[News] Trump is clearly losing the trade war with China, which he started. This is why.

Sun Nov 2 10:45:45 EST 2025

The US economy is vulnerable and much more dependent on China’s than 
vice versa. The one-year trade war truce that Donald Trump made at his 
meeting with President Xi Jinping proves this.
͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏   ͏   
  ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     
͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏ 
     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏   
  ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     
͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏ 
     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏   
  ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     
͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏ 
     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏   
  ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     
͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏ 
     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏   
  ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     
͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏ 
     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏   
  ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     
͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏ 
     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏     ͏   
  ͏     ͏     ͏     

Forwarded this email? Subscribe here 
<https://substack.com/redirect/2/eyJlIjoiaHR0cHM6Ly93d3cuZ2VvcG9saXRpY2FsZWNvbm9teS5yZXBvcnQvc3Vic2NyaWJlP3V0bV9zb3VyY2U9ZW1haWwmdXRtX2NhbXBhaWduPWVtYWlsLXN1YnNjcmliZSZyPWx2cHBiJm5leHQ9aHR0cHMlM0ElMkYlMkZ3d3cuZ2VvcG9saXRpY2FsZWNvbm9teS5yZXBvcnQlMkZwJTJGdHJ1bXAtbG9zaW5nLXRyYWRlLXdhci1jaGluYS11cy1lY29ub215IiwicCI6MTc3NzA5MzI2LCJzIjo0NTc1OTYsImYiOnRydWUsInUiOjM2NzUxNTgzLCJpYXQiOjE3NjIwODg1MDEsImV4cCI6MjA3NzY2NDUwMSwiaXNzIjoicHViLTAiLCJzdWIiOiJsaW5rLXJlZGlyZWN0In0.I0jizLis2GONFrvTerO98x6OOVt-mOn3yTJY8BjDqdc?> 
for more

  Trump is clearly losing the trade war with China, which he started.
  This is why.
  <https://substack.com/app-link/post?publication_id=457596&post_id=177709326&utm_source=post-email-title&utm_campaign=email-post-title&isFreemail=true&r=lvppb&token=eyJ1c2VyX2lkIjozNjc1MTU4MywicG9zdF9pZCI6MTc3NzA5MzI2LCJpYXQiOjE3NjIwODg1MDEsImV4cCI6MTc2NDY4MDUwMSwiaXNzIjoicHViLTQ1NzU5NiIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.JtjjDorhmYDieOt89FAEmV616WsTv-P7Kq6GF6x_JKM>

      The US economy is vulnerable and much more dependent on China’s
      than vice versa. The one-year trade war truce that Donald Trump
      made at his meeting with President Xi Jinping proves this.

Ben Norton <https://substack.com/@benjaminnorton>

Nov 2, 2025

<https://substack.com/@benjaminnorton>

<https://substack.com/app-link/post?publication_id=457596&post_id=177709326&utm_source=substack&isFreemail=true&submitLike=true&token=eyJ1c2VyX2lkIjozNjc1MTU4MywicG9zdF9pZCI6MTc3NzA5MzI2LCJyZWFjdGlvbiI6IuKdpCIsImlhdCI6MTc2MjA4ODUwMSwiZXhwIjoxNzY0NjgwNTAxLCJpc3MiOiJwdWItNDU3NTk2Iiwic3ViIjoicmVhY3Rpb24ifQ.77Sw1hm95NJw946rVKqcCpUVh8epY84HuGjIBYdVdS0&utm_medium=email&utm_campaign=email-reaction&r=lvppb> 

<https://substack.com/app-link/post?publication_id=457596&post_id=177709326&utm_source=substack&utm_medium=email&isFreemail=true&comments=true&token=eyJ1c2VyX2lkIjozNjc1MTU4MywicG9zdF9pZCI6MTc3NzA5MzI2LCJpYXQiOjE3NjIwODg1MDEsImV4cCI6MTc2NDY4MDUwMSwiaXNzIjoicHViLTQ1NzU5NiIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.JtjjDorhmYDieOt89FAEmV616WsTv-P7Kq6GF6x_JKM&r=lvppb&utm_campaign=email-half-magic-comments&action=post-comment&utm_source=substack&utm_medium=email> 

<https://substack.com/app-link/post?publication_id=457596&post_id=177709326&utm_source=substack&utm_medium=email&utm_content=share&utm_campaign=email-share&action=share&triggerShare=true&isFreemail=true&r=lvppb&token=eyJ1c2VyX2lkIjozNjc1MTU4MywicG9zdF9pZCI6MTc3NzA5MzI2LCJpYXQiOjE3NjIwODg1MDEsImV4cCI6MTc2NDY4MDUwMSwiaXNzIjoicHViLTQ1NzU5NiIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.JtjjDorhmYDieOt89FAEmV616WsTv-P7Kq6GF6x_JKM> 

