Trump’s nuclear trade war targets China (Uncut) 04-12-2025

Trump’s nuclear trade war targets China – but will blow back on USA

After threatening to impose tariffs on countries all around the world, U.S. President Donald Trump has made it clear that there’s really one country that is the main target of the very aggressive economic war that he’s waging, and that country is China. The U.S. government is obsessed with trying to weaken and contain China because they see China as the only country powerful enough to challenge the global dominance of the United States economically, technologically, militarily, and politically. And this is bipartisan.

It’s not just Donald Trump. The Democrats and Joe Biden also attempted it, but Trump has taken it to a whole new level and essentially declared a nuclear economic war on China. The U.S. President announced on the 10th of April that he was pausing the tariffs that he threatened on other countries for 90 days.

He did approve a blanket tariff of 10 percent on everyone, but that was already announced previously. However, he did announce something new and something big. He was continuing to impose tariffs of an additional 125 percent on China.

And those 125 percent tariffs are in addition to the previous 20 percent tariffs that Trump put on China. That means that Trump has now imposed 145 percent tariffs on China, which honestly, it’s more symbolic than anything. Economists estimate that after 50 percent, it doesn’t really have that much of an impact to increase the tariffs to 70, 90, 140 percent, because after 50 percent, it’s going to significantly decrease trade between the U.S. and China, because China has responded in self-defense to Trump’s tariffs and hit back with tariffs on the U.S. And Trump originally claimed that his tariffs were so-called reciprocal, which is actually not true.

They were unilateral and aggressive. China’s tariffs are actually reciprocal. And the Chinese government spokesperson Mao Ning published a video of Mao Zedong, the famous revolutionary leader, back in the 1950s, in which China was supporting Korea in the Korean War, when the U.S. brutally bombed Korea and killed 20 percent of the North Korean population.

And in this famous speech from Mao, he said that China is willing to fight until the end. China will never surrender. So Trump is trying to carry out the mission that war hawks in Washington have dreamed of for years, which is economic decoupling.

Trump wants to end economic relations between the U.S. and China. And this has been pushed by neoconservative think tanks like AEI, the American Enterprise Institute, which is a Washington, D.C.-based think tank, which is funded by large corporations, the military-industrial complex, and conservative billionaires who also support Trump. And Trump is now carrying out this agenda, which is very likely going to be disastrous for the U.S. economy, given that the U.S. imports more goods from China than any other country.

This is the very big and very risky gamble that the U.S. government is making, that it can win a trade war with China. And this was expressed by Donald Trump’s commerce secretary, the billionaire Howard Lutnick. On Fox News, he claimed that China is more dependent on the U.S. and the U.S. is dependent on China.

And he insisted that the U.S. can win this economic game of chicken. China chose the path of going against Donald Trump. I mean, he said, don’t retaliate.

If you retaliate, then you’re going to feel my wrath. And that’s what happened. But let’s be clear, we are their biggest client by far, by far, by far.

The American consumer buys everything from China. They can’t afford to be without us. Trump’s billionaire treasury secretary, Scott Benson, made very similar remarks.

He claimed that China responding to Trump’s tariffs by defending itself was a big mistake. And he said, quote, we export one fifth to them of what they export to us. So that is a losing hand for them, for China, he said.

However, that’s an absurd argument because it’s not about just the number, the overall sum of trade. It’s about what exactly the U.S. imports from China and what China imports from the U.S. If you look at their exports, you can see that what the U.S. largely exports to China is petroleum, oil. China can get oil from a lot of countries.

Soybeans, which is the top U.S. export to China. China can buy soybeans from many other countries. Cars.

Well, China already produces some of the best cars in the world. Copper. China can find copper from somewhere else.

And OK, the U.S. does or it used to export integrated circuits, chips to China. But the U.S. government has been putting export restrictions on China, going not only back to Trump, but also to Biden. This was bipartisan.

And China has been developing its own domestic chip industry. So it’s actually quite easy for China to replace a lot of the imports it gets from the U.S. It can import those products from other countries. But then look at what the U.S. imports from China.

