of national borders and, by implication, about the moral significance of nations as communities of mutual dependence and responsibility.”

“...job losses in manufacturing due to trade competition.”

“The left has not addressed the issues of trade and jobs. They will not win by competing with the nationalist right on identity discourse or about migrants because the nationalist right will always be more convincing on this front. What’s important, I think, is to address what’s really the core issue for the voters.”

Their sense was "that the future of a left politics will depend on developing fuller answers to these kinds of questions." While their reflections do not fully or accurately answer your question, they nonetheless represent a representative interpretation.

Q: Despite strong opposition from numerous economists, why did Trump persist in launching a trade war? Why is he so obsessed with using tariffs as a weapon? To what extent did his personal beliefs influence the U.S. government’s decision to initiate the trade war?

A: If Trump's trade policy were judged solely through the lens of economic theory, one might conclude that he has no knowledge of economics and that his actions contradict the foundational principles of international trade. However, when viewed from the perspective of political economy, his policy choices appear largely consistent with the logic of geopolitical rivalry. Simply put, power takes precedence over welfare. I will elaborate on this point later, so I will not go into further detail here.

As for why the Trump administration chose tariffs as a primary tool in its policy arsenal, the explanation lies both in the structue of the U.S. political system and in strategic considerations around policy implementation. The U.S. Constitution provides an institutional foundation for the president to exercise executive power, but it also leaves room for potential abuse of that power—one of the main reasons President Trump has been the target of constant criticism. Trump himself is generally a forceful, action-oriented leader, and trade is one of the policy domains where a U.S. president can exercise significant direct power. Coupled with his need to deliver on campaign promises to shore up his political base, and reinforced by a mutually reinforcing belief in major-power geopolitical competition among Trump and his advisors, it was almost inevitable that tariffs would become a primary instrument of policy.

Q: Does Trump oppose globalisation on the ideological front?

A: When discussing ideology, it is essential to first clarify the concept. In the context of Western political science, ideology refers to a belief that the current world is not in its optimal state and that it can—and should—be improved. By this definition, Trump is a committed and archetypal ideologue. He believes the United States is far from its ideal state and, in fact, in serious trouble. He is convinced that he can improve the situation and "make America great again." Trump has publicly stated that China is not the main culprit for America’s current troubles; rather, he blamed the misguided decisions of previous U.S. presidents and administrations, along with the influence of what he calls the "deep state."

A key manifestation of extending ideology into foreign policy is the belief that one's own system and values are inherently superior, so much so that other countries should adopt them. On this point, Trump differs sharply from the liberals, including some within the Republican establishment.

Trump’s ideological stance might be summarised as follows: Although America, once great, is now plagued by problems and crises, it can—under the leadership of a "visionary" president—become great again. This vision calls for fundamentally reshaping what he views as the "unfair" aspects of globalisation, particularly the current international trade system, and turning it into an instrument for restoring prosperity and containing rivals.

In Trump's view, globalisation has put the United States at a significant disadvantage, with China reaping the greatest benefits. His objective is not to pursue reform within the framework of the World Trade Organisation, but rather to bypass, or even abandon, the system altogether in order to impose change on his own terms.

Q: The Trump administration has paused the trade war and initiated economic and trade negotiations with multiple countries, yet it continues to maintain a 10% baseline tariff along with tariffs on steel and aluminum. How do you assess the administration’s intentions? What developments might be expected after the 90-day window?

A: For a leader whose core approach is "transactional diplomacy," Trump’s chief concern lies in the cost-benefit calculus of dealmaking. Wielding the "tariff stick" generates both fear and tangible economic pain—tactics that produce varying effects at different stages of negotiation. By starting with maximalist demands and then moderating his position, Trump—author of The Art of the Deal—recognises that many countries will accept his "bottom line" with relief, or even gratitude.

This strategy gives him latitude to maneuver and adjust according to the counterpart. From another perspective, Trump has already achieved a significant objective: imposing a 10% baseline tariff and duties on steel and aluminum imports on America’s trade partners, all with minimal resistance. That result alone can later be presented as a "great" diplomatic victory.

As for what may unfold after the 90-day period, it is likely that the United States, following multiple rounds of bilateral negotiations, will conclude at least provisional trade agreements with a number of countries. Counterparties will either accept elevated tariff levels and further reduce tariffs on U.S. exports, or make concessions on non-tariff barriers.

At the same time, Washington will likely engage in talks with its principal competitors in an effort to reach preliminary or interim agreements. This approach offers at least two clear advantages: first, it buys time and helps cushion the domestic market from abrupt price shocks; second, it consolidates the administration’s initial gains and sets the stage for the next phase of negotiations.

