From ‘Make America Great Again’ to ‘Make China Great Again’??

The slogan “Make America Great Again”, popularized by Donald Trump during his 2016 presidential campaign and re-iterated at the start of his second term, represents a bold promise to restore the United States to its former economic, military, and cultural dominance. His “America First” approach includes imposing tariffs on Chinese imports, intending to level the playing field and boost American manufacturing. However, this approach, while intended to benefit the U.S. economy, may paradoxically lead to a “Make China Great Again” moment, by accelerating China’s drive toward self-reliance and innovation.

The Tariff War: short-term gains, long-term pain?

Same as during his first term, just a few days after the inauguration, Trump announced that he will impose tariffs on Chinese imports, aiming to force China to change its trading practices and open its market further to U.S. businesses. By making Chinese products more expensive, Trump hopes to give American-made goods a competitive advantage, revitalize domestic production, and reduce the U.S. trade deficit.

During his first term, in the short term the tariffs did have some effect. Certain American industries that had long been struggling with competition from cheaper Chinese imports saw a boost. However, this protectionist strategy also brought significant costs. The tariffs led to price increases for U.S. consumers on everyday goods ranging from electronics to clothing. For American companies reliant on Chinese components, production costs rose, making their products less competitive on the global market.

China’s path to self-reliance and innovation

Rather than capitulating to U.S. demands, China used the trade war as a wake-up call. Faced with escalating tariffs and increasing hostility from the West, China doubled down on its efforts to reduce reliance on foreign goods and technology. As a result, China invested heavily in research and development, particularly in cutting-edge fields such as artificial intelligence (AI), biotechnology, and quantum computing. Over the past years, China’s progress in these areas has been remarkable. In areas such as 5G technology and electric vehicles, Chinese firms have become global leaders. The country has also made great strides in reducing its reliance on U.S. companies for critical technologies.

While Trump’s tariffs are meant to weaken China, they inadvertently push China to accelerate its transformation into a technological powerhouse, ultimately strengthening its position on the global stage. By pushing China to innovate and reduce its dependence on foreign goods and technology, Trump’s policies may ultimately contribute to a “Make China Great Again” moment, positioning China as a formidable global competitor for decades to come.

An opportunity for Europe?

The ongoing competition between the United States and China will inevitably have implications for European governments and companies. Pessimists may argue that China could respond by dumping products in Europe, further harming EU industries and exacerbating economic challenges within the region. This could lead to calls for protectionist measures to safeguard European markets from cheap Chinese goods. However, I see this new dynamic as an opportunity for Europe rather than a threat.

Instead of viewing China’s economic and technological advancements with skepticism, European companies should seek to form strategic partnerships with Chinese firms. By engaging in joint ventures and collaborations, European companies can leverage China’s innovations to access new markets, enhance their technological capabilities, and drive growth. These collaborations can open doors not only within China’s vast domestic market but also in other regions where Chinese companies have significant influence, such as Asia, Africa, and South America. By approaching this relationship with China strategically, Europe can position itself as a vital player in the global economy, benefiting from China’s rise while preserving its own economic strength and influence.

Bart Horsten