It’s very different. The biggest export that China sends to the U.S. is cell phones, which is included under broadcasting equipment. It’s difficult to replace cell phones made in China.

Where is Apple going to make its iPhone? They’re trying to make it in India, but it’s very difficult. The second biggest Chinese export to the U.S. is computers. So in other words, what the entire modern economy relies on, where is the U.S. going to get those computers from that it can’t import from China anymore because there is now 140 percent tariff? They’re over twice as expensive.

The U.S. also imports a lot of batteries from China, which are needed for electric vehicles, phones, computers. Pretty much everything today has an electric battery. How is the U.S. going to replace those electric batteries? It would have to create an entire new supply chain, create new factories, find new companies who will invest in the U.S., train workers.

It’s going to take many years, if not decades, to recreate that supply chain without China. In the meantime, the U.S. has no alternatives. So what this shows is that Trump administration officials are living in opposite land.

It’s actually the U.S., which is much more dependent on China than vice versa. And if you don’t believe me, well, this is what even mainstream prominent economists are warning, including Adam Pozen, who previously worked for the U.S. Federal Reserve, the U.S. Central Bank. In an article in Foreign Affairs magazine, he warned that trade wars are easy to lose.

He wrote that despite the Trump administration’s claims to the contrary, quote, it is China that has escalation dominance in this trade war. The United States gets vital goods from China that cannot be replaced anytime soon or made at home at anything less than prohibitive cost, end quote. He said that Trump’s massive escalation of this trade war so quickly is, quote, a recipe for almost certain defeat at enormous cost, or to put it in Besson’s terms, Washington, not Beijing, is betting all in on a losing hand, end quote.

The Financial Times published a long report that provides some very important insight into just how crucial China is in the global economy and in global supply chains. This FT report notes that Beijing’s trade juggernaut is built on deep competitive advantages built up over decades that will not be easily dislodged. Quote, the sheer scale of China’s dominance is unprecedented.

No other country in recent decades has matched this level. And it notes that China makes up around a third of all global manufacturing, more than the U.S., Japan, Germany and South Korea combined. This article notes that China almost single handedly runs the global lithium ion battery industry.

The U.S. doesn’t have alternatives to these very important batteries. Again, it would take years or decades to build its own domestic industry. And as the FT report put it, quote, no other region globally provides the same unique combination of resources, advanced manufacturing capabilities, skilled labor, investment capital and substantial government support for the battery industry.

End quote. There is no alternative to China. The FT reported that China supplies at least 50 percent of global exports for 730 out of 5000 classified trading products, three times higher than the EU and almost eight times as many as the U.S. This is why, despite the fact that in 2018, Trump started the trade war against China, China’s trade dominance continued to increase.

And this is largely because China has been diversifying its trade partners. China is now the number one trading partner of the majority of countries on earth, including all countries in Africa, most countries in Latin America and almost all countries in Asia. And China’s dependence on exporting to the U.S. market has been decreasing over time.

In 2018, 19.2 percent of China’s exports went to the U.S. As of 2024, it fell to 14.7 percent of China’s exports. And now with Trump’s sky high tariffs of well over 100 percent, this figure is going to fall close to zero probably if these tariffs continue in the long term. So the Trump administration is engaged in a very, very risky trade war that will likely backfire hard on the U.S. economy and cause significant damage, especially to average U.S. consumers, to average poor and working people in the U.S. They’re going to see lots of inflation because the U.S. economy is so reliant on importing consumer goods from China.

And those consumer goods are going to get a lot more expensive. And it’s going to have ripple effects across the U.S. economy because as the disposable income of Americans falls, they will buy fewer products, which means that companies will lay off workers. And as more workers will get laid off, you have a feedback loop where they’re not buying as many products.

So other workers are laid off and it could cause a recession and significant problems in the U.S. economy. And the Trump administration is significantly overstating its hand and risking a lot. And Trump’s arrogance in all of this is really incredible.

