Trump 2.0: Cutting Down Rival Number One, China

With Donald Trump’s election victory, the U.S. is set to hit China where it hurts most: its economy and international influence. In his first term, Trump didn’t just talk tough; he took action, launching a trade war with China and establishing tariffs and restrictions that threw them off balance.

Biden retained many of those policies, but Trump’s return signals a renewed, intensified approach that builds on the groundwork already in place—and this time, China is coming into the fight on its back heels. China’s economy is already expected to fall short of its 5% growth target, and after Trump takes office, that number may continue to decline.

A major player in Trump’s first term was United States Trade Representative Robert Lighthizer, rightly called the architect of the U.S.-China trade war. During my years in China, interpreting Trump policy for think tanks, I read Lighthizer’s reports regularly and was impressed with his efforts to stop the CCP from using U.S. consumer money to fund the expansion of the People’s Liberation Army (PLA). One very significant achievement was that he quantified China’s intellectual property theft, estimating they were stealing hundreds of billions in U.S. IP every year.

From inside China, I knew that Trump and Lighthizer were correct and that the best way to avoid a war was to cut off China’s income and prevent them from reaching military parity with the U.S. But at that time, the mainstream media and the Democrats in Congress were ridiculing Trump. They vilified the trade war because it made cheap plastic products more expensive, and they valued the price differential more than national security. Public opinion was divided; only about 44% saw China as a threat. Yet, despite these headwinds, Trump and Lighthizer persisted with the trade war, significantly weakening China.

The Biden administration, for all their criticism of Trump, continued with Trump’s policies, increasing tariffs and trade restrictions. Trump also strengthened the Committee on Foreign Investment in the United States’ (CFIUS) ability to restrict Chinese investment in the U.S., a legal authority that Biden invoked several times to halt certain Chinese investments. Trump is likely to double down on CFIUS powers to prevent China from owning farmland and possibly even factories in the U.S.

This time around, most of Congress would support Trump, and among the population, about 81% believe China is a threat, meaning the public will back the trade war. How the media will react remains to be seen, but it’s possible they’ll either go softer on Trump’s China trade war this time around, or the average person just won’t care what the media says and will be willing to support measures to protect the U.S. economy from China.

China’s strategy to “Trump-proof” its economy by seeking other trading partners and reducing its dependence on the U.S. actually aligns with our goals. If China is distancing itself from our supply chains, that’s ideal; it’s strategic decoupling at its finest. For example, China has already cut down on agricultural imports from the U.S. over the past eight years, prompting American farmers to shift to other markets. Apart from a spike in 2022, U.S. agricultural exports have shown steady growth since 2018.

The China tariffs not only discourage China from manufacturing and exporting to the U.S., but they also deter companies from the EU and U.S. from manufacturing in China and exporting to the U.S. There’s some concern that companies might try to get around tariffs by transshipping or relabeling products in a third country—for example, manufacturing in China, then packaging and shipping from Vietnam. However, Trump’s team, led by Lighthizer, is on top of it. The U.S. Trade Representative’s office oversees imports to ensure any attempts at circumvention are blocked.

Rules-of-origin legislation allows the USTR to analyze imports and determine what percentage of a product originates from China, ensuring it’s still subject to tariffs even if exported from places like Indonesia or the Netherlands. Foreign firms that once considered China their production hub are now facing the reality of needing to relocate. This shift is great news for emerging economies like Vietnam, Thailand, India, and Indonesia, who will benefit from the transition while we build stronger ties with them.

If Trump’s team maintains a consistent approach and further exploits China’s economic vulnerabilities, we can push Beijing even further off balance. While some predict a total collapse, I foresee a slower but steady weakening of China’s economy. Growth projections for China are falling below 5%, and the yuan is trending downward.

Due to the size difference between our economies, China would need to grow at over 3% just to keep pace with the U.S. economy growing at 2%. With Trump back in office and the likelihood of further restrictions, China’s growth will likely stall, delaying their economic ambitions by decades.

China’s core issues—an aging population, a real estate crisis, and a mounting debt crisis—aren’t going away with quick fixes. The CCP depends on export revenue, but as foreign investment dries up, that income stream is dwindling. International investors are turning elsewhere as the risks in China keep escalating.

In summary, Trump’s return is set to intensify economic pressure on China. With strong public support and a Congress likely to back tougher actions, Trump 2.0 is primed to hit the CCP where it hurts most: their bottom line. By cutting off Beijing’s revenue streams and safeguarding the U.S. economy from Chinese influence, America can maintain its position as the world’s leading economic and military power.

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