Noah, this piece is extremely interesting and well thought through However, there is a gigantic lacuna. I would like you to write a companion piece of how China could counteract this everybody-but-China strategy and consider what impacts that would have. I read a lot of articles about China, and they are very sensitive to the idea that they are being contained. Clearly, they would recognize this grand containment strategy instantaneously and react vigorously to it. Offhand, I think it would make an invasion of Taiwan more likely to intimidate its nearest neighbors
On the other hand, the removal of tariffs from every other country would damage the Chinese argument that America's policies always benefit America alone.
China has already reacted to the effort to contain China Shock II, by cutting off all exports of heavy rare earths. Which will make key parts of foreign industrial production much less competitive.
A Grand Containment (and Trade) strategy is probably the *only* way we--and the rest of the world--can prevent China from launching WW3 to seize their time in the sun. A war they are clearly gearing up for, and quite eager to start off with the conquest of Taiwan. India & Vietnam would be key members--and key geo-political beneficiaries--of such an alliance, where an attack on one is an attack on all. Even if such an alliance does not deter China from war, it will greatly reduce American battle losses if indeed the balloon goes up, and increase the odds of a Chinese defeat.
But the more FOX News runs segments about how going to war to defend Taiwan from Chinese invasion "...isn't our fight." or "..is a fight we couldn't win." makes me think the GOP natsec establishment has already chosen the Sudetenland option with regards to any effort at containment.
We just need to stop kidding ourselves that the same Democrats who were petrified of provoking Putin and slow walked Ukraine are going to jump in and defend Taiwan in China’s backyard. It seems laughable. They are carping about the cost of supporting Ukraine, Americans have less than zero interest in actually fighting the Chinese.
Taiwan can't defend itself from a determined China. In the end it is highly unlikely that we could or would defend Taiwan from an all out attack. Taiwan needs nukes. It's the only thing that can balance the scales.
You don't really need to do anything there. If you stop maintaining the factory for five seconds it'll break. If a bomb went off a mile away from it the vibrations would break it.
A TSMC factory is literally the most complicated and nearly the most sensitive thing in the world.
I agree - and it also needs legions of highly trained engineers to operate it. These would be on the last (or first) ‘plane out if a shooting war started.
But let us not be too reassured about rational behavior from Xi either. Until Trump turned up, he looked like the craziest guy out there.
Noah, if you substituted China in your article for Germany we would be in the position of Britain prior to 1914. Yes, that is how dangerous your ideas are. Do you think for a moment that China has not war gamed all these options. We in the West need to understand where we are today and where we want to be in the future. Britain and its Allies fought two wars with Germany, wars which impoverished all of us. Britain owned about 6% of the value of American stocks in 1914, stocks we were forced to sell to the Americans in exchange for military supplies. I appreciate the stupidity of the current American government but if we bide our time they will be gone in four years time. Until then we should remember Machiavelli that there are two ways to deal with your enemy, 1 put it beyond its power to hurt you (the debts heaped on Germany after WW1), which caused WW2, or, make it your friend (Germany after WW2). I suggest we treat China as a friend in the hope that it will not cause WW3 and we gain from its friendship rather than lose by treating it as an enemy.
There’s a vast gulf between going to war with China (we shouldn’t), and trying to stop Chinese domination of the entire global manufacturing supply chain. You’ll note that the west only began to freak out once it work up to this possibility - we were fine when China was just one of the manufacturing superpowers.
Another way to view it is in terms of anti-trust - if China is able to abuse its near-monopoly on manufacturing, it will. That doesn’t make them any more evil than Standard Oil or whatever, but it’s not a position we want to be in.
China is not seeking to merely dominate global manufacturing. They are also wish to dominate militarily. Many American conservatives delude themselves in the spirit of Chamberlain, that China will be appeased with the conquest of Taiwan.
John Woods is absolutely correct that Germany in 1914 thought that Britain was attempting to smother it economically, just as China believes the US is trying to do the same. There are many geopolitical strategists who think that economic competition and military competition are virtually indistinguishable.
I don’t doubt that, but I just don’t think history is a good guide for us here. The sample size is too small, so the analogies aren’t going to be close fits. This allows anyone to cherry pick their examples. That we successfully contained the USSR, or maybe in John’s example, China’s position is closer to the UK and we’re Germany. Or even that we tried being friends with China and they spent two decades funding industrial espionage - their quasi-official policy has been that economic and geopolitical competition is indistinguishable!
I think we’re clearer-eyed analyzing the situation as it is.