<https://substack.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.7EroZGBJBmQXnUB6yJ2cQ6O7QUqk1bRAeXs3MCHGH9o?&utm_source=substack&utm_medium=email> 

READ IN APP 
<https://open.substack.com/pub/geopoliticaleconomy/p/trump-losing-trade-war-china-us-economy?utm_source=email&redirect=app-store&utm_campaign=email-read-in-app> 

	<https://substack.com/redirect/e19bfaf5-6f3b-47fd-ba4e-f8a855675d28?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

Donald Trump is losing the trade war against China, which he himself 
started.

Trump held an important meeting with China’s President Xi Jinping in the 
South Korean city of Busan on 30 October. There, they came to a new 
agreement, which amounted to a one-year truce.

The US government agreed to lift most of the punitive measures that it 
had imposed on China since April 2025, essentially bringing the 
situation back to what it was in January, when Trump entered office for 
his second term.

Although this is not the end of the trade war, China clearly won this 
battle.

<https://substack.com/redirect/cba22ead-f982-4165-9454-3783be352677?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>

      China’s victory in this phase of the trade war confirms its
      “global economic superpower status”

The Financial Times (FT) noted 
<https://substack.com/redirect/81a34936-58e8-4f57-b894-54d882b016fa?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>that, 
“Unlike nearly 10 years ago, when Trump’s first trade offensive caught 
Beijing by surprise, this time a better prepared and economically more 
powerful China has been able to fight its once far mightier opponent to 
a standstill”.

Starting in April 2025, Trump threatened sky-high tariffs on countries 
around the world 
<https://substack.com/redirect/291879a5-2ce2-4850-a746-3fb1cfa86006?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>. 
China is the only one that was able to defend itself and prevent the US 
from imposing an unequal treaty on it.

When Trump resorted to the nuclear option and increased tariffs on China 
to 145%, he thought Beijing would give in. But on the contrary, China 
hit back with the same level of truly reciprocal duties. This terrified 
Washington, and Trump backed down.

The same thing happened when the Trump administration tightened chip 
exports to China 
<https://substack.com/redirect/0ec06844-da65-4f66-a7ec-dd5cee9ca897?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
and added many more Chinese companies to the US Entity List, which was a 
form of sanctions.

Beijing responded by restricting the export of rare earth metals and 
magnets to the US. Once again, this frightened Washington, because China 
dominates the global supply for rare earths, and US companies are 
extremely reliant on them. Trump was forced to back down.

This is why the FT quoted an analyst from the major French bank BNP 
Paribas, who said the United States has come to recognize “that it is 
now dealing with a peer rival capable of imposing material economic harm 
on it — a relatively new position for the US and a development which, at 
least to us, /confirms China’s ascendancy to global economic superpower 
status/” (emphasis added).

	<https://substack.com/redirect/5e81c0f0-9fee-4395-91f8-9d5e710612e6?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

With that said, the FT cautioned that this is by no means the end of the 
trade war, and the agreements made by the two sides “were relatively 
narrow and mostly suspended existing punitive measures rather than 
scrapping them altogether”, which “makes further US-China tensions 
inevitable”.

A scholar at the Institute of International Studies at China’s highly 
influential Fudan University, Zhao Minghao, explained, “This summit can 
only bring about a tactical détente rather than a strategic reset for 
the US-China relations”.

      USA makes more concessions than China

Bloomberg concluded 
<https://substack.com/redirect/12705ee4-6fce-4594-96ec-af9eb0abb40e?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>that 
the US made more concessions than China, following the Trump-Xi meeting 
in South Korea.

As part of the deal, the US government agreed to halt Trump’s threat of 
an additional 100% tariff, to reduce its fentanyl-related duties on 
China from 20% to 10%, to remove the new Chinese companies that were 
added to its Entity List, and to suspend port fees 
<https://substack.com/redirect/373909e9-9c0b-4128-97b2-3c7732a9cac5?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>.

For its part, China agreed to lift its rare earth controls and further 
restrict the export of chemicals needed to make fentanyl (although 
Beijing had already done the latter). China will also resume its 
purchases of US soybeans (which is discussed further below).

Trump and has allies have claimed that China also will buy US oil and 
gas and potentially allow a deal on TikTok, but this has not been 
confirmed; it is purely hypothetical.

