According to Fortune, last week’s Trump-Xi summit avoided immediate escalation but revealed the fundamental failure of America’s China strategy. The meeting produced only modest agreements – China will buy “large amounts” of US soybean meal matching their average purchases over the past five years, and both sides temporarily lifted some tariffs including port fees on China’s maritime industries. Only 2 out of 35 Chinese CEOs surveyed rated the summit a “12” on a 1-10 scale, while 82% of CEOs at a Yale Washington gathering condemned using tariffs to interfere in foreign countries’ politics. The U.S. Trade Representative had just initiated an investigation into China’s failure to fulfill its 2020 Phase One Agreement commitments days before the summit, yet the latest negotiations failed to address these issues or reach any new trade agreement.
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The Collective Action Problem
Here’s the thing about trade wars – you can’t fight them alone. And that’s exactly what Trump keeps trying to do. The administration’s own analysis shows China’s market manipulations require collective action, but Trump has systematically undermined potential alliances with his indiscriminate tariff use. He’s hitting Canada over a TV ad, Brazil over Bolsonaro’s legal troubles, and South Africa over land reform. The Wall Street Journal called his Canada tariff move a “tantrum” – and they’re not exactly known for anti-Trump rhetoric.
So what happens when you alienate everyone who should be on your side? You end up fighting China alone. And let’s be real – no single country can out-trade-war the world’s manufacturing hub. The uncertainty from all these tariffs has slowed global growth and made traditional U.S. allies more vulnerable to Chinese pressure. It’s like trying to organize a neighborhood watch while simultaneously keying everyone’s cars.
Meanwhile, China’s Playing the Long Game
While Trump’s been busy picking fights with everyone, Xi Jinping has been building China’s influence across the globe. He’s investing in Southeast Asian rail projects, South American ports, and think tanks shaping discourse in Africa and Latin America. China’s been fortifying its industrial champions like Huawei and BYD, and they’ve been pursuing economic self-sufficiency since Trump’s first trade war.
The power shift is real. Fortune notes that “the whispers of China’s rise have been ongoing since the Obama administration, but the power that was unintentionally ceded due to the actions taken by the first and second Trump administrations cannot be overlooked.” Xi presents China as the stable, multilateral partner while Trump comes off as unpredictable and unilateral. Who would you rather do business with?
The Global Collateral Damage
The economic fallout is spreading far beyond U.S.-China relations. Canada’s economy is weakening due to what Bank of Canada Governor Tiff Macklem calls a “structural transition” from U.S. tariffs that has “destroyed some of the capacity” in the country. Mexico’s GDP contracted last quarter, sparking recession fears as their industrial sector gets hammered by trade tensions. German manufacturing orders have come to a standstill amid tariff uncertainty, performing worse than during the COVID-19 pandemic.
And get this – 71% of CEOs see the tariffs as harmful, with roughly 60% saying Trump’s policies won’t stimulate domestic manufacturing investment in either the short or long term. So we’re damaging allied economies without even getting the supposed benefits. The Asian factory slowdown shows this isn’t just hurting Western economies either.
What Comes Next?
The temporary truce on rare earth exports only lasts one year, and it’s already looking shaky since China’s access depends on getting U.S. semiconductors – which Trump has ruled out. We’ve seen this movie before during Trump’s first term, when China promised to buy more soybeans and reduce fentanyl flows but never delivered on the Phase One Agreement.
Basically, we’re right back where we started before Trump took office, except now everything costs more to manufacture and our allies’ economies are weaker. The summit revealed that Trump started a trade war America can’t win alone, and he’s burned the bridges needed to build a coalition. Without carrots to complement the tariff stick, the U.S. risks becoming increasingly isolated while China continues its steady global rise. Not exactly the “winning” scenario we were promised.
