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Trump gets hit by his own wrecking ball, but he will keep swinging it

Washington’s tariff policies become explicable in light of the US economy’s relative decline and the astonishing rise of China, argues MICHAEL BURKE

US President Donald Trump talks about transgender weightlifters as gives a commencement address at the University of Alabama, May 1, 2025

DONALD TRUMP was hoping to take a wrecking ball to the world trade system and other countries’ exports to the US. He swung it hard when he announced tariffs on US imports from the rest of the world on “Liberation Day” on April 2, but within weeks it had slapped him hard in the face.

Unfortunately, this humiliation does not mean that will not be the end of the matter — far from it. These are the actions of a reckless president, and a reckless administration. Once his motivation is properly understood, it seems inevitable that he will return with similar policies. 

To put the current turmoil in perspective, there are two key trends in the world economy. The first trend is the relative decline of the US economy. The second is the extraordinary rise of China.

Clearly, the two trends are linked, but the US’s decline is not simply a function of China’s rise. The US relative decline has been taking place for decades. In the early 1950s the US economy accounted for 28 per cent of world GDP. By 2023 that proportion had almost halved, with the US accounting for just 15 per cent of world output.

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