The economically illiterate reader (like me) browsing the headlines about Donald Trump’s tariffs looks to borrow the opinions of his betters. I dutifully read a review of a book by Michael Pettis, a trade economist widely credited with a novel take on the consequences of deficits and tariffs, *that allegedly explains the present convulsion better than the views of an older cohort of trade economists like Paul Krugman. I could have read the book but I was looking for a Pettis-for-dummies, a kunji if you like, to spell it out for me. Having read the review, I’m now in the market for a kunji to the kunji. There’s nothing quite like talk of capital account surpluses and current account deficits and balance sheets to set innumerate Arts-types grumbling about the jargon of the hard social sciences.

So it was a relief to read The Economist’s leader about the tit-for-tat levies imposed by China in response to Trump’s latest tariffs. For all the talk in the financial press — Financial Times, The Wall Street Journal and so on — about Trump’s vandalism, the consensus on how to respond to him was notably tame. The Economist thought that China’s retaliation was a mistake. Tariffs were bad, ergo more tariffs were worse and since the US exported much less to China than China did to the US, China was hurting itself without inflicting equal pain on its antagonist. In this the magazine reflected the response of rich First World democracies: rhetorical outrage followed by a quick scurry to King Donald’s court to curry favour and preferential forgiveness. Keir Starmer’s entire strategy seems to be to tug his gelled forelock and leverage the ‘special relationship’. And for all the noises Giorgia Meloni, Emmanuel Macron and Olaf Scholz have made about Trump’s tariffs and America’s new isolationism, it’s notable that there has been no pushback in kind.

You don’t have to be an economist to see that The Economist’s opinion on China’s retaliation is worse than wrong, it’s beside the point. Because the Chinese tariffs aren’t about economics. To invert the insight of an earlier American president, it’s the geopolitics, stupid. It might be pragmatic for Britain, France, Germany, Italy, South Korea and Japan to abase themselves before Trump. He clearly expects them to: his proxies have made it clear that he is waiting for these countries’ leaders to kowtow before him on a first come, first serve principle. Come and grovel, says Trump, and despite the explicit, pantomimed contempt for Europe expressed by Trump’s cabinet, off they go.

Still, perhaps it makes sense for a rich country with the learnt reflexes of a client state to heed The Economist’s counsel. Even the European Union, a regulatory superpower by its own accounting and an economic union potentially the equal of the United States of America, sees that discretion is the better part of valour, given that the US has underwritten its security for decades.

Writing from its defensive crouch, The Economist forgets that China is not a client state. It is the world’s manufactory, its second superpower. It is a sovereign state, sovereign in a way that America’s rich allies no longer aspire to be. Their sense of themselves has been so muddled by the nostrums of globalisation and America’s security umbrella that they are blind to the obvious: a sovereign state can’t pander to a hegemon without implicitly accepting its hegemony.

China responded to Trump’s initial tariffs cautiously. Its retaliation was sectoral, targeting specific companies, particular commodities. But when Trump doubled down on tariffs and invited the world to perform submission, it became clear, not
just to China but to any observer outside the charmed circle of the West and its honorary Asian members, that the point of the exercise was to be seen to pay tribute. China’s response was to levy tariffs equal to those levied by Trump: thirty-four per cent. It was Xi Jinping’s way of drawing a line in the sand.

What China understands and The Economist and First World countries do not (or at least pretend not to) is that you can’t box clever without entering the ring. China didn’t panic when it imposed retaliatory tariffs, nor did it, in Trump’s words, endorsed by The Economist, “play it wrong”. Xi just let Trump know that there was a real game on.

For countries outside America’s orbit, regardless of their view of China, it must come as a relief that China put an end to this World Wrestling Entertainment style of international relations. For Trump, geopolitics ought to be like the pro-wrestling that he loves: fixed in advance, where Trump gets to body slam every country every time. It has been genuinely shocking to see Trump’s America rampage around the world, lay waste to Gaza, expropriate Ukraine, trash Europe and generally behave as if it were the master of the world twenty years after the passing of the unipolar moment. One of the revelations of this young Trump term has been the embarrassing servility of America’s European allies. It has fallen to China by a kind of default to restore geopolitical equilibrium.

In another time, when the US was more mindful of the salience of soft power, this confrontation could have been sold as a face-off between democracy and authoritarianism. But now the ‘rules-based order’, international law, the International Court of Justice, the UN system, the WTO, and globalist pieties in general have been publicly set on fire by the US and its allies. America, under both Joe Biden and Trump, has been the arch-enabler of genocide and ethnic cleansing in Gaza. Under Trump, the US government is an explicitly racist actor that sees White Afrikaners as the most discriminated against group in the world. It treats Palestinians as a people that needs to be ‘voluntarily’ relocated or else bombed out of Gaza. It’s hard to see a state mulcting Ukraine out of its natural resources even as that country fights for its life as an inherently good actor on the international stage.

In this face-off, the US has a lot going for it. It is the richest country in the world, it owns the almighty dollar, and its military spending still dwarfs China’s. It remains to be seen if a less prosperous country with a demographic deficit and a slowing economy can endure the pain that tariffs will bring without blinking. Perhaps Xi is betting that a country addicted to cheap imports and retail therapy will flinch first. We shall find out. Regardless of how this pans out, it was right that Trump’s bluff was called. Whether we acknowledge it or not, we’re in China’s debt.

mukulkesavan@hotmail.com

Source: thetelegraphonline.com