That said, I agree with John that there’s a lot of risk in being as provocative as Noah suggests (literally everyone but China trade bloc.) There’s also a lot of risk letting China follow through with their plan to dominate global manufacturing.
I don't I didn't interpret what Noah said as forbidding other countries as trading with China, simply that we and perhaps other volunteering countries would tariff China, whereas we would not tariff each other.
The Kaiser was even more foolish than Trump is. although not quite as foolish as Hitler was, and it wasn’t fear of economic smothering that brought them to attack in the west and the east simultaneously in 1914. It was the simple urge to dominate, just as it had been in the Franco-Prussian war. The Kaiser loved playing soldier more than nearly anything else (read Trump’s desire for the kind of military loyalty Hitler had), and he was convinced that Europe wasn’t giving him the respect he felt he deserved. (sound familiar). He abhorred his cousin, the English king who made friends wherever he went whereas the Kaiser, who frequently made just the kind of damned fool remarks that Trump makes was never invited to the ‘parties' he wanted to attend. So he thought he could force the issue with his army. He was wrong, and the world paid for that kind of lunacy twice.
The idea that China would accept our ‘friendship’ in any way that deterred their intent to dominate Asia or to alter their firm belief that we are their ideological enemy in more than economic terms is a trip into fantasy land.
For goodness sake, let us not assume that our economic rivals would risk nuclear oblivion when their economies are perfectly capable of supplying all their needs with normal relationships. This is not 1914when we were matching Germany with ever increasing size of warships. I hope the upper echelons of Chinese leadership recognise the imbecility of the Trump administration and will just match the tariffs until Trump backs down or is taken away by men in white coats.
I think the Chinese have given every indication that they are willing to calmly wait out trumps ineffectual trade war. The question is what they would do if faced by the more effective reshaping a world trade described by Noah.
'Waiting Trump out' is not really the same as inviting a friendship and/or partnering with a nation whose whole reason for being is counter to ours. The communist world has always lived with the belief that capitalism will self-destruct with a little help from them. And now Trump is working hard to prove them right.
I’m not suggesting that China would go to war over Trump’s demented dance with the Tariff Fairy, and they don’t think they have to.
Ms Weber is right in her reply that what China might do if Noah’s plan were adopted is unpredictable, but if they are at all realistic (granted, something I’m not taking for granted), they would not risk nuclear annihilation over something they could accept and deal with in other ways.
In the end, of course, if the world was ruled by rational men and women, we would long since have come to the conclusion that a world so interconnected as ours has become is hardly well served by this constant and often bitter competition, even without the memory of August 6th, 1945.
I’ve just turned 80, so I suppose I could be accused of have less skin in this game than those younger than myself who might not get the chance to live a relatively full life. On the other hand, I lived through those thirteen awful days in October of 1962 when we waited in terror for resolution or Armageddon (even the pale imitation of what we could do to each other today). And some of the more recent histories of that moment are clear on how close we came to the latter. But a sufficient form of rationality did prevail, and we are still here.
I would agree with you. The Chinese leadership is hardly likely to start something which would destroy them as well as us, but I suspect that AI will alter our lives in ways we as yet only dimly grasp, if at all.
I’ve just turned 80, and for the first time, I think of that as being very fortunate.
Remember that if Britain and France had simply refused the surrender of the Sudetenland, Hitler's war timetable would've been put off by two years or more, as the Wehrmacht simply couldn't have fought the Czechs, the Poles--and FR/UK simultaneously in the 1937-40 period.
Taiwan currently represents that fulcrum. If she is defended by a strong US-led alliance, China can be very likely contained without a world war.
There is a total case for believing that Chamberlain and the French should have stood up to Hitler in 1938. However we are faced with the facts that both Britain and France were at the end of a 10 recession, which in Britain had 6 million men on the dole and most of our industrial power running on empty. Even in America it took WW2 to revive the economy and empty the unemployed registers.
Both nations were also haunted by what had happened in 1914-18. WWI is so far in the past now that we can forget what a shock it was the world of the early twentieth century. Nothing even remotely like it had ever happened in human history, and they knew it. Even Winston Churchill, that most bellicose of men was frightened by the memory, one of the reasons why he was so reluctant to countenance an earlier over-Channel invasion during WWII which he thought would result in the same sort of slaughter he had witnessed on the Western Front.
Some historians have also suggested that all the statesmen who would have had a good deal more backbone than Chamberlain and his ilk proved to have had died in their youth on the Western Front. That, of course, is an unprovable hypothesis, although the fact that many of the cream of English society had indeed volunteered, gone over, and not returned cannot be denied.