The Associated Press also concluded that Trump won nothing in the 
agreement, reporting: “Deal between the US and China is undoing damage 
from a self-inflicted trade war 
<https://substack.com/redirect/eb51f358-b043-4662-9c8e-cc33051f0234?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>”.

The AP quoted an economist at Cornell University, Eswar Prasad, who 
commented, “It is hard to see what major gains the U.S. has made in the 
bilateral relationship relative to where things stood before Trump took 
office”.

In other words, Trump waged an aggressive trade war against China for 
months, only to end up back at square one, empty-handed.

	<https://substack.com/redirect/daed132c-e79a-4672-bad7-57309ca13756?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

      US economy is more dependent on China’s than vice versa

This is quite ironic, because back in April, when Trump massively 
escalated the trade war, US Treasury Secretary Scott Bessent claimed 
China was playing with a “losing hand” 
<https://substack.com/redirect/5410bd4b-e134-413b-a4b2-432456f4a019?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>.

Bessent, a billionaire hedge fund manager from Wall Street, insisted 
that the United States had much more leverage over China, and that 
Beijing would soon surrender.

“What do we lose by the Chinese raising tariffs on us? We export 
one-fifth to them of what they export to us, so that is a losing hand 
for them”, he said.

It turns out the exact opposite was true; the US economy is more 
dependent on China’s.

	<https://substack.com/redirect/160dcf08-7607-40a6-8da1-bbe598c85f80?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

Back in 2000, yes, China was very dependent on the US economy. At that 
time, trade with the US was around one-quarter of China’s overall trade.

In the past two decades, however, China has significantly reduced its 
dependence on trade with the US. By 2023, it was only around 10% of 
China’s overall trade.

When one analyzes what exactly China exports to the US 
<https://substack.com/redirect/485abbcd-c1f9-4f0b-b3a1-37eed873dd8b?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
and vice versa, one can clearly see that it is the US that is more 
dependent.

	<https://substack.com/redirect/c32a6acd-0521-4b04-9319-a0fbef3783bd?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

China exports many technological products that the US cannot get from 
anywhere else, including cell phones, computers, batteries, machinery, 
and parts.

This is no longer the 1980s and ‘90s, when much of China’s exports to 
the US consisted of low value-added goods, like textiles, toys, and 
household appliances. China has very quickly moved up the global value 
chain.

On the other hand, many of the goods the US exports to China are 
commodities like oil, gas, soybeans, and corn. China can easily buy 
these from other countries.

There are still a few important US goods that China has been dependent 
on, especially advanced semiconductors — although that is quickly 
changing (as will be discussed later in this article).

The US previously exported a sizeable number of cars to China. But China 
has become the world’s number one producer of cars, and most people in 
the country prefer buying cars from Chinese companies, which are much 
more affordable.

Trump and Bessent think the China of today is still that of the ‘80s and 
‘90s, when its economy revolved around exported low value-added, 
labor-intensive goods of questionable quality. Those days are long gone.

The Chinese government successfully used industrial policy, state-led 
development policies, and a careful mixture of central planning and 
regulated market competition in order to rapidly move up the global 
value chain, create complex supply chains, promote technological 
self-sufficiency, and massively boost industrial output.

The results speak for themselves: today, China is the world’s sole 
manufacturing superpower 
<https://substack.com/redirect/3a3ffa79-a25c-48c3-803d-48b4b2a0b0bf?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>.

	<https://substack.com/redirect/b744515b-306f-44e5-999b-eaef15e6033e?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

In fact, while China has become less dependent on exporting to the US 
market, US companies have become more reliant on the import of Chinese 
intermediate goods and other inputs.

	<https://substack.com/redirect/f3d425c5-bcdc-4dab-85b6-37611c316b32?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

Bessent argued that China was more dependent on the US market because it 
has a large trade surplus. However, the vast majority of the revenue of 
Chinese companies comes from domestic purchases.

Yes, China does generate significant revenue through the export of 
consumer electronics, but even in that industry, the majority of revenue 
derives from domestic sales. For all other major Chinese industries, 
domestic revenues make up the vast majority of total revenue.

	<https://substack.com/redirect/b2123b53-e3c1-4e00-941d-7dc05c393cc8?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

Some of China’s exports are still going to the US market, albeit 
indirectly, by rerouting through third countries, like Vietnam, 
Indonesia, Thailand, or Mexico.

Companies in those countries often add more value to a product that 
originated in China, and subsequently export it to the US, where it will 
not be labeled as a Chinese good.

However, from the perspective of a Chinese exporter, this is not a 
problem. It simply wants to sell the product; it doesn’t care where the 
product goes after.

