There is an inherent flaw in US President Donald Trump’s trade policy. While it is all but impossible to know where Trump will settle on most issues – from taxes to immigration – two key objectives of his trade strategy are now coming into focus: setting a global minimum tariff, and imposing a special penalty on China. The flaw lies in the combination.

After reaching a consensus in their tariff negotiations in Geneva, China and the United States have significantly reduced their duties on each other. This has awakened countries around the world and inspired them to launch a new wave of regional integration.

Wall Street’s turmoil is both a crisis and an opportunity. Those who adapt by diversifying into non-dollar assets or betting on emerging markets as wealth and power are redefined could come out ahead.

U.S. President Donald Trump’s unwarranted global tariff war, which began on April 2, 2025, with steep 145 percent tariffs on China, alerted economists to unforeseen global consequences. As China’s economy relied heavily on manufactured goods, and with the U.S. as its largest export destination, the Trump administration believed that imposing tariffs could weaken China and compel it to comply with its terms and conditions. Beijing, well-prepared in advance, proved this belief wrong. China’s resolute response within weeks forced the U.S. to enter negotiations, which took place from May 10 to 12 in Geneva, in which the two sides agreed to suspend tariffs for 90 days. The success of Beijing’s policy relied on several factors.

To Donald Trump’s surprise, China showed no fear of tariffs. Instead, it launched a powerful tit-for-tat counteroffensive that caused the United States to back off. Trump’s pattern of bullying, his obsession with bellicose showmanship, his love of flattery and his attempts to instill fear are on display for all to see.

Despite de-escalation in Geneva, trillions of dollars may have been lost in the unwarranted trade wars.

A trade deal between China and the United States is nowhere in sight. The mountain of issues could take a long time and enormous effort to resolve. It’s certainly not going to happen in three or four weeks, as Trump has suggested. More likely, it will be months, if not years.

History may rhyme, but the economic drama now unfolding in the United States defies historical reason. When the US Federal Reserve’s technocrats collide with an inexperienced and capricious presidential administration, conventional macroeconomic tools quickly become impotent.

The recent Financial Times editorial by economist Michael Pettis, in which he advocates for U.S. capital controls to achieve balance in its external accounts, is emblematic of a deeper and more troubling reality: American economic policy has entered a conceptual dead end.

Donald Trump’s “reciprocal tariff” policy is intended to push back against globalization, but its inherent structural problems will only accelerate the trend of “de-Americanization” worldwide.