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Donald Trump is set to assume presidential duties on January 20. Economists expect the fragile geopolitical relationship between the US and China, managed under Joe Biden’s leadership, to crumble further. The president-elect’s second term could mark the start of an economic cold war: a sharp decoupling of the world’s two largest economies. Will he prevail? Probably not so much. President Biden spent his tenure attempting to bolster a multifaceted approach to economic statecraft. He seemingly built a concept integrating economic, technological, and military tools to counter China.  This “economic security state” was inspired by cold war strategies against the once “highly ranked” American competitor, the Soviet Union. However, in the modern age, where wars aren’t fought through guns and bombs, the US is facing challenges due to poor coordination and conflicting political priorities. China’s economy is tough to battle  Unlike the Soviet Union, which the US could isolate through trade embargoes, China’s integration into global supply chains makes such a strategy impractical. The Asian country controls critical industries, such as minerals and high-tech manufacturing. It’s no question why Trump sees the country as a formidable rival.  The US’s fragmented governance, particularly between departments like the Treasury’s Office of Foreign Assets Control (OFAC) and the Bureau of Industry and Security, will complicate the president-elect’s efforts to enforce his “stringent” policies on foreign countries. Trump’s plans for sweeping economic measures include imposing 10% tariffs on all imports and 60% tariffs on Chinese goods. While these actions align with his “America First” agenda, they could destabilize global markets and hurt Asian exporters, including key US trading partners such as Vietnam, Japan, South Korea, and India.  The broad application of these tariffs risks creating more economic turbulence than targeted measures like financial sanctions. Experts remain uncertain about the specifics of Trump’s tariff policies. Magnus,…

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Filed under: News - @ January 9, 2025 1:24 pm