Crossed Wires: Why Trump’s wild swing at China was met with a knuckle sandwich

Everyone has a plan until they get punched in the face

This quote, brimming with pith, is from Mike Tyson: It was his response when asked whether he had considered Evander Holyfield’s fight plan. 

Trump just got punched in the face. Really hard. By China.

One likes to think that powerful people in charge of superpowers, with their hands on the levers of very big global machines, do some scenario planning when they consider a strategic action. You know, game theory. If we do this and they do that, then we will respond by doing the other. That sort of thing.

Trump, on the other hand, ever proud of his “gut feel”, just took a wild swing at China and not only did he miss but he found himself on the receiving end of a knuckle sandwich. You can see it in his suddenly uncertain bravado. As for Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent and Senior Counselor for Trade and Manufacturing Peter Navarro, not to mention Veep Vance and the rest of them, the whites of their eyes are showing.

Let’s look at the handicapping. China’s internal supply chains are, as they say, nationally integrated. Almost everything made in China gets its feedstock from China. Yeah, they import stuff from the US and elsewhere – some mineral fuels, integrated circuits, aircraft, grains, industrial equipment, vehicles and other miscellaneous stuff – but that is not the important metric.

What’s important is the fact that, while China imports about $160-billion worth of goods from the US, the US imports $500-billion worth of goods from China. That is the whole game, right there. The US needs China more than China needs the US. There are those who would argue it is not the quantum of the value of goods, but their criticality. China has the upper hand there too. Rare earth minerals, for instance, used in everything from jet engines to batteries. China controls 80% of the world’s supply.

In any event, Trump et al looked at this trade imbalance and said, this cannot stand. It must be stopped. So let’s use tariffs to make their stuff unaffordable. What happened? China narrowed its eyes, reared up and retaliated. Bigly.

Why?

Three reasons seem obvious.

The first is that a lot of the stuff that China imports from the US they can source elsewhere (coal from Africa, gas from the Middle East, aircraft from France, for instance).

The second: if Chinese industry gets hurt by the loss of US business, particularly manufacturing contracts, plants are downscaled and workers are fired. The CCP is not really threatened; they’ve done this sort of thing before. Citizen dissent is not really a thing.

And third, China wields a really big stick. They hold three-quarters of a trillion dollars in US Treasury Bonds. Dumping them would be catastrophic for bond rates, which the US needs to be low when the time to refinance comes around. Which is soon. Bonds will be expensive and the dollar will be weakened – which is the worst of all worlds for the US, and there is absolutely nothing they can do about it. China has the means to really hurt the US dollar.

The Trump administration believes they can do something about this. If they can convince other countries like Japan and those in the EU to support the dollar and move their factories from China to the US, then the US can win its trade war against China and send it back to being a second-rate power.

How do they go about doing this? They insult their allies and threaten them and levy tariffs on them. And now they want their help in their battle with China?

Excuse me, but I don’t think that’s going to fly. A beautiful example of what I believe America’s erstwhile allies are thinking was a statement made on TV this week by Japanese Democratic Party legislator Shinji Oguma who likened the US approach to a “delinquent kid extorting someone”.

What about the enticements (like tariff relief and low taxes) offered to other countries to bring their Chinese-based businesses to America? Tim Cook of Apple, ever the diplomat, observed that there are enough tooling engineers (who develop tools and machines for manufacturing processes) in the US to fill a single auditorium. Tooling engineers would fill many football fields in China. There are not enough people in America to recreate the hi-tech factories lost to China and, even if there were, they would cost multiples of what the Chinese pay for them.

It’s more likely that the US will see the opposite reaction from their traditional friends who are now feeling bruised and betrayed and will probably start to move into a closer trade relationship with China and others (like BRICS). The US has proved itself to be not only untrustworthy but a bully. And no one likes a bully.

It is of course true that China reached its position of industrial power using a whole slew of underhand and deceitful strategies over the past few decades, from IP theft to near-slave labour to cheap product dumping to currency control. But that is spilt milk, long evaporated. China is where it is, and the US cannot starve them out, nor does it have the local supply chains or the industrial skills and (in some cases) the country has fallen behind in innovation as well. All of it was outsourced to China and other countries in the past few decades. The process can’t suddenly be reversed; it would take further decades, time which China has already exploited to the full.

There is a counternarrative here. Well-meaning colleagues of mine insist that the US has carefully planned this 3D chess move – but not one single action of this administration has even the vaguest odour of careful planning, from the mass government firings and embarrassed rehirings, to the project cancellations and restarts, to mistaken deportations and defiance of court orders.

Already the finger pointing has started. Trump only this week fumed at Jerome Powell of the Fed about his failure to reduce interest rates. He will try to pin the blame on liberals, Democrats, communists, America-haters, the EU, BRICS. Anyone.

The trade war with China is a much more important matter than diversity, equity and inclusion, immigration and DOGE combined. When it is lost, the failure will be solely Trump’s to own. When history is written it will be remembered as his swansong, a final career-ending act of arrogance. DM

Steven Boykey Sidley is a professor of practice at JBS at the University of Johannesburg, columnist-at-large for Daily Maverick, and partner at Bridge Capital. His new book, It’s Mine: How the Crypto Industry Is Redefining Ownership, is published by Maverick451 in South Africa and the Legend Times Group in Europe/UK.