He boasted that after he threatened tariffs on countries around the world, more than 75 nations called the U.S., contacted U.S. representatives and asked for those tariffs to be removed or to be minimized. And at a fancy gala organized by the Republican Party, Trump boasted that other countries are kissing my ass, end quote, to end those tariffs. I’m telling you, these countries are calling us up, kissing my ass.

They are. They are dying to make a deal. Please, please make a deal.

I’ll do anything. I’ll do anything, sir. Now, the fact that Trump is saying things like that out loud in public is really troubling because other countries have access to the Internet.

They can see that Trump is demeaning other countries, making fun of them, spitting on them, treating them like they’re children or animals. And this is going to only further incentivize other countries to seek alternatives to their economic reliance on exporting to the U.S. market because they can see that the U.S. is run by this madman who is boasting that countries around the world are kissing his ass to try to bring down tariffs, using tariffs as a political weapon to force other countries to kiss the ring. And this really is the Trump administration strategy.

This was spelled out by Trump’s top economic advisor, Stephen Myron, who gave a speech that was published by the White House in which he said that the Trump administration is using the threat of tariffs to force other countries to make significant concessions to the United States to hurt their economies, to benefit the U.S. and to pay the U.S. empire to maintain its global financial and military system dominated by the U.S. If other nations want to benefit from U.S. geopolitical and from the U.S. geopolitical and financial umbrella, they need to pull their weight and pay their fair share. They could boost defense spending and procurement from the United States, buying more U.S.-made goods. They can invest in and install factories in America.

They won’t face tariffs if they make their products in this country. They could simply write checks to Treasury. That would help us finance global public goods as well.

So essentially what the Trump administration is trying to do is acting like a global mafia, Don, a global mafia boss, and ordering other countries to pay tribute to the U.S. emperor. Sorry for mixing metaphors here. But Trump’s acting like the emperor of planet Earth and saying you need to pay the U.S. tribute in order to maintain its global empire.

And this is really why Trump has been so inconsistent in saying one thing and doing another and contradicting himself. You know, Trump supporters like to claim that he’s playing 5-D chess and he’s a genius and he’s making the best deals. And every time he does something contradictory or stupid, they say this is part of the master plan.

But in reality, Trump is just acting like a mafioso. He’s threatening everyone. He’s using mafia-style tactics demanding that they pay tribute.

And this reminds me of a political cartoon that went viral on social media that shows a king with a crown and he’s shooting arrows randomly at the wall. And his servant is painting bull’s eyes around the arrows as if all of the arrows shot by the king were perfectly on the mark. Everything that he did is an example of his wisdom of how great he is.

This is how Trump supporters and conservative media outlets like Fox News are treating Trump. He’s just engaging in all of these crazy tactics. And at the end of the day, it’s not really part of some grand strategic bargain that he wants to pursue.

It’s really a simple strategy. He’s pushing around other countries to try to maximize the power of the U.S. empire, threatening countries to force them to pay up to subsidize the United States so it can continue to maintain its global empire. However, the Trump administration is facing a major obstacle, which is the largest economy on Earth when you measure its GDP at purchasing power parity is not the U.S., it’s China.

China is a major superpower and it’s defending itself. It’s refusing to kiss the ring. And China has said clearly, quote, China will fight to the end if the U.S. side is bent on going down the wrong path, end quote.

And this is why the U.S. is so angry, so furious, because it’s trying to maintain a global empire with unipolar dominance of the entire planet. And China is standing in the way. This is why top U.S. officials like Trump’s deputy chief of staff, Stephen Miller, are publicly threatening China.

This is why Trump announced that he’s expanding the U.S. military budget to one trillion dollars to prepare for war with China. And Trump’s extremely hawkish neoconservative defense secretary, Pete Hegseth, published a book called American Crusade, in which he said that the U.S. is in a so-called holy war. That’s the term he used, a holy war against China.

And he called for overthrowing the Chinese government. This is the guy running the Pentagon right now. And this is also why Trump nominated the neoconservative war hawk Marco Rubio to oversee U.S. foreign policy as the secretary of state.

