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Trump Accelerates U.S. Global Economic Decline [1]
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Date: 2025-05-21
In the 19th century and early 20th century, Great Britain with its industrial head start, global network of colonies, and the world’s largest Navy, dominated world trade and finance. A popular saying was that “The sun never set on the British Empire.”
After World War II, the United States replaced a devastated and diminished Great Britain as the world’s dominant economic force. American industrial might was instrumental in the allied victory and rebuilding Europe after the war. The dollar became the standard for international exchange and English the global language. Starting in the 1960s, American industry became less competitive, but the United States remained the world’s financial and cultural capital. But much of this is about to change.
Kyle Chan, a Postdoctoral Research Associate and Lecturer in Sociology at Princeton University, is a specialist in the economic relationship between the United States and China. In a recent op-ed for the New York Times, Chan argued that in the near future China will emerge as the world’s dominant economic superpower and that the United States, if follows its current Trumpian path, risks following in the path of Great Britain to economic superpower irrelevancy.
Chan believes that future historians will identify the first three months of the Trump administration as the turning point when U.S. policy made the country into a minor economic player and industrial backwater, while China harnessed its “vast economic and technological potential” to “reorient global power around a pole that runs through Beijing.” Just as the 19th century was a British century and the 20th century a U.S. century, the 21st century will be a “Chinese century.”
Chan claims that Trump’s misdirected economic policies are “taking a wrecking ball to the pillars of American power and innovation.” Tariffs will isolate American companies from global markets and disrupt supply chains. Talented researchers from other countries who flocked to the United States in the past will stop coming to this country because of budget cuts for government supported research, hostility towards immigrants, and Trump’s attacks on universities and academic freedom. Chan highlights a “roll back” in funding for research on clean energy and semiconductor technology and support for manufacturing in these areas. At risk is what Chan calls “American soft power,” or global influence.
Meanwhile, China leads global production in “steel, aluminum, shipbuilding, batteries, solar power, electric vehicles, wind turbines, drones, 5G equipment, consumer electronics, active pharmaceutical ingredients and bullet trains.” Economists predict that China will produce almost half of global manufacturing by 2030. While Trump and his allies hope to use tariffs to marginally boost outdated American industries, the Chinese government is making “long-term investments in cutting-edge technologies such as quantum computing and robotics” and increasing research funding.
The United States has repeatedly dismissed China’s capacity to innovate, arguing that a state-directed economy could never match a competitive American economy. Because of these axiomatic beliefs, the Trump administration is pledged to cut corporate taxes and reduce government regulation of major economic sectors with the goal of unleashing America’s economic muscle. America’s trust in corporate leadership and Trump’s fixation on tariffs are not going to force China to abandon a very successful “state-driven economic playbook.” A Chinese company developed DeepSeek, a streamlined and more efficient artificial intelligence chatbot and BYD, a Chinese electric car maker is outselling Elon Musk’s Tesla and has a “market value greater than that of Ford, GM and Volkswagen combined,” and China is investing in the production of semiconductors and advanced pharmaceuticals. While Trump wants to build a wall around industries based in the United States, China is building new factories around the world to tie other countries to the Chinese economic network. If anything, Chan argues “Beijing is doubling down on its state-led approach, bringing a Manhattan Project-style focus to achieving dominance in high-tech industries.”
According to Chan, “China will likely end up completely dominating high-end manufacturing, from cars and chips to M.R.I. machines and commercial jets” and the “battle for A.I. supremacy will be fought not between the United States and China but between high-tech Chinese cities like Shenzhen and Hangzhou.” Meanwhile, American companies will be trapped selling over-priced and “middling quality” goods to domestic consumers in an increasingly impoverished and decaying country while the American people will have to survive “rising inflation and stagnant incomes.”.
Chan believes this grim scenario” can be avoided, but it will require “bipartisan support” he believes is lacking for “investing in research and development; supporting academic, scientific and corporate innovation; forging economic ties with countries around the world; and creating a welcoming and attractive climate for international talent and capital.” Unfortunately, “the Trump administration is doing the opposite in each of those areas.” At this point, the time for the United States to change its political and economic course is quickly running out.
Note: I don’t completely agree with Chan’s predictions about Chinese dominance, however I think he is correct about American decline. China does face serious problems. Its workforce is aging, it has been unable to stimulate its own domestic market so its industries remain largely dependent on exports so they will be hurt by a global economic downturn, many in its younger population feel economically and socially constricted by the state-dominated system, and it has a real estate investment bubble similar to the United States in the 2000s that could cause economic havoc. Chan also did not address climate change and its looming threat to China, the United States, and the overall global economy, something China’s state-directed economy may be in a better position to address than untethered capitalism in the United States.
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