Victor Davis Hanson's claim that the United States can defeat China in a trade war unfolds as a narrative of gradual, then sudden, American advantage—rooted in economic fundamentals, global alliances, and the structural weaknesses of China's mercantilist model. The rare earths issue, often cited as a potential Chinese trump card, is acknowledged but ultimately framed as a manageable challenge within the broader context of U.S. strengths

The story begins with the United States, under the Trump administration, recalibrating tariffs in response to what Hanson describes as years of Chinese trade aggression—market manipulation, product dumping, intellectual property theft, and a nearly $1-trillion global trade surplus, a third of which comes from the U.S. alone. China, facing this new assertiveness, seeks support from Asian rivals, Australia, and the EU, but finds few willing to side with a nation widely seen as a "commercial rogue." Instead, most countries, even if critical of U.S. tactics, are reluctant to join China, given their own experiences with Chinese protectionism and exploitation.

Hanson's narrative emphasises that China's global standing is undermined by distrust—fuelled by its handling of Covid-19, aggressive Belt and Road policies, and ongoing border disputes with neighbours like India and Russia. Even China's so-called allies are wary, and Western nations are more likely to seek trade parity with the U.S. than to align with Beijing.

Hanson concedes that China can inflict short-term pain on the U.S. by restricting exports of pharmaceuticals, electronics, and, notably, rare earth elements—critical for high-tech manufacturing and defence. However, he argues that the U.S. can weather this disruption by diversifying supply chains and developing alternative sources, a process that may take a year of "gradual dislocation." After this adjustment period, the narrative predicts that China, far more dependent on export-driven surpluses, will begin to "hemorrhage"—its factories idled, its workforce restive, and its leverage diminished.

The rare earths issue is often cited as a potential Achilles' heel for the U.S., given China's dominance in mining and processing these materials. Hanson's argument, however, is that while a Chinese embargo could cause temporary disruption, the U.S. and its allies possess the technological and financial capacity to develop alternative sources and recycling methods. The pain would be real but temporary, and the long-term result would be a more resilient, diversified supply chain—further eroding China's leverage.

Hanson's narrative pivots on several key American advantages:

  • The U.S. is the world's largest oil and gas producer, while China is heavily dependent on energy imports.
  • American society, being more consensual and flexible, can adapt to external shocks and public opinion, whereas China's authoritarian system risks instability if unemployment rises among its export workforce.
  • The U.S. can leverage its alliances to redirect trade flows, reducing imports from China and increasing them from the EU, Japan, South Korea, and Taiwan—provided these partners strike parity deals.
  • American control over financial markets, technology, and higher education (with hundreds of thousands of Chinese students in the U.S.) provides additional levers of influence.

The narrative concludes with the assertion that, in a true trade war, the side with the larger surplus and higher tariffs—China—has more to lose. As the U.S. and its allies recalibrate, China's export-dependent economy will suffer, and its political system will struggle to absorb the shock. The collapse, Hanson suggests, will come "gradually, then suddenly," as the cumulative effects of lost markets, global distrust, and internal unrest take their toll.

Hanson's essay frames the U.S.-China trade war as a contest in which American resilience, global alliances, and economic fundamentals outweigh China's short-term advantages, including rare earths. The U.S., he argues, can endure the initial disruption, adapt, and ultimately prevail—leaving China isolated, weakened, and forced to accept new rules of global commerce.

All that is fine, but what does China do then facing economic collapse? Victor Davis Hanson paints a stark picture: if the United States and its allies truly commit to a trade war, China's export-driven economy could unravel. Factories would fall silent, millions could lose their jobs, and the Chinese Communist Party (CCP) would find itself facing a legitimacy crisis. In such a scenario, the world would watch anxiously, asking: what does a cornered China do next? Would it lash out, perhaps even risk war, to break the siege?

The first signs of trouble would be economic. As Western markets close their doors, China's vast manufacturing sector—once the engine of its meteoric rise—would sputter. Unemployment would surge, especially in the coastal provinces where global trade is lifeblood. The property market, already shaky, could collapse. Foreign reserves would dwindle as the government tries to prop up the yuan and stem capital flight. In the cities, discontent would simmer, threatening the social contract that has kept the CCP in power: prosperity in exchange for political control.