And in his Senate confirmation hearing, Rubio said very clearly that the new cold war that the U.S. is waging against China will determine the entire 21st century, that when historians look back at the history of this century, other issues like Russia and Ukraine will be mere footnotes, insignificant compared to the U.S. new cold war on China. The Communist Party of China is leads PRC is the most potent and dangerous near peer adversary this nation has ever confronted. They have elements that the Soviet Union never possessed.

They are a technological adversary and competitor and industrial competitor and economic competitor, geopolitical competitor, a scientific competitor now in every realm. It’s an extraordinary challenge. It’s one that I believe will define the 21st century when they write the book about the 21st century.

There’s going to be some chapters in there about Putin. There’s going to be some chapters in there about some of these other places. But the bulk of that book about the 21st century will be not just about China, but about the relationship between China and the United States and what direction it went.

Now, to be fair, this is not just policy of the Donald Trump administration. This is bipartisan policy in Washington. Democrats have also been very hawkish against China.

And in the previous Biden administration, Biden’s commerce secretary, Gina Raimondo, said very clearly that the goal of the U.S. is to, quote, slow down China’s rate of innovation, end quote. She also said that the U.S. government would do, quote, whatever it takes, end quote, to restrict China from getting access to the most high tech technology, especially artificial intelligence, because the U.S. government wants to protect big tech monopolies in Silicon Valley. So, again, this is bipartisan.

It’s Trump and Biden, Republicans and Democrats. However, Trump has taken the economic war and trade war and tech war against China to a whole new level. Trump started the trade war against China in 2018 during his first term as U.S. president.

And Biden, when he came in in 2021, he actually continued the trade war against China and the tech war. But Trump has kicked this trade war into hyperdrive. And like I have repeated, he has made this into a nuclear economic war against China, a massive game of chicken in which the U.S. is trying to destroy the Chinese economy, hoping that it doesn’t destroy the U.S. economy first.

And we’re actually already seeing signs of that happening. If you look at what’s going on in the U.S. bond market, this is very important for the U.S. government, because if the yields on U.S. bonds go too high, it’s going to make it very expensive for the U.S. government to continue to finance its debt. And it’s not China, but actually Japan that is the largest holder of U.S. Treasury securities with over one trillion dollars of U.S. Treasuries.

And what exactly happened that forced Trump to take a step back and pause his tariff war? Well, Japan was reportedly selling a lot of its U.S. Treasury securities, which caused the 10-year yield to go up very significantly. And this was not reported by anti-Trump people in the media. This was reported by Trump supporters at Fox News.

The Fox News correspondent Charlie Gasparino reported, citing money managers, that it was Japan, not China, that was selling its Treasury securities that upended the bond market, forcing Trump’s hand into a pause. This is a very big issue for the U.S. government. In fact, if you remember back to the British conservative Prime Minister Liz Truss, she introduced a budget that was like Thatcherism on steroids that would massively increase the deficit, and the bond market revolted, and it ultimately led her to losing power, to being replaced by another Prime Minister in the U.K. And in the U.S., we saw something not dissimilar, where the bond market revolted against Trump’s policies, and he took a step back.

So what exactly happened? Well, the 10-year bond yield on the 4th of April went under 4 percent, and then in the next few days, it significantly increased to 4.4 percent. What does this mean? Why is it important? Well, at the same time, the U.S. stock market was in severe crisis, was crashing, and usually when the stock market crashes, investors will sell their stocks and buy bonds. And as they buy bonds, the yield on the bond will go down because there’s more demand for the bond.

However, because many foreign investors were simply selling U.S. assets, period, getting out of all stocks and bonds and moving into foreign assets, what that meant is that there was less demand for U.S. bonds. And furthermore, Trump’s tariffs led to risks of more inflation, higher expectations of inflation. And as inflation expectations rise, bond yields rise because investors don’t want to lose money over time with inflation.

So while the stock market was crashing, the bond yields actually went up, not down, which is a huge problem for the U.S. government. U.S. Treasury securities are supposed to be seen as the safest reserve asset used around the world. They backstop the international financial system.