      China’s rare earth supply chain dominance forced the US to pause
      its aggressive trade war

One of the biggest and most important takeaways of China’s victory in 
this round of the trade war is the importance of rare earth elements.

China completely dominates the global supply chain for rare earths, 
including both the mining and the processing.

China made up more than 60% of the mining and around 90% of the refining 
of rare earths 
<https://substack.com/redirect/dd6dbcd0-b8af-4585-923a-bda13291d89b?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
as of 2024.

Despite the name, rare earths are actually not that rare; they can be 
found in many places around the world. What wakes it difficult for other 
countries to replace China in the supply chain, however, is the 
processing of rare earths, which is complex, labor intensive, and 
environmentally destructive.

The United States has tried to increase its role in the global rare 
earth industry, especially after Trump launched the trade war against 
China in his first term as president, but it has not made much progress.

It will take years, if not decades, for the US to make significant advances.

	<https://substack.com/redirect/49010f1e-79f3-4f7a-9609-14e1255b2fff?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

When China responded to Trump’s aggressive, unilateral escalation of the 
trade war in 2025, and, in an act of self-defense, decided to restrict 
the export of rare earths to the US, it terrified not only Washington, 
but also the military-industrial complex.

US tech companies, particularly arms manufacturers and other US military 
contractors, are very dependent on China’s rare earth metals and magnets.

The hawkish anti-China think tank the Center for Strategic and 
International Studies (CSIS) — which is funded by the US government 
<https://substack.com/redirect/b079eeec-f32d-4628-8257-78ef976e35e8?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
other Western governments, and large corporations in the 
military-industrial complex — published a report warning that “China’s 
new rare earth and magnet restrictions threaten U.S. defense supply 
chains 
<https://substack.com/redirect/66105792-fd6e-4307-bafa-53591b360c67?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>”.

Ironically, the US military is making plans for a potential war on China 
<https://substack.com/redirect/7506395f-15b9-41d9-9c31-c61fc11744ce?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
but it can’t do so without China’s rare earths.

This is why the US government in the past decade has poured resources 
into trying to develop a new supply chain for critical minerals that 
cuts out China.

However, the journals and media outlets of the US military-industrial 
complex acknowledge that the US cannot realistically catch up in the 
production of rare earths.

As the US media outlet National Defense put it, “the United States will 
not be able to end reliance on China 
<https://substack.com/redirect/a74009ef-3cd1-49f1-bd5c-9c84e100bcaa?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>through 
domestic production”.

      US “chip war” targets China

It must be emphasized that the reason that China put restrictions the 
export of rare earths is because it was responding to US attacks; it was 
an act of self-defense.

Trump started the trade war on China in his first term. However, the 
Democratic administration of Joe Biden continued this trade war. The new 
cold war — Cold War Two — is bipartisan in Washington.

In fact, the Biden administration put significant restrictions on the 
export of technologies 
<https://substack.com/redirect/1b8ede07-077c-4b73-8c87-026a3d989424?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>to 
China, prohibiting the export of advanced semiconductors and chip-making 
tools.

The idea in Washington was that this would be the Achilles’ heel of 
China. US imperial strategists thought that, by waging a tech war on 
China, they could prevent it from catching up in cutting-edge 
industries, especially artificial intelligence.

Washington hoped that US Big Tech corporations in Silicon Valley would 
have a monopoly on AI 
<https://substack.com/redirect/64402568-fc8c-4486-ad70-7ad4645cb370?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
and China would be left behind.

Commerce Secretary Gina Raimondo even admitted that the US government’s 
goal was to “slow down China’s rate of innovation 
<https://substack.com/redirect/91dd5f23-3c7a-41ea-b65d-876e5822cb09?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>”.

	<https://substack.com/redirect/e2d3b917-d09c-4ba1-9044-0d89bf7633e0?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

That, of course, is not what happened.

Just as China’s restrictions on the export of rare earths caused the US 
government to pour resources into developing its own supply chain for 
critical minerals, the same thing has happened with semiconductors. The 
US restrictions on the exports of semiconductors to China led Beijing to 
prioritize the development of its own domestic chip-making industry.

China’s industrial policy promoted the local production of 
semiconductors. And it has been quite successful.

In April 2024, Raimondo warned, “About 60% of all new ‘legacy chips’ 
<https://substack.com/redirect/3d1e8cc2-f9ad-4c71-be68-33aada9deba3?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>coming 
into the market in the next handful of years will be produced by China”. 
Legacy chips 
<https://substack.com/redirect/571b66ab-8934-4487-9ee5-6a80f6f730f7?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>are 
those used in most everyday technologies. They are not the most advanced 
chips, but they are much more common.

