Economics

Trump is forcing decoupling, but he clearly hasn’t thought through the consequences. We’ve already seen him backtrack on electronics tariffs which are the most critical import from China. And with companies stockpiling inventory, the real shock hasn’t hit yet. Once those stockpiles run out, the picture will look very different.

The most likely outcome is a US recession triggered by collapsing consumption. Many Americans were already relying on credit just to afford essentials which means they can’t absorb even higher prices. Debt defaults will follow, potentially spiraling into another 2008-style crisis.

Another problem with this strategy is that consumption is America’s only real leverage in global negotiations. The entire pitch for siding with the US over China hinges on its consumer market. But if that market shrinks, the argument falls apart. If Trump forces a binary choice, China simply has more to offer. Even the EU now sees China as a more rational partner.

Meanwhile, the idea that tariffs alone will revive US manufacturing is pure fantasy. No rational investor will pour money into a shrinking economy. Rebuilding factories, supply chains, and skilled labor would take billions and decades, it's far too much risk for far too little reward. That’s why financial capital abandoned US industry in the first place. Tariffs just function as a stealth tax on consumers. If Trump was serious about reshoring, there would need to be capital controls or massive public investment, but nobody’s even discussing that.