According to Fortune, last week’s Trump-Xi summit avoided immediate escalation but revealed the administration’s China strategy isn’t working. Only 2 out of 35 Chinese CEOs rated the summit a “12 out of 10,” while Goldman Sachs CEO David Solomon called the meeting constructive but emphasized the need for new policies to address China’s market manipulations. American Enterprise Institute economist Derek Scissors argued the meeting was “a waste of time” and that U.S. policy remains where it was when Trump took office. The summit temporarily lifted U.S. port fees on China’s maritime industries and delayed rare earth export controls for one year, while China agreed to buy average soybean volumes and cooperate on fentanyl – promises similar to unmet 2020 commitments. Meanwhile, 71% of CEOs at a Yale Washington CEO Caucus viewed Trump’s tariffs as harmful, and 82% condemned using trade policy to interfere in foreign countries’ domestic politics.
The Collective Action Problem
Here’s the fundamental issue with Trump‘s approach: tackling China’s trade practices requires collective international action, but Trump has systematically undermined America’s ability to build that coalition. He’s using tariffs as a multipurpose weapon – not just against China, but to settle personal scores and pressure weaker nations. Look at what’s happened recently: he slapped additional tariffs on Canada over a TV ad, threatened Brazil with 40% tariffs over Bolsonaro’s prosecution, and hit South Africa over land reform policies. These aren’t strategic trade measures – they’re tantrums.
And that’s the problem. When you’re trying to get allies to endure economic pain to counter China’s market manipulations, they need to trust you won’t abandon them. But Trump’s mercurial approach makes that impossible. Who wants to join a coalition led by someone who might turn around and tariff you next week over some unrelated grievance? The Wall Street Journal editorial board called the Canada move a “tantrum” – and they’re not exactly known as Trump critics.
The Global Fallout
The collateral damage from this approach is staggering. 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, Germany’s manufacturing orders have stalled worse than during COVID, and the broader Eurozone isn’t doing much better. Basically, Trump has weakened the very allies America needs to counter China.
Meanwhile, China’s been playing the long game. While Trump dismantles institutions that project American soft power, Xi has been expanding China’s influence through infrastructure investments in Southeast Asia, ports in South America, and think tanks across Africa and Latin America. He’s presenting China as the stable, multilateral partner while America looks unpredictable and unilateral. The irony is thick enough to cut with a knife.
The Pattern of Empty Promises
Remember the Phase One trade deal from Trump’s first term? China promised to buy more soybeans and reduce fentanyl flows. Sound familiar? Because we’re hearing the same promises now. The U.S. Trade Representative actually initiated an investigation into China’s failure to meet those 2020 commitments just days before last week’s summit. And what did the latest negotiations achieve? Nothing on the core issues – no resolution on non-tariff barriers, market access, or purchase commitments.
The rare earths situation perfectly illustrates the standoff. Export controls were delayed for one year, but access to these critical minerals depends on China getting U.S. semiconductors – which Trump has already ruled out for advanced chips. So we’re basically just kicking the can down the road until the next crisis.
What Comes Next?
The summit revealed something crucial: Trump started a trade war America can’t win alone. The very market distortions the tariffs were supposed to fix – subsidies, IP theft, forced technology transfers – are the least likely to be resolved because Trump’s protectionism has alienated the partners needed to address them. Without carrots to complement the tariff stick, America risks becoming isolated while China continues its global charm offensive.
Think about it: when 82% of business leaders condemn using trade policy to interfere in foreign politics, and 71% see the tariffs as harmful, you’ve got a credibility problem. The economic damage is spreading globally, and America’s leverage is diminishing by the day. Five years into this approach, we’re basically back where we started – except now our allies are weaker, China is stronger, and the path forward looks even more uncertain.