Q: How does the trade war under Trump’s second term compare with trade and economic policies in Trump’s first term and the Biden administration? What forms of continuity exist among them?

A: Trump's second-term trade policy toward China can be encapsulated as: "Biden's Blueprint, Trump’s Upgrade," meaning that the Trump administration preserves the core framework of Biden’s China policy while pushing it further on all fronts.

From Trump's first term through the Biden presidency and now into a second Trump term, the United States has consistently tightened export controls on advanced technology and reorganized global supply chains in key sectors even without a formal trade war. These measures reflect a long-standing strategic aim: great power competition. Backed and reinforced by its dominance in global finance and monetary systems, the U.S. is able to wield trade as a policy instrument, using restrictions on high-tech exchanges and steep tariffs to hinder the economic rise of its rival.

In his 2023 book No Trade Is Free: Changing Course, Taking on China, and Helping America’s Workers, former U.S. Trade Representative Robert Lighthizer went so far as to claim that China's long-term strategic goal is to avenge the Opium War of 1840. [I have not been able to locate an exact quote in the book. — translator’s note] Such a narrative has serious implications.

Figures like Lighthizer, Peter Navarro, and Michael Pillsbury (author of The Hundred-Year Marathon: China's Secret Strategy to Replace America as the Global Superpower) represent a growing faction that interprets nearly all of China's actions as part of a grand strategy to exact retribution against the West. From this perspective, trade policy is seen as a mere tactical instrument, and it was in this context that the Trump administration framed the cumulative $6 trillion U.S. trade deficit with China as proof of China’s "ripping off" America.

In principle, trade is for mutual benefit. A collaborator and I are currently developing a game-theory model to analyze the China–U.S. trade relationship. When both sides open their markets and trade, comparative advantage and relative gains emerge.

In the early stages, China’s GDP was only 10% of the U.S. level. Suppose that in each round of trade, the U.S. gains 10 units while China gains 8. Even under these conditions, China would be able to narrow the GDP gap steadily over time. Eventually, its economy could grow to 80% of the size of the U.S. economy.

Over nearly five decades of reform and opening up, China’s economy has grown at a remarkable pace. Measured at market exchange rates, China’s GDP stood at less than 7% of the U.S. level in 1980. By 2021, that share had increased to 77%. Although fluctuations in exchange rates and price levels have caused a modest retreat in recent years, China's economy today still amounts to roughly two-thirds that of the United States.

Even if the per capita income gap continues to widen, China's population—roughly four times that of the U.S.—means that convergence in total economic size remains plausible. This trend has deeply unsettled many in the United States, sparking fear over China's rise. As the two countries grow more economically comparable, their relationship becomes one of simultaneous strategic rivalry and interdependence. Third-party states are increasingly caught in the middle, facing mounting pressure to "choose sides." Most are likely to adopt hedging strategies, maintaining engagement with both powers. Once these factors are introduced into the analytical framework, discussions of the so-called "Thucydides Trap" naturally follow. Under such circumstances, identifying a viable and sustainable model for great power coexistence becomes vastly more difficult.

Graham Allison, founding dean of Harvard’s Kennedy School, addresses this challenge directly in his book Destined for War: Can America and China Escape Thucydides' Trap? He argues that China's rise has stirred deep anxiety among some in the United States. According to Allison, China's strategic goal is to "make China great again." As a civilization with a long and distinguished history, its pursuit of national rejuvenation is both understandable and acceptable. The core challenge, however, is whether the shock of China's rise can be absorbed by other countries in a relatively stable, non-confrontational manner. At a deeper level, the question troubling Western elites is this: if China becomes the world's dominant power, what demands will it place on the world and, more pointedly, on the Western nations that once subjugated it?

Therefore, Trump's trade war must be understood in the broader context of shifting major-power balances and the intensifying strategic rivalry between China and the United States. Former U.S. Treasury Secretary and Harvard President Larry Summers once posed a sobering question: how will historians, 300 years from now, view the early 21st century?

In his telling, the end of the Cold War was a third-tier historical event; the civilisational clash between the Islamic and Christian worlds, a second-tier event; but the rise of China—a truly first-tier transformation. For Summers at least, China's rise is one of the most consequential variables in the profound changes unseen in a century. [I have not been able to locate the exact source for this purported view of Summers. The earliest instance I have found of him being quoted in this way appears in Logic of Mr. Luo: Why Is China Promising, a 2016 book by Chinese commentator Luo Zhenyu. —translator’s note]

II. Trump's strategic approach and instruments in his trade war on China

Q: How do you assess Trump's China policy in his second term and the underlying logic of major-power competition?

