INTERVIEW - Tariff dispute between Beijing and Washington: "This will quickly become very uncomfortable for Donald Trump domestically"

Mr. Evenett, J.D. Vance, the American Vice President, recently said that the United States was borrowing money from Chinese farmers to buy goods produced by other Chinese farmers. What does this statement reveal about the state of world trade?

Simon Evenett: The statement says more about the domestic political situation in the US than about global trade. J.D. Vance apparently believes that mocking the Chinese will benefit his position within the Republican Party. His remarks were received very negatively in Beijing – and they likely hardened the Chinese negotiating position. They may now insist even more strongly that President Trump lower his tariffs before serious talks begin.

The US and China are negotiating a de-escalation of the trade war in Geneva this weekend. Who has the upper hand?

Trump is under significantly greater pressure to defuse the conflict. Of course, the American tariffs are hurting the Chinese economy—but as its export figures from April 2025 show, China is increasingly finding new customers in emerging markets. President Trump, on the other hand, feels growing pressure from US politicians and the financial markets to escape the spiral of escalation he himself initiated. In short, the Americans are currently under greater pressure than the Chinese.

Does this mean Trump will be the first to give in?

That's likely—and it may be happening right now. But a final agreement isn't in sight. The best-case scenario is a kind of ceasefire. Whether this will later lead to a sustainable agreement is another matter entirely. In any case, the Chinese won't send their president to Washington for a PR photo with President Trump. Such actions aren't their style—and after the humiliation of Ukrainian President Volodymyr Zelensky in the Oval Office, they're likely to be deterred anyway. So if a ceasefire agreement is reached, it will happen quietly.

Assuming the decoupling of the American and Chinese economies continues – what are the consequences?

The number of Chinese cargo ships sailing to the US has already plummeted by 40 to 50 percent in the last six weeks. Ports on the American West Coast will be much quieter in the next six weeks, with bottlenecks and shortages expected.

Which products do you expect to experience shortages?

For cheap consumer goods – but also for components that American factories urgently need. This is quickly becoming very uncomfortable for Donald Trump domestically. And that's precisely why his team is under so much pressure to signal a change of heart. The short-term effect is supply bottlenecks in the US – very visible and all over the media.

What happens then?

The next step will be to divert certain Chinese exports that previously went to the US to other markets. This is already happening: Exports to India, Africa, Latin America, and Southeast Asia have increased significantly. And the third effect is likely to come towards the end of the year: That's when companies begin to rethink their global production locations. Those who previously produced in China for the US market will look for alternatives.

Who is actually to blame for this trade conflict? Is it really Donald Trump? Or did his predecessors pave the way? Tariffs existed before him, too.

Trump isn't the main cause, but rather an accelerant. The underlying problem lies deeper: For decades, the American political elite—whether Republican or Democrat—failed to explain the benefits of global trade to the public. Many Americans saw only job losses, insecurity, drug addiction, and broken families. There was a lack of active labor market policies. Instead of helping people change jobs, they were left to fend for themselves. The result was immense frustration and a violent backlash against globalization.

And what part does China bear in the misery?

When you look at how many millions of jobs are created and disappeared in the US every year, the China narrative alone is simply not enough to explain the wage stagnation of the last decades.

But China subsidizes its exports on a large scale and thus gains an unfair advantage, doesn't it?

There's no question: China has deliberately promoted its exports – that's a fact. But the more important question is: Do subsidies really lead to competitive companies? And the answer is: no. The uncomfortable truth that many in the West refuse to acknowledge is: China has invested massively – in infrastructure, in education, in its supply chains. That's why many Chinese industries are so competitive today.

Does that mean that the West is making things too easy for itself by blaming everything on subsidies?

Western criticism of Chinese subsidies is an excuse to avoid an uncomfortable debate. But this is precisely the debate we need in Europe if we want to revive our own competitiveness. If subsidies automatically led to successful companies, then, given the generous state aid in Europe, there would hardly be stagnating living standards in so many countries.

Is a return to the old free trade era even conceivable?

Going back to the 1990s is illusory. We are facing a new phase: more uncertainty, more disruption, and more protectionism. But at the same time, the global economy is much more multipolar today than before. New markets and new customers are emerging. Countries like Switzerland—but also Europe as a whole—now have the opportunity to diversify their exports and become more independent from both China and the USA. This new world order should not be seen solely as a threat; it is also an opportunity. We are not at the end of globalization—we are entering a new chapter.

Liberalism, as a school of thought, sees world trade as a guarantor of peace. Will the risk of real war increase if this trade conflict remains unresolved?

The connection between trade and peace is old—and certainly controversial. In the current case, if China and the US trust each other so little in trade, as is currently the case, then it's unlikely they will trust each other diplomatically and militarily. Anything that further fuels mistrust endangers peace.