History offers a warning. Authoritarian regimes, when threatened from within, have often looked outward for salvation. The logic is as old as politics itself: if the people are angry, give them an external enemy. Hanson's analysis suggests that, faced with economic collapse, China's leaders might be tempted to stoke nationalism and seek a dramatic distraction.

Nowhere is this temptation more dangerous than across the Taiwan Strait. For decades, the CCP has called reunification with Taiwan a sacred mission. Under Xi Jinping, this rhetoric has only grown more urgent. The Chinese military has modernised at breakneck speed, conducting exercises that simulate blockades and invasions. The world's attention is fixed on this flashpoint, where a miscalculation could ignite a global crisis.

Would China really risk war over Taiwan if its economy is collapsing? The answer is complicated. On one hand, a bold move could rally the nation, distract from domestic woes, and fulfill Xi's promise of national rejuvenation. On the other, the costs would be staggering. Taiwan is the world's semiconductor powerhouse; a conflict would shatter global supply chains, including those China itself depends on. The United States, bound by the Taiwan Relations Act and its own strategic interests, would almost certainly respond—with sanctions, military support, and perhaps direct intervention.

The CCP would have to weigh its options carefully. A full-scale invasion of Taiwan would be a gamble of historic proportions. Success could cement Xi's legacy; failure could bring down the regime. Even short of war, China could escalate in other ways: cyberattacks, economic coercion, or a blockade designed to strangle Taiwan without firing a shot.

Yet, as Hanson and many strategists note, the risks of military action might outweigh the benefits. China's economy, already reeling from the trade war, would suffer even more from the loss of foreign investment and access to technology. The PLA, though modernised, has not fought a major war in decades. Mobilising for conflict could strain resources and loyalty within the ranks, especially if the public is already restless.

In the end, Hanson's scenario is one of high drama and higher stakes. If China's economic walls close in, the CCP will face a fateful choice: turn inward and risk internal revolt, or turn outward and risk catastrophic conflict. The most likely path, at least at first, is not all-out war but a campaign of pressure—gray-zone tactics, cyberwarfare, and targeted economic retaliation—designed to fracture Western resolve without crossing the threshold of open conflict

But history is full of surprises, and desperate regimes have sometimes chosen the unthinkable. The world can only hope that, if the moment comes, China's leaders will see that the costs of lashing out far outweigh the fleeting gains of a diversionary war.

https://amgreatness.com/2025/04/14/china-would-lose-a-trade-war-with-the-us-gradually-then-suddenly/

"No one wants a "trade war" with China, or for that matter with any nation. Nonetheless, China has been waging one for years and is now locked in a tariff recalibration with the Trump administration.

In this American effort to find trade parity and equity, China can do some short-term damage to the U.S., especially in terms of ceasing exports of some pharmaceuticals, phones, and computers. But ultimately, it cannot win—and will eventually lose catastrophically. It will likely accept that reality sooner rather than later.

We are only in the first week of the escalating rhetoric and tariffs. But already China is appealing to its Asian rivals, Australia, and the EU to join in fighting the supposed American bully.

But so far, there are understandably few takers.

An exasperated China is now also running vintage Korean War-era propaganda videos of Mao Zedong bragging about how he was standing up to then-President Dwight Eisenhower.

Does Beijing really believe that airing ossified threats from decades ago—issued by the greatest mass killer in human history to the one U.S. president who warned of the military-industrial complex—is going to win over neutral nations?

Or maybe China thinks calls to Western nations to stop American trade "bullying" will resonate—this, from the greatest trade bully, cheat, and rogue commercial nation in history.

China is running a nearly $1-trillion trade surplus with the world. Its mercantilism is the result of market manipulations, product dumping, asymmetrical tariffs, patent, copyright and technology theft, a corrupt Chinese judicial system, and Western laxity—or what might be mildly called "bullying." The U.S. accounts for about a third of China's trade surplus, with most of the EU and Asian nations accounting for the other two-thirds.