A: China and the United States are engaged in what could be called the "game of the century." In game theory, there are three basic types of games: positive-sum, zero-sum, and negative-sum. A positive-sum game produces mutual gains; a zero-sum game has fixed gains and losses, where one side’s gain is the other’s loss; and a negative-sum game is a lose-lose scenario, though one side may still prefer it if the opponent's loss is greater.

Economics primarily concerns itself with growth and improvements in welfare. Any increase in overall well-being is generally regarded as desirable. Under the principle of Pareto improvement, even if only one party benefits—so long as no one else is made worse off—the outcome is considered efficient. The logic of international political economy, however, is different. In great-power competition, the goal goes beyond welfare; it is about power—simply put, the ability to compel others to act against their will.

While welfare is derived from the absolute growth of wealth or output, power is rooted in relative disparities in comprehensive national strength, encompassing political, military, economic, and security dimensions. The preservation or expansion of such relative advantage can be pursued in two ways: by enhancing one's own capabilities or by inflicting disproportionately greater costs on an adversary. It is this latter approach that guides Trump's strategic calculus. In essence, this logic captures the fundamental nature of every great-power geopolitical competition.

Q: In your view, what are the conditions for initiating high‑level economic and trade negotiations between China and the United States? How do you assess the prospects of the China-U.S. trade war? If the trade war continues, will the Trump administration resort to other pressure tactics beyond trade? How should China respond to safeguard both its strategic interests and business development?

A: China and the United States are locked in a test of strategic resilience. The ball is now in Trump's court, and it is up to the United States to make the next move. Since Washington was the one that started the trade war, if it hopes to resume negotiations with China, it must take the initiative in offering clear diplomatic gestures. Negotiation, in a sense, is the art of making conditional concessions to secure maximum benefit or inflict maximum loss on the opponent at the lowest possible cost. Once both sides see the potential for such outcomes, the groundwork for talks is in place.

One key point bears emphasis: whether the rivalry between these two great powers escalates into mutual destruction will partly depend on the potential for a third party to profit. In other words, the possibility of a third party reaping rewards—the fisherman's gain—can temper the intensity of confrontation. I am currently co-authoring a paper on the fisherman’s gain, examining how the presence and possible opportunism of actors such as the European Union, Russia, Japan, and India will be key variables in determining whether China and the United States can eventually reach a mutually acceptable trade agreement.

The Chinese government should play an active role in mitigating the short-term pain caused by the trade war on domestic businesses. The Politburo meeting of the Communist Party of China (CPC) held on April 25, 2025 outlined relevant directives, proposing targeted financing and employment policy support for enterprises hit hardest by the Trump administration's tariffs. China and the United States have also agreed to exempt certain key products originating from the other country, such as some semiconductors and related manufacturing equipment, from retaliatory tariffs.

While geopolitical competition remains crucial, it is important to remember that the foundation of national power rests on wealth and welfare. From a short-term perspective, I hold a pessimistic view of the China-U.S. trade war. Even if partial agreements are reached, the U.S. approach of offering conditional concessions while pressing excessive demands suggests that negotiations will remain exceedingly difficult. However, I maintain a relatively optimistic view of the medium- to long-term prospects of the economic and trade relationship, largely due to my confidence in China's ability to navigate the "profound changes unseen in a century." The China-U.S. economic contest is a test of strategic resilience. As long as sound policies are in place, time will ultimately favour China and this great ship will be capable of weathering any storm.

If the China–U.S. trade war continues or future economic negotiations fail to produce mutually acceptable agreements, the Trump administration is likely to escalate pressure across multiple fronts. This could include encouraging the Philippines to take provocative steps in the South China Sea dispute, intensifying rhetorical efforts to "demonise" China, amplifying claims of so-called "overcapacity," or fueling lawsuits and investigations into the origins of the COVID-19 virus.

In the face of these potential challenges, China must be fully prepared. At the same time, it can show the United States what it means to act as a genuinely responsible major power. China enforces one of the world's strictest drug-control regimes and will continue vigorous efforts to combat crimes involving fentanyl-related substances. It remains committed to maintaining a high level of openness and to upholding the international trade system, and its decision to grant tariff exemptions for certain U.S. goods is a prudent move.

These measures reflect China's own reasoning and long-term objectives, not simply a reaction to U.S. demands. When China acts in this way, the world takes note. Over time, such actions will generate a collective influence that shapes American perceptions and behaviour.