The US “chip war” against China ended up pushing Beijing to increase 
government incentivizes for domestic semiconductor manufacturing, and 
China is now dominating the global chip market.

Yes, China has not caught up in developing the most advanced chips; the 
US is still ahead. But China is making progress fast.

This is why Beijing decided to restrict Chinese tech companies from 
purchasing chips from Nvidia 
<https://substack.com/redirect/bac6fc66-5340-4b12-8861-3291da9261de?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
the US tech giant that has now become the largest corporation on Earth 
by market capitalization, because it has a monopoly on designing the 
most advanced chips. China said Nvidia violates its anti-monopoly laws 
<https://substack.com/redirect/6d9d4311-c749-46ae-ac8f-b76bc9a3c6b1?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>.

Instead of Chinese companies remaining dependent on the purchase of 
Nvidia chips, Beijing wants to promote domestic self-sufficiency.

      China progresses fast, leading in most global critical technologies

China’s rapid progress in the US “chip war” demonstrates the success of 
Beijing’s industrial policy, its state-led drive to move up the value 
chain and produce higher value-added goods.

Such technological upgrading is at the heart of China’s new five-year plan.

China does have a market economy, but it it a /socialist 
<https://substack.com/redirect/8febf616-0d16-4c23-a137-84695d549b62?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>/market 
economy 
<https://substack.com/redirect/8febf616-0d16-4c23-a137-84695d549b62?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
where the most important sectors — the commanding heights of the economy 
— are publicly owned by the government, and central planning is still 
used in strategic industries.

The Communist Party of China’s five-year plan for 2026 to 2030 heavily 
emphasizes the importance of technological progress.

In particular, the new five-year plan calls for “extraordinary measures” 
<https://substack.com/redirect/b646e31e-9b75-4dae-8182-af45a96e41bc?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>to 
bring about breakthroughs in advanced chip production.

This is not just rhetoric. If one looks at China’s past plans, most of 
its goals were achieved.

A good example is the Made in China 2025 initiative. This was a plan 
announced in 2015, when Beijing set goals to become globally competitive 
in cutting-edge tech industries.

Bloomberg concluded that China was successful 
<https://substack.com/redirect/db7ee86e-44ce-428c-bbb3-ed0286459cc2?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>in 
almost all of the industries it targeted. It is already the global 
leader in five key technologies, and is rapidly catching up in seven more.

	<https://substack.com/redirect/0c2452bb-7258-4ffb-af9d-c94eda5e6d4c?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

This was in fact admitted by a Western think tank that is very anti-China.

The Australian Strategic Policy Institute (ASPI) is backed by the 
Australian military and funded by multiple Western governments. It is 
extremely hawkish and constantly spreads anti-China propaganda.

However, ASPI published a report in 2024 
<https://substack.com/redirect/e8e6142a-dad8-4e27-8ff7-55117ddee0c8?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>acknowledging 
that China has made incredible technological and scientific progress in 
a short period of time.

ASPI reluctantly concluded that China “is currently leading in 57 of 64 
critical technologies”, or 89%.

This was a, well, great leap forward from the 2003-07 period, when China 
was leading in only three of 64 key technologies, or a mere 4.7%.

In stark contrast, this hawkish think tank lamented that the “US is 
losing the strong historical advantage that it has built”.

Two decades ago, the United States was leading in 60 out of 64 critical 
technologies, or 94%.

Today, the US is only leading in seven of those 64 technologies, or 11%, 
measured from 2019 to 2023.

This is a tectonic shift in just two decades.

	<https://substack.com/redirect/f4b4e163-2a83-4db4-a034-b834851e6978?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

China is today the world’s indisputable technological and manufacturing 
superpower, due in no small part to government planning and industrial 
policy.

And China continues to advance. Its new five-year plan emphasizes the 
importance of “technological self-reliance 
<https://substack.com/redirect/7b552d3f-705c-4240-85b7-49c456899282?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>”, 
as the country catches up in the industries where it is still behind.

Given this context, it is no surprise that the US government’s trade war 
and tech war on China backfired.

The Trump administration clearly underestimated China, and decided it 
needed a temporary truce to change strategy.

      Trump suspends the trade war for a year, as the 2026 midterm
      elections approach

The Financial Times described the US-China deal as a “one-year trade 
truce 
<https://substack.com/redirect/55dfa6d0-0b3a-439e-90c9-304698acc6e1?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>”.

Trump, on the other hand, in his typical bombastic fashion, claimed it 
was “an amazing meeting” and, “On a scale of 0-10, with 10 being the 
best, the meeting was a 12”.

