How Trump Lost the Trade War Before It Began

Nearly 2,500 years ago, the famous Chinese military strategist Sun Tzu wrote in his book The Art of War: “He who knows when he can and cannot fight will win.”He means that one should not start a war unless one knows they will win.Trump appears not to have heeded this wisdom.

Its unparalleled manufacturing power has driven China’s emergence as a real challenge to U.S. hegemony.
Through cheap labor, minimal environmental regulations, and a massive production scale, China has slowly but surely built monopolies across several strategically crucial industries.

In 1992, former Chinese leader Deng Xiaoping declared, “The Middle East has oil; China has rare earths.”
Like the Middle East, rare earths have enormous geopolitical implications.

About 70% of the world’s rare earths are mined in China, but the country’s ability to undertake the toxic task of refining these minerals has given it a near-monopoly on the market, with more than 90% of the global supply coming from China.This requires refined rare earth minerals for any product, including magnets, sensors, lasers, guidance systems, batteries, displays, and high-performance motors.

This means that rare earth minerals are used to produce almost every advanced piece of weaponry on which a modern military relies.However, unlike oil, this is not a monopoly defined by geography.
China only holds about 35% of the actual known reserves.However, any attempts by other countries to profit from their own reserves have been met with strategic price cuts from China, making it virtually impossible for any private enterprise outside of China to enter the market.

This has been a growing national security threat to the West for years, a serious but not insurmountable one.
President Biden had already recognized the problem and funded significant subsidies to develop domestic production.

But if the West is to be adequately protected from any future trade hostilities with China, it will need to pool its resources, cooperate, and coordinate a unified response.It will require engaging with manufacturing powerhouses like India to build production capabilities.It will require financial commitments from rare earth buyers in the European Union, Japan, and South Korea to agree to minimum prices so that new competitors can establish themselves in the market.It will require long-term commitments from the largest potential suppliers in Brazil, Canada, and Australia.Perhaps most importantly, it will require patience.We are preparing for a trade war that we hope will never happen because many have yet to realize that we are not ready for it.

Trump did not start a trade war he could win; he did almost everything he could to make it unwinnable.
He has distanced India from any alignment with the West, which may have been a response to buying Russian oil. Still, most agree that it was in response to Trump’s public statements regarding tensions between India and Pakistan.He has alienated allies in the European Union and Asia with tariffs and openly hostile rhetoric, and has made no move to coordinate any strategy on rare earths.

He threatened to annex Canada, invited legal challenges when he attempted to overturn the results of an election, and imposed substantial tariffs on Brazil.Even Australia, one of the United States’ closest allies, was hit with tariffs despite a trade surplus, and the value of its AUKUS military alliance was publicly questioned.
In addition, Trump even eliminated Biden’s subsidies designed to protect the United States from the trade war he knew he was going to start.Trump started this war unprepared, without the proper knowledge, and without allies.

Last week, China announced extraordinary export controls on its rare earth minerals, including a ban on their use in military production.To some extent, it was a shot across the bow with their economic leverage that revealed to the world what many already knew…If this trade war continues, China will win.

Likely, Trump will now be forced into negotiations from a position of unprecedented weakness for the United States.It would be like an ignominious surrender, but he will try to spin it back.This is a situation from which this proud and unyielding superpower may never truly recover.Historians may one day look back on this week when US hegemony died.