I agree that if China is deferred by strong US led alliance, that China can be contained. But our Asian allies have always been very ambivalent about confronting China.
You're probably right about the Sudetenland crisis, but the leaders of France and Britain knew that their populations simply weren't up for another war at that point. If Chamberlain had come home Issuing an ultimatum to Germany, parliament and the public may have voted him out the next day.
Industrial military production of all the major WW2 combatants roughly tracked the Hitler-led diplomatic initiatives. E.g., Occupation of Rhineland in '36, etc. Such that by mid-'39, all major combatants were almost fully mobilized with near-full military output.
My point is that in '37 or '38 Germany was no more ready for war than France/UK.
I've read several history books that the German general staff was promising peak readiness in 1942. My basic point was Germany was more psychologically prepared for war than France or Britain in 1947.
The Wehrmacht's officer corps was pretty amazing overall, throughout the war. The Brits weren't bad mostly; while the French in '39-'40 were mixed.
The divisional TOE's and weaponry of UK/FR/GE in '40 were also nearly identical by divisional type (Line Infantry, Reserve Infantry, Motorized Infantry, Cavalry, etc.).
If the Panzer breakthrough at Sedan had been repulsed/contained (all it would've taken was 1-2 more infantry divisions dug in facing the river), it's conceivable the Allied armies could've held the line at the Belgian border for many more weeks. Even months.
I had a Taiwanese friend for a few years, so I got a glimpse of how multidimensional the relationship is, that's all.
I actually think that from the Chinese perspective, all their military activity is *defensive* - they regard Taiwan as part of China, and above all they want to prevent it from being taken over by foreign-backed separatists. As with Taiwanese and American military build-ups, actual war is a last resort and they would prefer to succeed via political, cultural, economic means, something I find very thinkable given the extremely broad interactions between Taiwan and the mainland.
I lived in S & Se Asia for ~6 years, practiced in CA as an Acupuncturist for 25 years, finished a doctorate in Hangzhou, and have been practicing Chinese internal arts for (off and on) 40+ years. I also have some Taiwanese friends.
Taking Taiwan is an obsession with the Mainlanders. As was Hong Kong before it. Amplified by centuries of grievance against foreign invaders/oppressors, and now supercharged by a nascent sense of Manifest Destiny. I agree they'd rather "reunite" with Taiwan peacefully--if only to prevent damage/destruction of TSMC's hi-end chip fabs. But they're fully prepared to take it by force. Xi has set 2027 as the date by which the PLA & PLAN are to be sufficiently bulked up for a successful invasion. War is almost certainly coming.
I don't think the analogy is perfect, for several reasons.
First, there are many more players on the field. In 1914 the four large economies of the world were Britain, France, Germany, and the US. Now there are dozens of players. In 1914 Britain could cut Germany off more effectively from the rest of the world economy. Noah's strategy does not seem to explicitly discourage China from accessing the world market, just providing alternative sources of important goods. It seems more like an antitrust strategy, making sure there are alternatives sources of critical goods, raising up competition to Chinese monopolies.
Finally, Germany's position physically encircled by Britain, France, and Russia made that country believe that a struggle to the death was inevitable. In contrast, China, due to its size and population obviously cannot be conquered or occupied.
Germany was treated as a friend after the war, because they were defeated and the west needed support for its rivalry with the new enemy, the USSR. China has not been defeated, nor is there any reason to be soft and fuzzy towards them as they build up their army and navy complete with swarms of drones, hypersonic missiles and fleets of transoceanic cable cutters.
I feel like the way we talk about China and how its economy are actually doing are completely at odds with each other? The CCP is spending $2 dollars to get $1 in growth through export subsidies and it is only a matter of time before it collapses.
If anything we should be encouraging even more Chinese imports because the CCP is paying to make us stronger while they are growing weaker.
Their economy is doing at least as well as ours from a geopolitical standpoint. We pay our $2 to subsidize healthcare and consumption - at least China's getting $1 in growth via manufacturing from their $2. Sucks to be a Chinese citizen, but they're willing to tolerate that pain to continue to invest.
And I think you're underestimating how hard it would be for us to compete if (when) China turns off their subsidy. They're investing in capabilities that already would allow them to destroy our manufacturing cost competitiveness in an unsubsidized competition. If they decide not to subsidize anymore, or even block us out completely, we have no choice but to start paying a much greater share of GDP to buy Chinese goods.
