The largest economy in the world is no longer in charge of trade talks—its biggest adversary is.
Recently, US Treasury Secretary Scott Bessent labeled China’s top trade negotiator, Li Chenggang, as being “unhinged” and “disrespectful.” It came as an advisor to the Chinese government made a startling remark on American television: China was prepared to walk away from trade talks with America, leaving both sides without a deal.
The unprecedented moves China has made in the past two weeks—banning its largest tech firms from acquiring specific Nvidia chips, probing Qualcomm, imposing tit-for-tat port fees, and, of course, the expanded rare earth measures—have put the US in its weakest position in decades.
China’s Game
The largest economy in the world is no longer in charge of trade talks—its biggest adversary is. America is now trying to convince China to change course, as it realizes the fallout is nuclear. The recent remark from US President Donald Trump, threatening 100% tariffs on China (from November 1) while saying he “does not want to destroy China,” coupled with a proposal from Bessent, where US tariffs would be delayed in exchange for China reversing its rare earth moves, makes it clear how much the ground has shifted. The US is now chasing China.
Short of a detente at the upcoming APEC Summit in South Korea, the new trajectory of the US-China fight is one of extremes. And one of the most extreme is whether Trump is putting America in a corner by engaging in his signature “geopolitical whiplash”—embracing countries one day, enraging them the next.
Economic Bleeding
The US is reaching a point where it may have to either steer away from tariffs on China permanently (an optical disaster) or lock horns with China.
The latter threatens to permanently disrupt the US and global economy. The moment China withholds export licenses or probes more US companies, China will be deciding how America trades with the world. This is not hype or oversensationalism. The new export licenses apply to products made outside of China but still using Chinese rare earths. The US economy, adding just 22,000 jobs in August, compared to over 75,000 projected, could unravel. The same markets that Trump touts may end up melting down.
By prodding China for months, where the average tariff on Chinese imports into the US is now above 50%, Trump may have cornered America. There is no way out other than to fight and get bloody.
Security Guarantees
The historic defense agreements that are being signed in the Middle East could also corner America.
For the first time since the 1950s, the US has given a security guarantee to a nation (Qatar). The US is now guaranteeing the security of Qatar, treating any “armed attack on the territory, sovereignty, or critical infrastructure of the State of Qatar as a threat to the peace and security of the United States.” This is unprecedented and has barely garnered the spotlight.
Now, the Saudis are in discussions for a defense pact with the US, after almost inking one with the Biden administration before the October 7th attacks. It comes after Riyadh signed a mutual defense treaty with Pakistan, whose activation is grey as Pakistan and Afghanistan collide on the border. The US could soon be formally guaranteeing the security of two of the Middle East’s most significant economies.
Next Iran War
This comes as Iran prepares for a second war with Israel after the flare-up in June. The next fighting could be far greater than what occurred during the summer, and could result in far more extreme moves by both sides.
If Iran strikes US military bases in Qatar or launches drone attacks on Saudi oil fields, the US is now bound to step in. America could be pulled directly into the war, well beyond concentrated strikes on Iranian nuclear sites.
On economy and security, the latest US moves may be putting America’s back against the wall. There is nowhere to turn other than toward a handful of nations angry with America’s behavior.
Logic or Lack of Reason?
The question is not just how America fights its way out if diplomacy and deal-making fail. It is also how the entire world is interpreting the moves the US is making. Nobody is questioning the fight with China. Many are questioning this kind of fight with China. The US was always unofficially going to defend its Arab allies if attacked. But signing a formal security guarantee at the precipice of another Middle Eastern war is a curious choice.
Perhaps, there is hidden logic to what is happening. If China activates export licenses, it could push the West into overdrive to build critical minerals supply chains, shrinking decades into months and years. However, if this is all reactive plays, then from China to security, America is overexposing itself.
And the result could be exactly what US leadership has sought to avoid: economic crises and foreign involvement that once again position Washington’s focus on the external world, and create fallout on a scale few have prepared for. Because when punches start flying, calculations and strategy tend to disappear.
-ABISHUR PRAKASH AKA. MR. GEOPOLITICS
Mr. Geopolitics is the property of Abishur Prakash/The Geopolitical Business, Inc., and is protected under Canadian Copyright Law. This includes, but is not limited to: ideas, perspectives, expressions, concepts, etc. Any use of the insights, including sharing or interpretation, partly or wholly, requires explicit written permission
Regarding the topic of the article, this was a really sharp analysys. It’s fascinating how quickly the power dynamics shifted. Trump’s approach always felt like a high-stakes poker game, but maybe the algorithm for winning has changed now.