Washington designed the international financial system in that way, to give it the exorbitant privilege of printing the global reserve currency. And normally when there are moments of crisis and instability and volatility like this, there’s something called a flight to safety where investors will fly to the safety of U.S. bonds. But instead, they were fleeing U.S. bonds.

So the U.S. was doing significant damage to its own exorbitant privilege, which is ultimately why Trump took a step back. Trump’s Treasury Secretary Scott Besant, who’s a billionaire hedge fund manager from Wall Street, has constantly reiterated that the Trump administration is dedicated to bringing down the yield on the 10-year Treasury security. And why is that? It’s because the yield on the 10-year note is used as the basis for other important interest rates in the U.S. economy.

So for instance, if you go to a bank and you want to buy a house and get a mortgage, well, the bank is going to use the 10-year Treasury note yield as the basis for giving you a mortgage. If you want to get a 30-year mortgage, what is the interest rate that will charge you? Usually, it’s a spread above the 10-year yield. So if the 10-year yield is 4%, they’ll probably give you a mortgage with a 6% rate.

And this is true for other parts of the economy. If a company wants to borrow to make new investments, for instance, if they go to a bank and they ask for a loan, the bank will charge an interest rate based on the 10-year yield. Or, for instance, if corporations want to sell bonds to investors, corporate bond yields are also closely related to the 10-year Treasury yield at a slight spread above.

So the Trump administration has been desperate to try to bring down the 10-year yield, and yet the exact opposite is happening. It’s been going up. And this is especially a concern for the Trump administration because it says that it wants to bring down U.S. deficits, U.S. government deficits.

The U.S. deficit is already over 120% of GDP. And one of the biggest expenses that the U.S. government is paying is now interest on the national debt because the U.S. Central Bank, the Federal Reserve, significantly raised interest rates in 2022 because there was a lot of inflation coming out of the COVID pandemic due to supply chain shocks. And as the Fed raised interest rates, that also significantly increased the cost of U.S. government borrowing.

And the interest payments on U.S. national debt skyrocketed and are now at over 3% of GDP, which is very close to military spending. And the U.S. already spends more on the military than the next nine largest foreign military spenders in the world combined. So this is a significant problem that the U.S. government is really trying to grapple with.

But honestly, the problem goes even deeper than just the bond market. That’s what concerns the U.S. government the most. But all parts of the U.S. financial system are deeply intertwined and linked.

And Trump’s tariffs also unleashed another crisis in the U.S. financial system, which was that hedge funds were facing the largest margin calls since the 2020 crisis at the beginning of the pandemic. What is a margin call? It refers to when an investor takes on lots of debt from a creditor and the creditor, like let’s say a hedge fund, is going to take on a lot of debt from a commercial bank. The bank gives them a loan, but then the bank demands collateral.

And as collateral, the hedge fund may choose something like stocks that it owns. But if the price of those stocks plummets, as has been happening in the U.S. stock market, then the creditor may demand some other collateral. The hedge fund will have to sell more stocks or bonds, which is what they did because they need to get some cash to pay their creditor to show that they’re not insolvent.

So what happened? A lot of hedge funds were very overleveraged. They had so much debt and they were engaged in something called the basis trade. What does that mean? It means that they’re looking for little examples of arbitrage, little differences in the bond market that normally would be little cents.

I mean, you’re not really going to make much money, but if you’re dealing with billions of dollars with lots of leverage, you can actually make a lot of money from engaging in this arbitrage. However, a lot of these hedge funds were very indebted, overleveraged, and the basis trade depended on stability. If there was a lot of volatility in stock prices, then it could blow up the entire basis trade, which is exactly what happened.

So hedge funds got all of these margin calls from their creditors and they began dumping not only stocks, which further accelerated the drop in the U.S. stock market, but also bonds. So once again, we see how the U.S. financial system is actually quite fragile. I mean, it’s not surprising for anyone who remembers the 2008 financial crisis in which the U.S. almost took down the entire global financial system.