Q: At the initiative of the United States, the China-U.S. Economic and Trade Meeting was held in Geneva, Switzerland from May 10 to 11, 2025, and achieved significant progress in a short time. Did this outcome exceed your expectations? How do you evaluate the results of the negotiations?

A: The high-level talk between China and the U.S. in Geneva, followed by the Joint Statement issued on May 12, was a natural development. Dialogue is always preferable to no dialogue, and even better when it yields results. News of the outcomes quickly drew positive reactions from global markets, underscoring the far-reaching impact of decisions made by the world’s two largest economies.

However, it must be stressed that although the United States has committed to tariff reductions and a 90-day suspension of the tariff war, the average tariff rate on Chinese goods entering the U.S. has nonetheless surged from 19% at the start of 2025 to 49% as of May 18. This figure includes a 10% "reciprocal tariff" and a 20% “fentanyl tariff.” By comparison, before 2018, the average tariff rate on Chinese exports to the U.S. was just 3.4%. After Trump launched the trade war in his first term, it rose to 19%, and now stands at roughly 49%. Meanwhile, the average tariff rate on U.S. goods exported to China is 31%.

If no agreement is reached within the 90-day window, Washington intends to reinstate a 34% "reciprocal tariff," effectively restoring the previously suspended 24% and pushing the total tariff on Chinese goods to as high as 73%. Clearly, such levels are unsustainable for most businesses. Judging from the trajectory of tariff adjustments alone, Trump's trade policy toward China represents a decisive shift toward "decoupling." One must remain fully alert to this reality.

Q: During the 2024 campaign, Trump said that, if re‑elected, he would pursue “complete decoupling” from China across several key economic domains. [Translator’s note: While a tougher U.S. stance and further decoupling were widely expected in media and policy analysis regarding a second Trump term, I have not found a 2024 quote in which Trump uses the exact phrase “complete decoupling”; I have seen such wording only in 2020.—translator’s note] Given the current trajectory of China-U.S. interactions, is the Trump administration likely to achieve a complete decoupling? If the United States continues down this path, could bilateral relations enter a “new Cold War”?

A: To answer this question, it is first necessary to define what a Cold War is. The defining characteristic of the Cold War was the U.S. policy of containment towards the Soviet Union, which entailed isolating it and severing all forms of contact, resulting in "complete decoupling" and leaving the targeted party to collapse under its own weight. At the time, trade between the U.S. and the Soviet Union was virtually nonexistent, and similar measures were applied to countries such as Cuba and North Korea. By this definition, the likelihood that the Trump administration could achieve complete decoupling from China and push the bilateral relationship into a "new Cold War" remains low, given the prohibitive costs.

Even if the U.S. manages to rebuild some low-end manufacturing capacity domestically, it will be difficult to reverse the existing global division of labour. In high-tech sectors, the U.S. leads in research and development, while China excels in application and market penetration. From a supply chain perspective, the U.S. controls critical technological "nodes," while China dominates "segments," benefiting from its massive scale and long supply chains. If the U.S. seeks confrontation, it will need to leverage its high-end "nodes" to control China's "segments" and gradually shift at least parts of China's extended industrial system to the U.S. or its allies. Clearly, achieving this would significantly raise costs for the U.S. and would require considerable time and cooperation from other countries.

The Trump administration is seeking to reinforce its "small yard, high fence" approach in high-tech sectors, driving efforts to decouple from China. Yet the question remains: can the U.S. allies truly achieve decoupling from China? Without full cooperation from third-party countries, building a parallel system would be significantly more difficult.

Moreover, in shaping foreign economic policy, the Trump administration must contend with the varied demands of domestic interest groups. While many of these groups currently align with the U.S. political establishment in taking a relatively unified stance toward China, their underlying interests differ, giving them strong incentives to press for adjustments in specific aspects of Trump's trade policy.

What is clear is that the United States will not reverse its overall course toward high-tech decoupling in the coming years. For China, this poses both a challenge and an opportunity. The crucial question is whether China can, within a relatively short time, move to occupy and secure the high-tech markets vacated by the United States, Europe, and Japan.

Q: In January 2025, the United States House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party introduced the Restoring Trade Fairness Act. The bill proposes revoking China's Permanent Normal Trade Relations (PNTR) status and outlines a plan to increase tariffs on Chinese "strategic goods" incrementally to 100 percent over five years. It also calls for a 35 percent tariff on non-strategic goods. Although the bill has not yet entered the voting process and faces opposition from both Republicans and Democrats, its thrust closely aligns with the Trump administration's approach to strategic decoupling from China. How do you assess the likelihood of the bill's passage?

