November 21, 2025
How to Win the Economic War with China
This article was originally published in TIME.
Both President Donald Trump and Chinese President Xi Jinping declared victory after their recent meeting in South Korea, which resulted in a one year truce in the economic war between the two superpowers. Yet the thaw hides a harsh reality: the United States and China did not return to the status quo ante but entered a new phase in which Beijing has gained the upper hand. To rectify this situation, Washington needs to understand what went wrong—and use the truce, however long it lasts, to strengthen its hand when the next escalation inevitably occurs.
Trump's approach to China has run aground, giving Beijing unprecedented advantage in the economic conflict.
Trump was unprepared and wrongly assumed that American tariffs were an unbeatable weapon because our large trade deficits—nearly $300 billion with China in 2024—enable Washington to impose broader tariffs on adversaries than they can impose in response. The duties swiftly sent the U.S. stock market plunging and intensified fears of a recession at home. The Trump Administration just as quickly dropped them. In the following months, China’s exports to the United States nosedived, but the country managed to expand its total exports and found new markets for over 80% of the goods it previously sold to the U.S. Trump had played what he believed was his best card: sky-high tariffs. And it turned out to be a dud.
Read the full article in TIME.
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