In the past, third-party nations did not appreciate the ends to which China has gone to warp the international trading system. In one sense, unable to address their deficits with China, our friends and neutrals turned to America, where they sought to make up their trade asymmetries by going China-light and running surpluses with the U.S.

However much they criticize the United States, it is unlikely that European and Asian nations will join China—which imposes high tariffs and steals from them—in order to gang up on the U.S., which has tolerated massive trade deficits for decades.

To the degree that the world accepts China as an international commercial rogue nation, it does so out of fear —or, again, on the assumption it can recycle its deficits with Beijing by running surpluses with the vast open American market.

Countries like Panama, which once thought China's Belt and Road Initiative was advantageous, soon learned that it was exploitative. Nothing is free with China. Its Silk Road policy is mostly designed to manipulate strategically located—and soon to be indebted and subservient—nations as future choke points in times of global tensions and is directed at the West in general and in particular the U.S.

China has done everything possible to incur global distrust and fear.

Most of the world accepts that the COVID-19 epidemic that killed and maimed millions worldwide was birthed in a Wuhan virology lab under the auspices of the People's Liberation Army. The world also remembers that China and the Chinese-controlled WHO lied repeatedly about the origins and spread of the virus.

The global public may recall that China stopped all domestic flights out of Wuhan on the internal news of the lab leak of the virus, while for days greenlighting nonstop air travel to major European and American cities. The world now accepts that China will never explain exactly when the virus appeared, how it "escaped" from the lab, why it was created in the first place, why Beijing repeatedly lied about all such inquiries, and what happened to an array of whistleblowers who warned of the leak.

China's so-called allies, such as Russia and India, have historical grievances and ongoing border disputes fueled by Chinese aggression.

NATO, the EU, Japan, South Korea, Australia, and the US also are curious as to why China is using its vast foreign exchange not to lift about a quarter of its population out of third-world-level poverty. Instead, it is frantically building 3-4 nuclear bombs a month, a 700-ship navy, and 2,500 combat aircraft as it ratchets up pressure on Taiwan.

The complexities of trade and tariffs present all sorts of minefields. But the Trump administration is beginning to navigate them, and its trajectory is rather simple. In the next 90 days, it will likely conclude trade deals with our allies and third parties that bring either tariff parity or no tariffs at all that will reduce the U.S. trade deficit.

Of course, our allies and neutrals still use stealth tariffs to ensure advantage by money manipulation, VAT taxes, and pseudo-health and security impediments to free trade. And they deeply resent the Trump administration's loud denunciations of their surpluses and asymmetrical tariffs. But those machinations can be addressed later in round two after tariff reciprocity or elimination is finalized.

For now, Trump should persuade our allies that if they were not so subject to Chinese mercantilism, they would have more flexibility to ensure fair trade with the U.S. And thus, they should not do something self-destructive and side with China but instead join the U.S. to force China to keep its long-broken promises and play by international rules. A reduced import footprint from China in the U.S. could make room for increased imports from the EU, Japan, South Korea, and Taiwan—if they strike parity deals with the Trump administration. Barring that, they should simply get out of the way and not opportunistically cut reformist trade deals with China.

If China really does reduce most of its exports to the U.S., America will have to scramble for a year or so to establish new supply chains and some alternate importers of U.S. products. But after a year of gradual dislocation, China will begin to hemorrhage, and then quite suddenly, given the U.S. has almost all the advantages—if it chooses to use them.

One, if it ever comes to a real trade war, remember that nations with the higher tariffs and larger trade surpluses usually lose, given that their economies are far more dependent on mercantile exports and trade imbalances. Psychologically, it is far harder to convince the world of victimhood when tariffs and surpluses illustrate contrived trade aggression.

Two, consensual societies are far more flexible in dealing with external pressures and volatile public opinion. True, Trump must face a midterm election in 18 months. However, Xi Jinping may soon face a third of his export factory workforce unemployed—in a society that has no mechanism for them to vent tensions and objections peacefully.