A: One key reason some members of Congress oppose the bill is the gravity of such legislation. Once enacted, these trade measures would be difficult to amend, sharply limiting the flexibility for future policy adjustments. By contrast, President Trump's use of executive orders to implement tariff and trade policies toward China offers greater scope for modification. Revoking China’s PNTR status, commonly referred to as Most Favored Nation treatment, would, in a sense, upend normal bilateral trade relations.

Given that the Republican Party holds a majority in both chambers of Congress, the possibility of the bill passing cannot be completely ruled out. However, even though the bill aligns closely with Trump's China policy, I believe that even establishment Republicans would tend to weigh the broader economic consequences of such a drastic and permanent measure. A more likely scenario would be the imposition of high tariffs to disrupt trade in strategic goods, while significantly raising tariffs on the remaining 90 percent of non-strategic goods at levels far higher than during the Biden administration.

Q: Some American scholars have proposed the establishment of a new type of tariff alliance in which member countries would stimulate domestic consumption through higher wages and increase domestic investment in order to achieve overall trade balance. Under such a framework, member states would adopt unified trade barriers, including tariffs and anti-dumping investigations, against non-member countries. Do you believe this proposal is realistically feasible?

A: On trade with China, the United States and several other developed countries share common concerns, particularly over so-called "overcapacity." This may lead them to consider collective measures, such as forming a tariff alliance to exclude Chinese products. However, from a theoretical standpoint, shared interests are a necessary condition for collective action, not a sufficient one. In practice, effective coordination among multiple countries is often difficult, hampered by many factors such as the free-rider problem and externalities. The story of "too many cooks spoil the broth" neatly captures this collective-action dilemma.

The key to any nation's development lies in its commitment to openness and market principles. In a fair competitive environment, countries must focus not only on technological innovation and improving domestic labour skills but also on the benefits of specialisation and division of labour through active international trade.

Although Adam Smith and David Ricardo's trade theories did not directly address technological progress, both stressed that division of labor and specialization, followed by trade, generate "gains from trade," thereby improving welfare for all participants. This principle was already articulated in ancient Chinese thought. Liu An's Huainanzi advocates "exchanging what one has in surplus for what one lacks, and what one is skilled at for what one is less adept in," while Sima Qian’s Records of the Grand Historian speaks of exchanging "what is abundant for what is scarce." I call this the “Liu An–Sima Qian Theorem,” which holds that economic growth is driven by specialisation and trade, an idea captured in the classical Chinese term huozhi (commerce).

For the United States, if the aim is sustained economic growth or the ambition to "make America great again"” especially when conventional deterrence or negative-sum strategies prove ineffective, it must change course and return to the principles of free trade. A core driver of global economic growth is for countries to develop industries in which they hold absolute or comparative advantages, thereby fostering an efficient international division of labor and maximising the gains from trade. Yet the structure of global industrial specialisation is not fixed; it evolves in step with changes in national competitiveness and comparative advantages.

In the short term, the United States may suppress its competitors by raising tariffs and erecting other trade barriers, thereby cutting into their export revenues and global market share. Over the long term, however, such measures will also harm U.S. interests. A tariff alliance operating within a reduced market size would not only directly diminish overall trade gains but also shield inefficient domestic industries and firms that would otherwise be eliminated through competition, potentially fostering monopolies. The resulting costs to economic structure and innovative capacity may not be fully accounted for in the policy-making process. Moreover, the direct costs and their spillover effects are unlikely to have been thoroughly assessed.

According to the U.S.-China Business Council’s April 2025 report US Exports to China 2025, the U.S. exports to China in 2024 totalled roughly $140.7 billion, supporting over 860,000 American jobs. A complete halt to China–U.S. trade would force thousands of U.S. multinationals to exit the Chinese market, inevitably affecting domestic employment. In light of overlooked costs and spillover effects, the initiator of a trade war must carefully consider who will ultimately bear the greater loss in a mutually destructive confrontation. History offers many examples of self-inflicted harm.

III. The future of globalisation and international order

Q: If Trump's dissatisfaction lies primarily with the current structure of globalisation, would he support a new form of globalisation that serves U.S. interests, rather than adopting a strictly protectionist, economic nationalist, or populist stance?

A: For the United States to become "great again," it must re-engage with the world and re-embrace globalisation. This goal cannot be reached in isolation; the U.S. must work towards restructuring the global economic system in ways that better serve American interests. In this context, let me introduce the notion of "institutional non-neutrality" or "rule-based non-neutrality": the same rules or systems can yield very different outcomes for different countries or groups. As the Chinese saying goes, "Officials can light fires, but the common people are not allowed even a lantern." Rules may be applied equally in form, yet they are not neutral in effect—some parties benefit, while others lose. Equal application does not necessarily mean fairness, nor that all will benefit.