This is because Trump always claims he wins everything, and he will 
never admit defeat (including in the 2020 US presidential election). He 
doesn’t want to acknowledge the fact that he is losing the trade war 
that he started back in his first term as president, which he massively 
escalated in April 2025.

A major factor motivating Trump to seek this one-year truce with China 
is the US midterm elections coming up in 2026.

Trump is afraid that continuing to escalate the trade war on China would 
blow back on the US economy and hurt the Republican Party’s chances in 
the midterms.

Polling by Pew Research shows that the Republican Party is very 
unpopular 
<https://substack.com/redirect/ea006b84-c48a-461a-b069-ee2d114fb3af?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>. 
The majority of Americans say the GOP is too extreme in its positions 
and do not think that it governs in an honest way. (The study also 
demonstrates that the Democrats are very unpopular. Both parties are 
widely mistrusted.)

	<https://substack.com/redirect/6b044fe1-e1f4-4919-9434-31e3185148bb?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

Moreover, polls show that Trump is very unpopular.

Trump had a net approval rating of -18% as of 1 November, which was 285 
days into his second term as US president, according to polling from The 
Economist 
<https://substack.com/redirect/4f08c90d-1f78-45d1-a053-1b8ff938ce13?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>.

Only 39% of Americans support Trump and his policies. Nearly 3/5ths of 
Americans, 57%, disapprove of Trump.

	<https://substack.com/redirect/d96b3451-bcac-4289-b7aa-6054d0a58c3c?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

      Trump’s tariffs hurt working-class Americans, driving inflation

It makes sense that most Americans disapprove of Trump, because his 
policies have done a lot of damage to average working people.

Most of the burden of Trump’s tariffs has fallen on the shoulders of US 
consumers.

US consumers are paying for 55% of the cost of Trump’s tariffs 
<https://substack.com/redirect/0cdf2a82-aa45-4732-ab11-82c716d86fab?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
according to analysis by Goldman Sachs.

	<https://substack.com/redirect/cc9a2cd4-8b94-4876-86c3-4f9c7c2a368e?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

Trump has falsely claimed for years that other countries pay tariffs. 
That is simply not true; it is a lie.

Tariffs are a tax on imports. It is importers in the country where the 
duties are imposed that pay them. So US importers pay Trump’s tariffs.

Companies in the US that import goods from China pay the tariffs, not 
Chinese exporters.

Importers usually they pass down the costs of those tariffs to 
customers, in the form of higher prices. This is exactly what is 
happening in the US.

	<https://substack.com/redirect/3f69c2a8-9402-493a-8301-1e02e080039a?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

In other words, Trump has been raising consumption taxes on 
working-class Americans with his tariffs. This is a form of regressive 
taxation.

Meanwhile, Trump has massively slashes taxes on the richest Americans, 
effectively shifting the burden of taxation off of capital and onto labor.

	<https://substack.com/redirect/1ff6f40c-f49f-4f9b-9df6-eee6cc621c7b?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

Furthermore, this comes at a time when consumer price inflation in the 
US has remained relatively high.

The consumer price index (CPI) 
<https://substack.com/redirect/c96a79c4-9968-4d71-929d-d8bb3b968151?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>was 
at 3% in September 2025. It has stuck persistently above the 2% 
inflation target that is set by the Federal Reserve, the US central bank.

Consumer price inflation has been rising ever since Trump imposed 
massive tariffs on countries around the world in April.

	<https://substack.com/redirect/7e41e0ae-cdfb-443d-bdf8-28540259235a?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

This is all deeply ironic, because inflation was the main reason that 
Trump won the 2024 US presidential election.

Due to supply chain disruptions during the Covid-19 pandemic, countries 
worldwide suffered from high rates of inflation in 2022-23.

In the US, the CPI peaked at 9% in June 2022. This was the highest level 
in decades.

Most political parties and leaders that were in power during this 
inflation crisis lost elections. The US was no exception.

US voters said the economy was the most important issue 
<https://substack.com/redirect/c1901b00-8a75-4ca0-b848-e6a702fec45d?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>in 
the 2024 election.

The Joe Biden administration did not handle the inflation crisis well. 
Inequality skyrocketed in the US; the rich got much, much richer, while 
poor and working-class people struggled.

Trump claimed he would solve the economic issues and bring down 
inflation. He has utterly failed to do so, and has in fact made the 
problems even worse. Trump’s policies have mostly benefited billionaires 
like him, and the dozen other billionaires in his administration 
<https://substack.com/redirect/ffccb9a3-9f92-46f1-890d-29a4b057b6ad?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>.

