The accidental beneficiary: How Trump could make China stronger
US President Donald Trump and his new team are initiating a series of policies that will impact the American people, US trading partners, and global markets. Consequently, the US’s influence in the region could diminish, potentially benefiting China in the long run, notes Lianhe Zaobao associate editor Han Yong Hong.
Barely two months in office, US President Donald Trump has dismantled several federal government mechanisms and foreign policies, preparing for a global trade war. Reports indicate that some American citizens have tightened their belts, even cancelling annual vacations and putting off plans to have children, fearing that they will not be able to cope with the possible consequences of soaring prices, a stock market slump and economic recession.
The owner of a small local bar told the media that if Trump follows through on his threat to impose a 200% tariff on European alcohol, she would be forced to raise prices by 20-30% or even close down.
However, the Trump administration remains unusually confident.
Launching a global trade war
The White House’s extreme and brusque decision-making has caused anxiety among elites, ordinary citizens and global markets. The most apparent impact is the decline in US stocks, with the S&P 500 index dropping 10% from its February high. Several investment banks have raised their probability estimates for a US recession this year, with JPMorgan increasing its forecast from 30% at the beginning of the year to 40%. Some economists believe the likelihood has reached 50%, with some calling it a “Trumpcession”.
However, the Trump administration remains unusually confident. Commerce Secretary Howard Lutnick said an economic recession would be “worth it”, while Treasury Secretary Scott Bessent said the US economy needs a “detox”.
On 18 March, Bessent reaffirmed that the reciprocal tariffs on global trade partners will be implemented on 2 April as planned. He described that each US trade partner will receive a number that the US believes represents their tariffs, factoring in actual tariffs, non-tariff barriers, currency manipulation, and other practices the US deems unfair. These trade partners can negotiate ahead of time to avoid a “tariff wall” or after receiving their reciprocal tariff number.
The message is clear: “Beg for mercy, and you might be spared.” The US employs a threatening and dismissive tone towards both allies and adversaries, with its leadership seemingly indifferent to the implications.
Reciprocal tariffs are just one of the measures Trump plans to implement; he also intends to impose additional tariffs on specific industries, with no exemptions — the 25% tariffs on imported steel and aluminum have come into effect. This week, The Washington Post cited an anonymous source claiming that White House officials are preparing tariffs on “trillions” of dollars in imports. Indeed, the White House is not bluffing about launching a global trade war.
Their endgame is something akin to the 1985 Plaza Accord — a “Mar-a-Lago Accord” — to reshape the global financial structure.
Unfazed by a market downturn
There are rumours that the tariffs are merely a tactic and not the ultimate goal for Trump’s new team. Their endgame is something akin to the 1985 Plaza Accord — a “Mar-a-Lago Accord” — to reshape the global financial structure.
The US plans to use methods such as tariffs and military protection agreements to force allies to sell off US dollar assets. This would devalue the dollar to help American manufacturing regain competitiveness and “make America great again”. Meanwhile, other nations are forced to purchase ultra-long-term century bonds, essentially providing long-term loans to the US.
Last year, Bessent publicly discussed the idea of a “Mar-a-Lago Accord” and grading foreign governments as red, yellow or green according to their value and level of congeniality to Washington, and adjusting the US’s policy accordingly.
Trump’s new team is driven and ready to implement their long-conceived plans. The downturn in the stock market did not faze them as 87% of stocks and mutual funds in the US stock market are owned by the top 20% of income earners, while the Republican Party’s supporters are mainly from the low to middle-income groups. A stock market crash would not harm them much; on the contrary, the redistribution of wealth from the rich provides a sense of satisfaction.
These events in the US have been described as an American-style Cultural Revolution. The US establishment and its allies, such as Canada and Europe, are suffering, and the so-called Western bloc is facing division.
... if this is indeed a rare golden opportunity, what carefully thought-out actions would China take to seize this strategic opportunity? It is still uncertain.
China’s opportunity
Is America’s “self-revolution” a challenge or a strategic opportunity for China? Li Mingjiang, an associate professor at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore, stated at a forum held by Lianhe Zaobao on 20 March that it is a significant challenge in the short run, but an opportunity in the long run. During Trump’s first term, many netizens gave him the nickname “Trump, the Chinese nation-builder” (川建国), mocking Trump’s unilateralism and his alienation of US allies, and suggesting he inadvertently did China a favour.
Last week, the US federal government slashed the budget for the United States Agency for Global Media, and cut federal funding for Voice of America and Radio Free Asia — also perceived as the US disarming itself in the ideological competition with China, again benefiting China.
If Trump’s new policies persist, even to the next president, the global situation would be completely rewritten. China is expected to take advantage of the decline in US’s global influence to become the dominant force in Asia’s economy, politics and security. However, if this is indeed a rare golden opportunity, what carefully thought-out actions would China take to seize this strategic opportunity? It is still uncertain.
China is already the largest economic power in Asia, but three contentious issues in the region could affect or even hinder its ability to lead Asia while staving off US involvement, i.e. the Taiwan Strait, the East China Sea and the South China Sea. These issues involve strong national sentiments, historical grievances or complex multinational interests that are difficult to balance.
None of these issues are easy to resolve, and there are currently no peaceful solutions acceptable to all parties. Meanwhile, most countries are unwilling to face military solutions.
Of course, it may be premature to discuss the reconstruction of the international framework, as everyone is still trying to understand the current situation and figure out how to safely navigate Trump 2.0.
This article was first published in Lianhe Zaobao as “特朗普式革命是中国的机遇或挑战？”.