As always, I enjoy reading Noah’s thoughts. I’m not nearly enough of an economist to know if he’s right or not, although I think he is, but unfortunately he’s also right that the Trump administration is above all else a deep well of irrationality and stupidity. a combination that has led more than one nation into the abyss.
his love of industrial policy drives me up the wall. He says "smart industrial policy" but there is no such thing because the amount of support for "key industries" never actually goes away, it just gets more entrenched and makes them non competitive.
We fought the Chinese Army during the Korean War. We failed to defeat them either on land, sea or in the air. The Communist Regime was only four years old and sent its soldiers into battle during one winter wearing plimsols. Over 75% of the POW’s we captured elected to stay in the West. No one in his or her right mind would want to start a war with China and I believe the Chinese leadership feels the same. However, having been humiliated by the West on several occasions during the 18th and 19th centuries, the Chinese are determined that it will not happen again (the Opium Wars of 1842 were a total disaster for China and shameful by the British to force opium on the population of China). That the British negotiated the lease of Hong Kong was the only redeeming point of the negotiations.
One of the premises of Noah's proposal is that Trump no longer plays any role in US politics. Europe welcomed America's return after the presidencies of George W bush and Trump 1.0.
This is an optimistic take on the damage done. Europe will welcome us leadership back when maga is gone. Just like uk is not back in the fold after Brexit.
I was hoping you'd write a piece like this Noah. I'm 99% sure that we're all where we are now by accident misadventure and incompetence rather than any form of actual planning, but maybe there is a way out of this clustershow after all. I honestly do believe that this administration makes its decisions based on what it reads in the WSJ or sees on cable news, so the more people that talk about what a coherent trade policy that does effectively tackle China, the better.
PS I also think that the reason Trump un-exempted his exemptions over the weekend was because there were too many headlines about it. Maybe we all just need a pact to not say anything when he does something right?
I’m pretty sure Trump doesn’t read the WSJ, and if anyone on his cabinet does they wouldn’t talk to him about it. The WSJ opinion page have been harshly honest in saying the tariff policies are stupid and counterproductive, so Trump automatically puts them in the fake news bucket.
Good article, I think the damage is already done. Bessent may be leading the negotiations but the final say goes to Trump who has made it clear his goal is to eliminate our trade deficit. Overall: the US has abandoned its effort in containing China.
Thanks Noah, this was a much needed note. One thing that wasn't stated, maybe not needed as everyone knows, is the incredible inequality between most of the world and how China treats its workers, environment and trade laws. Is there anything that can address these issues directly besides a blunt force instrument like a tariff? Is there any reason to think they would comply?
Hot take: in this scenario, where an administration is in power that is concerned about geopolitical threat to democracies from authoritarian China, shouldn't they realize that an authoritarian government is likely to be in power in the US about 50% of the time, and try to yield some of our power to more responsible international actors while we still can?
I think it is also useful for Noah and other proponents of this approach to expressly identify the objectives of these policies (national security, containment of China, productivity, employment, etc). Both the identification of objectives (which are also benchmarks for determining whether a policy is succeeding on its own terms) and the objectives themselves would provide a contrast with the approach taken by the Admin, which is aimless, self-defeating, and ultimately unaccountable given its character and its focus on means instead of measurable ends.
I'd also focus on learning the hurdle rates that investors and companies have for larger-scale capital investments in US capacity (that could influence the level and duration of trade restrictions), along with relocating/training skilled labor to work where investments will be made.
"If this sounds familiar, well, it should. Two trade treaties, the TPP with Asia and the TTIP with Europe, would have gone a long way toward creating this sort of common market among non-Chinese manufacturing nations. Both were killed by Donald Trump."
An important fact. It is also a fact that Hillary Clinton opposed TTP and TTIP was not a priority of the Biden Administration. As Scripture says, "First cast out the Beam that is than own eye ..."
The Democrats are not actually for free trade or agreements, Biden didn’t remove Trumps first tariffs and even added new ones. Schumer had votes to eliminate the section 232 national security trade exceptions in 2021 but never brought it to a vote. Even now Whitmer is meeting with Trump in the White House to support his tariffs “for the autoworkers “ but ashamed to be photographed there.
This readership seems to be a pretty anti-China group. But I'll suggest that there are many reasons why Noah's idea is not only (i) a bad idea economically but also (ii) riddled with myriad practical problems, and so (iii) it won't happen. ... Have you considered why Japan attached the US at Pearl Harbor? ...
