Tariff Wars: Who's really winning?
The media’s still chasing chaos. Meanwhile, a very different story is unfolding...one with massive implications for global trade.
Executive Summary
Lost in the mainstream media’s obsession with diagnosing chaos inside the White House is a more rational and clear-headed reality: a high-velocity, rapid-fire execution of the Trump trade agenda—an agenda that was not only foreseeable but openly telegraphed long before the election.
The dominant narrative has been one of dismissal and disbelief—that the incoming administration would dare stand up to the world’s factory.
But COVID was America’s wake-up call. It revealed a dangerously unhealthy and strategically risky dependence on China for essential goods, just as the relationship between the two countries was deteriorating. Pharmaceuticals, critical minerals, and key industrial inputs had all been effectively outsourced to an increasingly adversarial state.
The Biden administration addressed this only partially—through measures like the CHIPS Act and the Inflation Reduction Act—but left significant loopholes China continued to exploit. Trump’s second administration is now aggressively moving to close those gaps. His team is targeting efforts by Chinese firms to reroute exports through neighbors like Mexico in an attempt to dodge tariffs. Unlike before, enforcement is now the main event.
Trump’s key weapon is tariffs, but he is playing a broader and more strategic game. He is pressuring China’s trade partners to choose sides—and it’s working.
According to Treasury Secretary Bessent, over 100 countries have lined up to initiate bilateral agreements with the United States. These deals are not just diplomatic gestures. Bilateral agreements are a calculated weapon of leverage: America’s bargaining power increases when it deals with countries individually, rather than through multilateral frameworks.
What’s emerging is a two-front war. On one front, China must now pay a premium to access the largest consumer market in the world. On the other, its competitors are being invited into an auction system—vying for privileged access to the same market. The goal isn’t just to punish China; it’s to weaken its grip as the world’s default manufacturing base.
We’ve addressed in previous writings the very real challenges America faces in achieving a trade reset of this magnitude. We are not ignoring those difficulties.
But now, we turn to the question few are seriously entertaining:
What if this actually works?
We assert that much—if not most—of the leverage actually lies with the United States, not with China.
China’s economy is dangerously concentrated. Between its export dependency and collapsing real estate sector, nearly half of its GDP is under threat. While certainly not easy, in our opinion it is far easier for the largest consumer market in the world to find new suppliers than it is for the largest factory in the world to find new buyers—especially as Europe adopts its own anti-dumping measures.
For the United States, this is about defending its consumption base and protecting American workers from subsidized imports. For China, the stakes are existential. At least 180 million Chinese workers rely on this export model for survival.
Trump knows this.
Xi knows this.
But the media? They're still too busy bracing for collapse to ask the far more interesting question:
What if Trump actually wins the trade war?
The Tariff War in Context
It is important to recognize that the tariff war is just one front in a much larger campaign the United States is waging against China—a campaign whose central battlefield is technological supremacy.
The tariff war may dominate headlines, but it is only one component of a broader strategy aimed at resetting global industrial influence.
That said, the tariff strategy itself is multi-dimensional. It is designed not only to rebalance trade relationships, but to compensate American workers for decades of job displacement to offshore factories. It also seeks to reduce the domestic tax burden on U.S. consumers, while simultaneously charging foreign producers more for access to the American market—a market that represents 30% of global consumption, despite accounting for just 5% of the global population.
The prevailing narrative one month after “Liberation Day” tariff announcements is that as a command economy, China is better equipped to absorb economic pain than U.S. consumers. Chinese officials continue to claim they can endure a drawn-out trade war more effectively than the United States.
We do not believe this to be true. China’s industrial sector is increasingly loss-making—a position that offers little resilience in the face of external pressure.
We will return to this point in more detail later in the paper. But for now, it is worth noting that the effects are already being felt. Disruption is underway—both within China’s domestic economy and across international shipping volumes.