So, Donald Trump says he might lower tariffs on China. Shocker, right?
Our president-elect recently floated the idea that those sky-high levies his first administration slapped on Chinese goods might need to come down because—wait for it—they've essentially killed trade between the world's two largest economies.
"I'm going to lower them, because otherwise, you could never do business with them, and they want to do business very much," Trump declared with his typical verbal flourish.
Let me translate that for you: Trade wars aren't quite the "easy wins" he once promised. Who'd have thought?
I've been covering Trump's economic policies since 2016, and this latest pivot feels like watching someone slowly recognize that the economic equivalent of a sledgehammer might not be the precision tool they imagined. It's the classic "arsonist discovers firefighting" routine—first you torch the building, then expect applause when you show up with a hose.
The about-face creates a fascinating strategic puzzle for both Washington and Beijing. Chinese officials now face a delicate calculation: hold firm until after January's inauguration to maximize leverage, or make early concessions to set a friendlier tone?
For investors (and I've spoken with several major fund managers this week), this uncertainty creates both risk and opportunity. Position too early for a trade thaw and you're caught in policy limbo; wait too long and the market will have already priced in the shift.
What's particularly striking about Trump's statement is the grudging acknowledgment of economic reality lurking between the lines. "You could never do business with them" isn't just an observation—it's recognition that decoupling from China was always more fantasy than feasible policy.
Look, this shouldn't surprise anyone who's taken Econ 101. Trade barriers create losers on both sides. American consumers pay higher prices. American manufacturers face increased input costs. Supply chains get mangled in ways that take years—not months, years—to untangle.
The original sales pitch was that tariffs would force China to "play fair" and bring manufacturing rushing back to American shores. Instead, production shifted to Vietnam, Mexico, India... pretty much everywhere except the U.S.
(A manufacturing executive in Ohio once told me, "These tariffs didn't bring my factories back home; they just gave me a map of where else to build them.")
So now what? The history of trade policy suggests that climbing down from tariff mountains requires careful choreography. You need to save face. You need to claim victory. You need to pretend the retreat was actually the plan all along.
Trump, never one to acknowledge missteps, is positioning himself for exactly this kind of pivot—setting up what will likely be billed as "the greatest trade deal ever negotiated by anyone, anywhere, at any time."
The market implications could be significant. Retail, technology, agriculture—virtually every sector has something at stake. But don't expect this to unfold cleanly or quickly. There will be posturing. There will be demands. There will be middle-of-the-night social media storms.
And the real kicker? After years of economic disruption, billions in lost trade, and countless businesses forced to rebuild supply chains from scratch... we might end up with a trading relationship that looks remarkably similar to what we had before this all started.
That's not to say nothing will change. The relationship between Washington and Beijing has fundamentally altered. Trust has eroded. Both sides have learned painful lessons about economic dependency.
But tariffs as a blunt instrument? Even Trump seems to be recognizing their limitations.
In the end, we've spent half a decade and incalculable economic resources to potentially arrive back where we started—except with damaged relationships, twisted supply chains, and higher prices for American consumers.
But hey, I'm sure it'll be packaged as a tremendous win. The best win. Nobody wins like these wins.