1.) You did not mention that the US CBP already has a regulation called 'substantial transformation' that is used to determine whether a final good made from intermediary goods gets subject to the tariff rate on the country making the final good or not when it enters the US. This framework could be used, and updated as needed, to tackle the problem of transshipment that has been going on for decades.
2.) Your analysis is not alone (did Miran do so either?) in not including the fact that US trade numbers with China only reflect the value of the final goods shipped from China, even when the intermediary goods to make those goods originated in countries other than China. If we are going to pursue an accounting for the value of Chinese inputs for non-China export countries, we're going to need that army of people to do the same for non-Chinese inputs into Chinese exports.
This is complicated stuff. So much for 'trade wars are good and easy to win.'
Noah, this piece is extremely interesting and well thought through However, there is a gigantic lacuna. I would like you to write a companion piece of how China could counteract this everybody-but-China strategy and consider what impacts that would have. I read a lot of articles about China, and they are very sensitive to the idea that they are being contained. Clearly, they would recognize this grand containment strategy instantaneously and react vigorously to it. Offhand, I think it would make an invasion of Taiwan more likely to intimidate its nearest neighbors
On the other hand, the removal of tariffs from every other country would damage the Chinese argument that America's policies always benefit America alone.
China has already reacted to the effort to contain China Shock II, by cutting off all exports of heavy rare earths. Which will make key parts of foreign industrial production much less competitive.
A Grand Containment (and Trade) strategy is probably the *only* way we--and the rest of the world--can prevent China from launching WW3 to seize their time in the sun. A war they are clearly gearing up for, and quite eager to start off with the conquest of Taiwan. India & Vietnam would be key members--and key geo-political beneficiaries--of such an alliance, where an attack on one is an attack on all. Even if such an alliance does not deter China from war, it will greatly reduce American battle losses if indeed the balloon goes up, and increase the odds of a Chinese defeat.
But the more FOX News runs segments about how going to war to defend Taiwan from Chinese invasion "...isn't our fight." or "..is a fight we couldn't win." makes me think the GOP natsec establishment has already chosen the Sudetenland option with regards to any effort at containment.
We just need to stop kidding ourselves that the same Democrats who were petrified of provoking Putin and slow walked Ukraine are going to jump in and defend Taiwan in China’s backyard. It seems laughable. They are carping about the cost of supporting Ukraine, Americans have less than zero interest in actually fighting the Chinese.
Sounds about right!
Taiwan can't defend itself from a determined China. In the end it is highly unlikely that we could or would defend Taiwan from an all out attack. Taiwan needs nukes. It's the only thing that can balance the scales.
You don't really need to do anything there. If you stop maintaining the factory for five seconds it'll break. If a bomb went off a mile away from it the vibrations would break it.
A TSMC factory is literally the most complicated and nearly the most sensitive thing in the world.
I agree - and it also needs legions of highly trained engineers to operate it. These would be on the last (or first) ‘plane out if a shooting war started.
But let us not be too reassured about rational behavior from Xi either. Until Trump turned up, he looked like the craziest guy out there.
This is fun alternative history, and all true, but Trump has already foreclosed this possibility in just a few months in office.
We are clearly not a reliable partner to lead such an alliance.
Noah, if you substituted China in your article for Germany we would be in the position of Britain prior to 1914. Yes, that is how dangerous your ideas are. Do you think for a moment that China has not war gamed all these options. We in the West need to understand where we are today and where we want to be in the future. Britain and its Allies fought two wars with Germany, wars which impoverished all of us. Britain owned about 6% of the value of American stocks in 1914, stocks we were forced to sell to the Americans in exchange for military supplies. I appreciate the stupidity of the current American government but if we bide our time they will be gone in four years time. Until then we should remember Machiavelli that there are two ways to deal with your enemy, 1 put it beyond its power to hurt you (the debts heaped on Germany after WW1), which caused WW2, or, make it your friend (Germany after WW2). I suggest we treat China as a friend in the hope that it will not cause WW3 and we gain from its friendship rather than lose by treating it as an enemy.
There’s a vast gulf between going to war with China (we shouldn’t), and trying to stop Chinese domination of the entire global manufacturing supply chain. You’ll note that the west only began to freak out once it work up to this possibility - we were fine when China was just one of the manufacturing superpowers.
Another way to view it is in terms of anti-trust - if China is able to abuse its near-monopoly on manufacturing, it will. That doesn’t make them any more evil than Standard Oil or whatever, but it’s not a position we want to be in.