However, Biden, Kamala Harris, and the Democratic Party did not propose 
pro-working class policies that would solve these economic problems. 
They failed to provide an alternative to the neoliberal status quo.

Trump won the election because he had a simplistic message, claiming he 
would solve these deep, structural economic problems with some quick 
fixes: scapegoating immigrants, carrying out mass deportations, and 
imposing tariffs.

These policies have only made the situation worse.

      The US is losing manufacturing jobs

Trump claimed he would re-industrialize the US and bring back good 
manufacturing jobs. The opposite has been happening.

The number of manufacturing jobs has in fact been falling under Trump.

The US lost 42,000 manufacturing jobs 
<https://substack.com/redirect/c34aa9c9-50a7-4f41-af5e-60fed5ce10b3?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>between 
April, when Trump kicked off his global trade war, and August 2025, 
according to data from the Bureau of Labor Statistics (BLS).

	<https://substack.com/redirect/bcca6d03-b25e-415a-b1a6-30a84deeb4a2?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

Surveys of manufacturers have found that the main reason for the job 
loss is the extreme uncertainty surrounding Trump’s tariffs and trade war.

CBS News reported that many of the workers who lost their jobs 
<https://substack.com/redirect/87e29f3b-52fd-43a9-8d32-28039f2315b6?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>had 
been making goods like cars, household appliances, and electronics. 
These were relatively well-paid jobs that provided stability for 
working-class families.

      Trump’s tariffs hurt US farmers, many of whom voted for him

Trump’s trade war on China also hurt a major part of his voting base: 
farmers 
<https://substack.com/redirect/fe5ebfd2-dec5-4afe-bb51-426ebc295325?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>.

US soybean farmers rely heavily on exporting to the Chinese market.

As part of the agreement that was made between Trump and President Xi in 
South Korea in October, the Treasury Secretary Scott Bessent boasted 
that China agreed to buy 12 million metric tons of US soybeans.

That may sound like a lot, but it actually represents a big decline 
compared to the previous year. Reuters reported that, last season, China 
bought 22.5 million tons of US soybeans 
<https://substack.com/redirect/d9563dbe-c5c9-4d3f-8bfb-bea16c45cd93?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>. 

According to Bessent, China agreed to buy 25 million tons of US soybeans 
per year for the next three years. However, this is below the annual 
average of 28.8 million tons that China had already been buying from the 
US, before Trump started this new phase of the trade war in April.

China had paused its import of soybeans in response to Trump’s 
aggressive, unilateral trade war.

So in reality, China is not making any concessions to the Trump 
administration by agreeing to buy soybeans; it is simply returning to 
the status quo ante.

Meanwhile, throughout this trade war, US farmers endured severe economic 
pain, for no reason.

“The drop in Chinese demand cost U.S. farmers 
<https://substack.com/redirect/d9563dbe-c5c9-4d3f-8bfb-bea16c45cd93?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>- 
a key pillar of Trump’s political base - billions of dollars in lost 
sales and the deal would represent a return to normalcy in trade”, 
Reuters wrote.

What this demonstrates, again, is that, when Bessent claimed China had a 
“losing hand”, it was the opposite of reality. China had more options 
than the US did.

When Trump massively escalated the US trade war, China responded by 
buying significantly more soybeans from Argentina 
<https://substack.com/redirect/41dab991-80eb-4315-ae80-b5141fc1481f?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>.

China also increased its purchases of soybeans from Brazil 
<https://substack.com/redirect/1e403858-b951-45f0-a748-a3f660308d24?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
which has become a major trading partner of China, and a key ally.

Brazil is the B in BRICS 
<https://substack.com/redirect/2698b691-a6ac-4db2-83b5-ab528f7d1c96?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>; 
it is one of the co-founders of the Global South-led organization. The 
growing partnership between China and Brazil shows how Beijing has 
alternatives to the US.

The Trump administration drank its own kool-aid, and believed that China 
was isolated. That was its mistake.

This disastrous, self-destructive episode was eerily reminiscent of 
Trump’s first term (2017-21), when he started the trade war on China.

Nearly all of the revenue that the US government made from imposing 
tariffs on China from 2018 to 2020 ended up being given to US farmers in 
the form of relief payments and subsidies. Those were equal to 92% of 
the tariff proceeds 
<https://substack.com/redirect/5a56f577-1d06-4fa9-a67b-25c201af9340?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>.