Rules are critical. Without them as safeguards, all advantages, capabilities, development, and talent lose their meaning. The post–World War II international order, built under U.S. leadership, was designed to protect American interests. The Bretton Woods system, for example, pegged the dollar to gold and linked other currencies to the dollar, making it the world's sole key currency. This arrangement gave the United States substantial "rule-based" or "institutional" advantages.

Today, however, the U.S. finds its ability to profit from the existing framework diminishing, while competitors that are thriving within it have at least narrowed the overall gap with the United States. At the same time, the international community is questioning Washington's future leadership role and voicing dissatisfaction with its frequent abuse of institutional hegemony. Against this backdrop, the U.S. is being forced to adapt, seeking to preserve its current institutional advantages while expanding its future ones by reshaping the existing rules.

Although the Trump administration's new policies have been in place for only a few months, it is clear that the current U.S. Administration intends to reconstruct the international system. Trump has used tariffs as an entry point, initiating bilateral trade negotiations to reshape international trade rules as part of building a new global order. Alongside this, he has employed other tactics to alter the rules, such as withdrawing from international organisations, disregarding territorial sovereignty norms, and demanding that allies shoulder more responsibilities, etc. The ultimate goal of this new international order is to ensure that the U.S. can access global resources at the lowest possible cost, while maintaining its dominance in military, cultural, high technology, and financial spheres.

However, if the U.S. seeks to rewrite the rules of the international system, it cannot act alone; it must work in concert with its allies and partners. A central question in reshaping the global order is how to deal with China. Here, Washington faces two interconnected yet contradictory objectives. On one hand, it aims to place a "rule lock" on China by requiring Beijing to accept U.S.-defined rules as a precondition for participation in the new world system, thereby assigning China a fixed role within Washington's vision of the global order. On the other hand, it is striving to build a "parallel system" that excludes China and other rivals, an effort to isolate Beijing, slow its technological advancement, limit its access to international markets, and constrain the global use of the renminbi. Having a strategic vision is one thing; turning that vision into reality is another challenge altogether.

Q: What impact will Trump's second-term trade and foreign policies have on major power relations and the global order? What new alliances might emerge in response to escalating geopolitical and geoeconomic conflicts?

A: One of the most consequential impacts of Trump's second term on international relations is his challenge to a cornerstone principle established in 1945—the sanctity of territorial sovereignty, enshrined in the UN Charter and international law. The post–World War II era, marked by territorial adjustments and decolonisation, brought an end to the practice of victors seizing land from the defeated. Since then, mutual respect for territorial sovereignty and territorial integrity has become a fundamental norm and established practice in international relations.

Yet, since returning to office, Trump has repeatedly voiced a strong interest in expanding U.S. territory, implying that national borders are negotiable. He has floated territorial claims not only over Greenland and the Panama Canal but also over parts of Canada. As the world's most powerful nation, if the United States leads in disregarding the inviolability of territorial sovereignty, it would call into question the very foundation of the current international order. Should the Trump administration act on such claims, it could directly influence how other states handle their own territorial stances and disputes. Israel, in fact, has already begun moving in this direction.

A second major impact of Trump's second term lies in the return to a form of classic great-power politics, which leads to the diminishing role of multilateral institutions. On economy and trade, Trump believes the World Trade Organisation has not only failed to protect U.S. interests but has also empowered rivals such as China. Therefore, the U.S. must bypass the WTO, renegotiating bilateral trade relationships through unilateral tariff imposition to reconstruct the global economic and trade system.

In the current trade war, although Trump has applied pressure to nearly all countries, his primary focus remains on China, situating China–U.S. economic competition within the broader framework of great-power rivalry. In the case of the Russia–Ukraine conflict, he has opted to bypass both Ukrainian President Zelensky and the European Union, engaging directly with Russia on ceasefire and peace terms. This underscores his preference in major-power politics: favouring unilateralism and bilateral dealings among major powers, rather than relying on the alliance system or operating within a multilateral rules-based framework.

Notably, Trump’s second-term foreign policy has weakened the long-standing consensus within Western countries on core values and international institutional frameworks, exacerbating internal divisions and, in effect, accelerating the shift toward global multipolarity. For nearly 80 years after World War II, the international rules-based system was led by the United States and its Western allies. While disagreements did occur, they were largely confined to the low-politics sphere. On issues such as democratic values, international norms, and multilateral institutional cooperation, the West maintained strong cohesion and shared interests in preserving the existing international political and economic order.

