Trade-Offs and Trade-Ups

As the U.S. and China navigate their ambitions on the global stage, their contrasting approaches reveal deep divides shaped by their respective historical narratives.

With President Donald Trump’s return to the White House in late January, U.S. domestic and foreign policy is undergoing rapid adjustments and transformations. Trump’s approach leans heavily toward nativism. This philosophy prioritizes America’s own interests and often justifies increased tariffs—even against traditional allies—as a necessary step in the nation’s quest to “make itself great again.”

China, meanwhile, remains committed to economic globalization and free trade. In 2024, the country achieved a milestone, with total imports and exports reaching a record 43.85 trillion yuan ($6.1 trillion). Since joining the World Trade Organization in 2001, the country has slashed its average tariff rate from 15.3 percent in 2001 to 7.3 percent last year.

A 2021 report from Moody’s Analytics, a global credit ratings agency, revealed that over 90 percent of the burden from tariffs imposed during Trump’s first term fell on U.S. businesses and consumers.

Today, seven years into the trade war with China, the U.S. trade deficit remains stubbornly high, and the anticipated resurgence of American manufacturing has yet to materialize.

Nonetheless, protectionist sentiments run deep in U.S. history. In the 18th century, the Founding Fathers believed that the nation’s geographic isolation offered a strategic advantage, allowing the country to steer clear of Old World conflicts. Alexander Hamilton, the U.S.’s first Secretary of the Treasury, championed tariffs as a means to protect emerging industries, arguing that short-term price increases would ultimately lead to long-term industrial strength. The Tariff of Abominations in 1828, which reached a peak rate of 61 percent, ignited sectional tensions but also contributed to U.S. economic growth in the 19th century.

As Austro-Hungarian economist Karl Polanyi observed in his 1944 book The Great Transformation, nations often turn inward to restore domestic order during systemic crises—an idea that resonates with “Trumpism.” However, whether this 19th-century approach is applicable in today’s interconnected world remains unproven.

In contrast, China’s historical experiences paint a starkly different picture. Starting in the 15th century, China shifted from active maritime exploration, epitomized by Ming Dynasty (1368-1644) admiral and diplomat Zheng He’s voyages, to a stance of isolationism. By the 18th century, China’s ruling class, confident in their self-sufficient “Celestial Empire,” excluded the country from global trade and technological development. This attitude persisted until British warships forcibly took control of Chinese ports in 1840. This period led to what is now referred to as the “Century of Humiliation” (1840–1949), which has ingrained a national narrative in the country: Isolation breeds weakness.

This historical trauma has shaped China’s reform ethos since the country first embarked on its economic opening-up policy in 1978. Ordinary citizens, having experienced a substantial rise in living standards through globalization, largely support open markets. They perceive global engagement not as a threat but as a catalyst for industrial upgrading. This belief is exemplified by initiatives like the Belt and Road Initiative, which aims to boost connectivity along and beyond the ancient Silk Road routes, and the Digital Silk Road, which emphasizes the development and expansion of digital infrastructure and technology cooperation among Belt and Road participating countries.

The decisions made by the world’s largest economies will impact the course of the 21st century. The U.S. hopes that nativism can restore its industrial dominance, while China relies on hyper-globalization to avoid the mistakes in its history.

The true challenge lies not in repeating history, but in transcending it. True greatness, perhaps, emerges only when both nations recognize that their future does not depend on revisiting historical choices, but on discarding historical bondages.