	<https://substack.com/redirect/58ea0b51-aada-445a-84e0-1a37eafaaa2f?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM> 	

Trump has claimed that his tariffs will supposedly raise lots of revenue 
for the US government — while lying about the fact that that revenue 
comes from working-class Americans, given that his tariffs are a 
regressive tax on consumption of imported goods.

But even much of the revenue that the US government did earn from 
tariffs during Trump’s first term was given back to Americans in the 
form of relief payments, to try to undo the economic harm caused by 
Trump’s trade war in the first place.

The second Trump administration has been repeating these same, 
self-destructive policies. It has considered paying another $10 billion 
to US farmers 
<https://substack.com/redirect/5d866ba3-4430-42b1-83cc-6dc0fec65db2?j=eyJ1IjoibHZwcGIifQ.9RIwWbE6EVIB7Jy8lfazxZKfps8R18neRGMKwOiqnRM>, 
who have been harmed by Trump’s trade war, exactly like in his first term.

Given all of this information, it is no surprise that Trump’s trade war 
on China has failed. It is contradictory, foolish, and suicidal; and it 
is based on falsehoods that grossly underestimate China’s economic 
strengths, while hopelessly minimizing the deep, structural problems in 
the US economy.

Like 
<https://substack.com/app-link/post?publication_id=457596&post_id=177709326&utm_source=substack&isFreemail=true&submitLike=true&token=eyJ1c2VyX2lkIjozNjc1MTU4MywicG9zdF9pZCI6MTc3NzA5MzI2LCJyZWFjdGlvbiI6IuKdpCIsImlhdCI6MTc2MjA4ODUwMSwiZXhwIjoxNzY0NjgwNTAxLCJpc3MiOiJwdWItNDU3NTk2Iiwic3ViIjoicmVhY3Rpb24ifQ.77Sw1hm95NJw946rVKqcCpUVh8epY84HuGjIBYdVdS0&utm_medium=email&utm_campaign=email-reaction&r=lvppb> 

Comment 
<https://substack.com/app-link/post?publication_id=457596&post_id=177709326&utm_source=substack&utm_medium=email&isFreemail=true&comments=true&token=eyJ1c2VyX2lkIjozNjc1MTU4MywicG9zdF9pZCI6MTc3NzA5MzI2LCJpYXQiOjE3NjIwODg1MDEsImV4cCI6MTc2NDY4MDUwMSwiaXNzIjoicHViLTQ1NzU5NiIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.JtjjDorhmYDieOt89FAEmV616WsTv-P7Kq6GF6x_JKM&r=lvppb&utm_campaign=email-half-magic-comments&action=post-comment&utm_source=substack&utm_medium=email> 

Restack 
<https://substack.com/redirect/2/eyJlIjoiaHR0cHM6Ly9vcGVuLnN1YnN0YWNrLmNvbS9wdWIvZ2VvcG9saXRpY2FsZWNvbm9teS9wL3RydW1wLWxvc2luZy10cmFkZS13YXItY2hpbmEtdXMtZWNvbm9teT91dG1fc291cmNlPXN1YnN0YWNrJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPWVtYWlsLXJlc3RhY2stY29tbWVudCZhY3Rpb249cmVzdGFjay1jb21tZW50JnI9bHZwcGImdG9rZW49ZXlKMWMyVnlYMmxrSWpvek5qYzFNVFU0TXl3aWNHOXpkRjlwWkNJNk1UYzNOekE1TXpJMkxDSnBZWFFpT2pFM05qSXdPRGcxTURFc0ltVjRjQ0k2TVRjMk5EWTRNRFV3TVN3aWFYTnpJam9pY0hWaUxUUTFOelU1TmlJc0luTjFZaUk2SW5CdmMzUXRjbVZoWTNScGIyNGlmUS5KdGpqRG9yaG1ZRGllT3Q4OUZBRW1WNjE2V3NUdi1QN0txNkdGNnhfSktNIiwicCI6MTc3NzA5MzI2LCJzIjo0NTc1OTYsImYiOnRydWUsInUiOjM2NzUxNTgzLCJpYXQiOjE3NjIwODg1MDEsImV4cCI6MjA3NzY2NDUwMSwiaXNzIjoicHViLTAiLCJzdWIiOiJsaW5rLXJlZGlyZWN0In0.7EroZGBJBmQXnUB6yJ2cQ6O7QUqk1bRAeXs3MCHGH9o?&utm_source=substack&utm_medium=email> 

© 2025 Benjamin Norton
548 Market Street PMB 72296, San Francisco, CA 94104

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://freedomarchives.org/pipermail/news_freedomarchives.org/attachments/20251102/3f16110d/attachment-0001.htm>