However, Trump's approach to matters such as the Ukraine crisis, NATO defence spending, transatlantic economic and trade relations, territorial sovereignty, and democratic governance has eroded this transatlantic unity. Actions of the Trump administration have deepened the rift between the United States and Europe, underscoring that Washington can no longer depend on the existing international system to sustain its hegemonic position and interests. At least during Trump's second term, such divisions with Europe are unlikely to be repaired.

In response, European countries are beginning to explore ways to rearm Europe. French President Emmanuel Macron has emphasised that while Europe continues to value U.S. support, it must prepare for a future where the United States no longer remains at its side. In Germany, certain political leaders are seeking to leverage the U.S.–European rift to advance national strategic autonomy, with the aim of making Germany a truly "normal" country. Japan harbours similar ambitions, considering whether and how to build up its own military capabilities.

Against this backdrop, China must carefully navigate the risks and strategic opportunities arising from the new dynamics of international relations, recalibrate its policies toward Europe and Japan, and adjust its broader diplomatic strategy accordingly.

Q: Can the United States continue to play a leading role in shaping the future direction of the international order?

A: As the world’s most powerful nation, developments within the United States inevitably shape its international conduct, which in turn influences the global order. The Trump administration's drive to shrink the federal government is, at its core, a populist "anti-establishment" mobilisation strategy, an effort to enter the system from the outside and confront entrenched structural problems within the federal government, including bureaucratic bloat, regulatory overreach, fiscal waste, and excessive political correctness.

Trump and his advisers are acutely aware of the deep public resentment toward the entrenched problems of the nation. In The War on Warriors: Behind the Betrayal of the Men Who Keep Us Free, U.S. Secretary of Defense Pete Hegseth depicts the state of disarray in the military brought about by "woke" movements and extreme political correctness. In Government Gangsters: The Deep State, the Truth, and the Battle for Our Democracy, FBI Director Kash Patel alleges pervasive corruption within the federal government, detailing the political targeting of Trump supporters by the "Deep State" and outlining key reforms to "defeat the Deep State." Elon Musk, the inaugural head of the newly established Department of Government Efficiency, has likewise spoken publicly about the serious fraud within the federal system.

I have recently been reading Spanish philosopher José Ortega y Gasset's classic The Revolt of the Masses, which examines the rise of the "mass man" in 1930s Europe. Ortega y Gasset argues that these ordinary citizens, intellectually rigid and hostile toward responsible elites and institutions, insisted on mediocrity as a right. In the early 1930s, the world witnessed the triumph of a kind of "hyper democracy"—the masses, disregarding all laws, acted directly and, through elections, imposed their own desires and preferences on society, ultimately producing what he called the "tyranny of the majority."

It was against this backdrop that fascism and Hitler emerged in Germany. The parallel with today's United States is striking. The spread of American populism naturally fosters the rise of a strongman who claims to represent the ignored and dispossessed, rallying the "forgotten" masses in a counterattack against the establishment. After reading The Revolt of the Masses, I revisited Alexis de Tocqueville’s Democracy in America, particularly Chapter Seven, where he warns of the "tyranny of the majorit" and democracy's potential to threaten liberty. In the present era, American populism is making the country increasingly dysfunctional, undermining both its capacity for domestic governance and its ability to lead the international order.

Meanwhile, major demographic shifts in the United States will inevitably exert profound pressure on its democratic institutions. As of 2013, more than half of Americans under the age of 20 were non-white, and by 2030, projections indicate that the white population may account for less than 50% of the total. The trajectory of a nation's rise or decline is often closely linked to demographic transformations. Professor Yang Guangbin, Dean of the School of International Studies at Renmin University of China, argues that Western democratic systems were primarily designed for societies dominated by populations of European descent. Once the ethnic composition of the United States changes fundamentally, its political institutions are likely to encounter significant strains—a logic that applies equally to Europe.

Whether the United States can continue to dominate the future international order depends on how the current era is defined. The world has entered an age of multipolarity, and the era of a single hegemon steering global affairs has passed. Although the U.S. remains the most powerful nation, it will continue to be a central force in shaping the global order, with the nature of that role shaped by "Trump 2.0." Amid deepening domestic divisions and the global shift toward multipolarity, Trump's second term could mark either the onset of accelerated American decline or the beginning of a new national cycle. History shows that cycles bring fluctuation and uncertainty, so a revival of U.S. power at some point cannot be ruled out. For now, it remains premature to assess the full impact of Trump 2.0 on the international order or to determine the broader trajectory of the global system.

Q: Does the Trump administration have a coherent view of the international order? How does it differ from the Biden administration's vision, and what path might the United States take after Trump?