But what we now see is that although the U.S. government constantly reassures us that they solved all of the problems that led to the 2008 financial crisis, we can see some cracks emerging in the system that could become bigger and bigger and cause a serious crisis. And these problems on Wall Street are causing significant turmoil inside the Trump administration because Trump appointed 13 billionaire oligarchs as officials in his administration, and they’re losing a lot of wealth because the tariffs caused the stock market to crash. This is why Elon Musk, the world’s richest billionaire oligarch, was heavily pressuring Trump to take a step back and to pause the tariffs.

Musk has been losing a lot of wealth because Tesla stock has been hit really hard throughout all of the volatility of this tariff crisis. Ironically, you know where half of Tesla cars are made? In China. So as Trump is massively escalating this economic war against China, it’s causing significant problems for Tesla and people around the world are boycotting Teslas in protest of Elon Musk because he’s a top official in the Trump administration.

So Tesla is in serious crisis and its stock has been plummeting and Musk has been begging Trump to please pause the trade war. And many other billionaire Trump backers were doing the same. The billionaire hedge fund manager Bill Ackman, who strongly supported Trump, he also constantly called for Trump to issue a 90-day pause on tariffs, which by the way is exactly what Trump did.

The Wall Street Journal reported that Trump was also listening to the billionaire CEO of JPMorgan Chase, the largest US bank. Its CEO is Jamie Dimon. And he went on Fox News, which Trump is constantly watching.

And Jamie Dimon said, Trump, please take a step back on these tariffs. You’re going to cause an economic crisis. And apparently Trump listened to him because we can now see that Trump’s real constituency are not average Americans, not the working class.

It’s billionaire oligarchs on Wall Street. Those are his real base of support. And in fact, related to all of this scandal, Trump has been accused of market manipulation because he has been enriching his billionaire friends and boasting about it in the White House.

On the 9th of April, Trump posted on his Twitter copy, Truth Social. He said, quote, This is a great time to buy, end quote. And then just a few hours later, he announced his tariff pause.

So the stock market ripped upward and investors made a lot of money. And then Trump invited billionaire oligarchs to the White House. And Trump’s communications assistant, Margo Martin, published a video of Trump meeting with billionaires from Wall Street, including Charles Schwab, who is a billionaire oligarch, who’s very conservative, very closely linked to the Republican Party.

And the financial services company, Charles Schwab, is named after him. And Trump boasted that his billionaire friends made $2.5 billion and $900 million in one day. This is Charles Schwab.

He made $2.5 billion today and he made $900 million. Just think about how crazy that is. This billionaire made $2.5 billion in one day.

And was this corruption? We have to ask, is Trump giving insider information to his billionaire friends? Is Trump text messaging his billionaire oligarch friends and saying, you really need to buy some stocks now because the S&P 500 is going to rip upward? I’m about to announce a pause to my tariffs. I mean, the Trump administration is so cartoonishly corrupt. And this isn’t even to mention the meme coin scam that Trump and his wife, Melania, launched.

And after Trump coin was launched, Trump coin insiders made $100 million in profits in the first few weeks, whereas hundreds of thousands of investors lost their money. And these were Trump supporters. So Trump has been scamming his own supporters, telling working class Americans that they can get rich by buying his meme coin while he’s inviting billionaires to the White House and boasting about how they make billions of dollars in one day.

And meanwhile, Trump is this economic nuclear war against China, which could cause serious problems in the U.S. and blow back really hard on the U.S. economy. And again, I must stress, it’s going to be working class Americans who suffer because of this, not Trump’s rich friends. And it’s going to potentially be working class people around the world in other countries as their economies are disrupted because of the new cold war that the U.S. empire is desperately waging, trying to weaken and undermine China to try to maintain U.S. global hegemony.

On that note, I’m going to conclude. Please like and subscribe. Please share this.

I am Ben Norton. I’m the editor in chief of Geopolitical Economy Report. I will be back soon.

Thanks a lot for joining me today.