Weathering Trump 2.0

“History doesn’t repeat itself, but it often rhymes.”  This saying by celebrated American writer Mark Twain, a contemporary of the American Civil War (1861-1865) and the Crimean War (1853-1856), resonates uncannily once again as Donald Trump takes charge in the United States.

There are fears that Trump will batter his own country’s institutions plus the world’s organizations and agreements on a deeper scale than he did during his earlier presidency between 2017 and 2021, when the U.S. retreated from several international treaties and obligations.

In the last month of 2024, for example, Trump promised to impose an additional 10 percent tariff on imports from China, “above any additional tariffs.” Prior to this, he had said he would end China’s most-favored-nation trading status and subject Chinese imports to more than 60 percent tariffs. He has also announced his intention to slap a 25-percent conditional tariff on goods from Canada and Mexico. The EU and other countries will not remain unscathed either if Trump keeps his promise to impose a 10 percent universal tariff. For the BRICS countries, the punishment goes up as high as 100 percent in case they attempt to create an alternative to the dollar-based international monetary system.

The main point is how could he “make America great again” if he imposes a blanket tariff of up to 20 percent on all U.S. imports, which might lead to a fall in global demand and result in “a global reduction of GDP,” as European Central Bank President Christine Lagarde argued in a recent interview with the Financial Times.

Economics by Paul A. Samuelson and William D. Nordhaus, both Nobel laureates, is virtually a classic economics textbook from which the elite of half the world have learned. In the chapter on “The Economics of Protectionism,” the authors argue that those who pretend to help reform other countries by imposing what they understand as retaliatory tariffs should think “with great caution” because “just as building missiles leads to an arms race as often as to arms control, protectionist bluffs may end up hurting the bluffer as well as the opponent.”

We can imagine how valid that is today as the International Monetary Fund’s data portal updated in November 2024 shows that since 2010, the export of goods by the top five economies, amounting to trillions of dollars, has been increasing and has been consistently led by China.

It is apparent that Trump will not consider the EU as an ally either, and by wanting to pivot towards China to contain it, he shows that as in his first presidency, he could be a classic isolationist in this second term as well. However, faced with a complex rivalry, China has the attributes to get ahead, and the United States and the rest of the world, including the EU, should understand this. If the planet does not suffer a natural or human-induced cataclysm this decade, China will be able to weather a potential Trump blockade by drawing on its traditions, genius, and size.

President Joe Biden’s confrontational stance, cutting people and firms in China off from many advanced technologies and products of American origin, has led to Chinese President Xi Jinping calling for “self-reliance” and “resolutely winning the battle for core technologies in key fields.”

“The way you face adversity determines how far you can go,” says an academic text written by Professor Katherine Xin of the China Europe International Business School in Shanghai. Another academic, Grace Yuehan Wang, wrote in a paper titled “How Chinese Culture Led Huawei from Surviving to Thriving” that the Chinese spirit and organizational culture play a very significant role in how a company reacts to adversity. “It is impossible to understand China’s technological development over the last few decades without acknowledging Chinese culture,” she wrote, concluding, “Technology giant Huawei has achieved technological breakthroughs perhaps not despite U.S. export controls and trade sanctions, but because of them.”

The current situation reminds one of the development of China’s first domestically designed general-purpose computer, Model 107 developed by Xia Peisu. While China was isolated from the rest of the world in the 1960s, it was developed based on China’s own scientific capacity. The same capacity made it possible for Beijing to send its first satellite into space in 1970.

But looking at the last decades, we see that China prefers multidimensional collaboration and cooperation rather than confrontation. This juncture therefore is an opportunity for the EU and China to restart talks to rescue the Comprehensive Agreement on Investment (CAI) that was concluded in principle in 2020. The agreement was hailed as providing for a level playing field. “CAI will ensure that EU investors achieve better access to a fast growing 1.4 billion-consumer market, and that they compete on a better level playing field in China,” the European Commission said in 2021.

It is key to remember this as in 2025 both partners, despite some disagreements, will celebrate 50 years of win-win bilateral relations. Maybe as the EU competitiveness is diminishing, there is margin for the new EU Parliament leadership to have a more sympathetic and realistic view on the issue which prevented the endorsement of CAI in 2021. This is also the view of the Europe-China Forum: 50 years of Diplomacy organized by the Friends of Europe think tank in Brussels in November.

Going by what has been said so far, few benevolent deals are expected for any traditional partner of the U.S. during Trump 2.0. But if Trump 2.0 ends in four years’ time, will things go back to the way they were eight years ago? Perhaps governments around the world should heed what American legal scholar Erwin Sheremensky said in his 2024 book. The title sums it up: No Democracy Lasts Forever: How the Constitution Threatens the United States.

Trump, by what he is proposing, seems to want to become a systemic rival to his own country’s institutionality, to its former alliances, and, by all accounts, consequently, to the global stability that during decades of the post-Cold War served his country first and foremost. In the end, both the EU and China will continue trading and investing in the U.S., but they are asking for the principles of free trade to be maintained.

Augusto Soto is director of the Dialogue with China Project in Barcelona, Spain.