A: The Biden administration has a very clear and well-defined vision for the international order. Its core strategy is captured in the 2021 article America’s New Great-power Strategy by Harvard Professor Joseph Nye. Nye states, "If the US, Japan, and Europe coordinate their policies, they will still represent the largest part of the global economy and will have the capacity to organize a rules-based international order capable of shaping Chinese behavior. That alliance is at the heart of a strategy to manage China's rise."

My interpretation is that the Biden administration aims to unite Western countries to build a strong competitive edge over China, seeking to make Beijing understand that "join or die." Joseph Nye describes China–West relations as "both cooperation and rivalry." In the Chinese context, "cooperation" suggests mutual benefit, whereas in English, particularly in game theory, "cooperative games" denote situations in which participants agree on common rules and accept binding arbitration. If China refuses to cooperate, that is, refusing to accept a U.S.-led rules-based system, it will face serious consequences.

The Biden administration's National Security Strategy, released in October 2022, aligns closely with Nye's views. Incidentally, the report notes that the world has entered the early stages of a "decisive decade" in great-power geopolitical competition. What does "decisive decade" mean? In my view, it refers to the next ten years as the inflection point where the outcome of great-power rivalry will be decided.

Currently, the Trump administration's great-power strategy follows a negative-sum approach, aiming to raise competitors' costs by challenging existing international rules and multilateral frameworks. Yet Trump has offered no fully coherent blueprint for a new international order. His unilateralism has left a deep imprint on the world and become a defining feature of his foreign policy. Even so, note that he did not entirely abandon allies or the international system.

In a speech at the Institute of International Finance, Treasury Secretary Scott Bessent stressed that "America First does not mean America alone. To the contrary, it is a call for deeper collaboration and mutual respect among trade partners. Far from stepping back, America First seeks to expand U.S. leadership in international institutions like the IMF and World Bank. By embracing a stronger leadership role, America First seeks to restore fairness to the international economic system." It is clear that under Trump, the United States still needed the international order and could not fully withdraw from it. Its core demand was that the international system operate according to American logic and serve U.S. interests.

In the latter half of Trump's second term, the administration may attempt to recalibrate its policies and reduce frictions with allies. However, the likelihood of success appears limited, as mainstream political, business, and academic circles in Europe are likely to remain unconvinced. A more probable outcome is that the next U.S. President, Republican or Democrat, will seek to repair relations with allies and work in concert with them to shape a new international system.

This emerging system would likely take the form of a dual-track structure: the "rule lock" and the "parallel track" described earlier. The "rule lock" refers to a U.S.- and ally-led, non-neutral international rules framework designed to maximize their own interests, into which real and potential competitors are brought, with their behaviour and interests bound by the rules themselves. If the counterpart refuses to join, or if the "rule lock" proves ineffective, the "parallel track" comes into play, in which Washington builds a separate system to exclude and marginalize the competitor. The United States' true intention is to erect two fences: an unbalanced "parallel system" in trade and investment—essentially a big yard, high fence—and a small yard, high fence in high-tech sectors, ensuring that the U.S. and its developed-economy allies maintain a monopoly on technological innovation outcomes.

However, such ambitions demand practical means of execution. One important insight I draw from Hans Morgenthau's Politics Among Nations: The Struggle for Power and Peace is that a goal without the means to achieve it is no goal at all.

Q: In your view, how should China participate in future global governance? A: The world is now in a period of profound turbulence and transformation, making it imperative to reflect on what kind of international system will better serve China's interests. At the Central Conference on Work Relating to Foreign Affairs in December 2023, General Secretary Xi Jinping articulated two guiding principles: "China calls for an equal and orderly multipolar world" and "a universally beneficial and inclusive economic globalization." These objectives provide clear guidance for shaping the future international order. Building a community with a shared future for mankind requires a corresponding system of rules and order, which in turn demands comprehensive, in-depth strategic planning and institutional design on China's part.

In response to Trump's "America First" foreign policy, China must firmly safeguard its own interests while also representing the shared aspirations of the vast majority of countries, particularly those in the BRICS group and the Global South. The great rejuvenation of the Chinese nation is about achieving success, not victory. Victory is often defined in opposition to others, grounded in their failure, whereas success is measured against one's own progress, denoting self-prosperity and advancement. Atop the Tiananmen in Beijing, two prominent slogans stand out: "Long Live the People's Republic of China" and "Long Live the Unity of the Peoples of the World." These encapsulate China's fundamental principles in both domestic and foreign policy—its pursuit of national development and the well-being of its people, as well as its aspiration for global peace and prosperity. China has walked, and will continue to walk, firmly along this path.