this post was submitted on 19 Apr 2025
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The U.S.-China decoupling arrives (www.axios.com)
submitted 1 week ago by yogthos@lemmy.ml to c/economics@lemmy.ml
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[–] Majestic@lemmy.ml 4 points 1 week ago (2 children)

I recall a number of prominent users on lemmy proclaiming that this would not, could not happen within the past few years. And yet here we are, the acceptance stage from the financial elites. No grand resistance, no big push by retailers or wall street to crush Trump into obedience. Not even attempts at doom-saying that this will entirely destroy the economy just kind of passive acceptance and a shrug that it'll hurt but oh well. I guess we'll have cold war 2.0 after all with separate blocs and more horrible proxy wars instigated by the west.

It may seem petty of me but I'm just a working person and I don't look forward to price increases I can't afford of 250% on random things I need. I buy so many things that are made in China from kitchen tools to electronics to parts to repair appliances because it's cheaper than throwing away or a repair-person (not anymore I guess). This is going to hurt me and other people badly. I also worry what it means for the ability of the US to launch a war on China.

[–] dis_honestfamiliar 1 points 6 days ago

I don't know about a full on war, but China seems to be leading the race with trade. China could generate a lot of goodwill in Europe by expressing a wish to protect free trade

[–] yogthos@lemmy.ml 1 points 1 week ago

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.