China is not seeking to merely dominate global manufacturing. They are also wish to dominate militarily. Many American conservatives delude themselves in the spirit of Chamberlain, that China will be appeased with the conquest of Taiwan.
John Woods is absolutely correct that Germany in 1914 thought that Britain was attempting to smother it economically, just as China believes the US is trying to do the same. There are many geopolitical strategists who think that economic competition and military competition are virtually indistinguishable.
I don’t doubt that, but I just don’t think history is a good guide for us here. The sample size is too small, so the analogies aren’t going to be close fits. This allows anyone to cherry pick their examples. That we successfully contained the USSR, or maybe in John’s example, China’s position is closer to the UK and we’re Germany. Or even that we tried being friends with China and they spent two decades funding industrial espionage - their quasi-official policy has been that economic and geopolitical competition is indistinguishable!
I think we’re clearer-eyed analyzing the situation as it is.
That said, I agree with John that there’s a lot of risk in being as provocative as Noah suggests (literally everyone but China trade bloc.) There’s also a lot of risk letting China follow through with their plan to dominate global manufacturing.
I don't I didn't interpret what Noah said as forbidding other countries as trading with China, simply that we and perhaps other volunteering countries would tariff China, whereas we would not tariff each other.
agreed - trade "bloc", not "block"- reasonable to think that would be a typo on my part
The Kaiser was even more foolish than Trump is. although not quite as foolish as Hitler was, and it wasn’t fear of economic smothering that brought them to attack in the west and the east simultaneously in 1914. It was the simple urge to dominate, just as it had been in the Franco-Prussian war. The Kaiser loved playing soldier more than nearly anything else (read Trump’s desire for the kind of military loyalty Hitler had), and he was convinced that Europe wasn’t giving him the respect he felt he deserved. (sound familiar). He abhorred his cousin, the English king who made friends wherever he went whereas the Kaiser, who frequently made just the kind of damned fool remarks that Trump makes was never invited to the ‘parties' he wanted to attend. So he thought he could force the issue with his army. He was wrong, and the world paid for that kind of lunacy twice.
The idea that China would accept our ‘friendship’ in any way that deterred their intent to dominate Asia or to alter their firm belief that we are their ideological enemy in more than economic terms is a trip into fantasy land.
For goodness sake, let us not assume that our economic rivals would risk nuclear oblivion when their economies are perfectly capable of supplying all their needs with normal relationships. This is not 1914when we were matching Germany with ever increasing size of warships. I hope the upper echelons of Chinese leadership recognise the imbecility of the Trump administration and will just match the tariffs until Trump backs down or is taken away by men in white coats.
I think the Chinese have given every indication that they are willing to calmly wait out trumps ineffectual trade war. The question is what they would do if faced by the more effective reshaping a world trade described by Noah.
'Waiting Trump out' is not really the same as inviting a friendship and/or partnering with a nation whose whole reason for being is counter to ours. The communist world has always lived with the belief that capitalism will self-destruct with a little help from them. And now Trump is working hard to prove them right.
I’m not suggesting that China would go to war over Trump’s demented dance with the Tariff Fairy, and they don’t think they have to.
Ms Weber is right in her reply that what China might do if Noah’s plan were adopted is unpredictable, but if they are at all realistic (granted, something I’m not taking for granted), they would not risk nuclear annihilation over something they could accept and deal with in other ways.
In the end, of course, if the world was ruled by rational men and women, we would long since have come to the conclusion that a world so interconnected as ours has become is hardly well served by this constant and often bitter competition, even without the memory of August 6th, 1945.
I’ve just turned 80, so I suppose I could be accused of have less skin in this game than those younger than myself who might not get the chance to live a relatively full life. On the other hand, I lived through those thirteen awful days in October of 1962 when we waited in terror for resolution or Armageddon (even the pale imitation of what we could do to each other today). And some of the more recent histories of that moment are clear on how close we came to the latter. But a sufficient form of rationality did prevail, and we are still here.
Right now I'm more afraid of future AI systems than I am of nuclear war with China.
https://ai-2027.com/
I would agree with you. The Chinese leadership is hardly likely to start something which would destroy them as well as us, but I suspect that AI will alter our lives in ways we as yet only dimly grasp, if at all.
I’ve just turned 80, and for the first time, I think of that as being very fortunate.
Remember that if Britain and France had simply refused the surrender of the Sudetenland, Hitler's war timetable would've been put off by two years or more, as the Wehrmacht simply couldn't have fought the Czechs, the Poles--and FR/UK simultaneously in the 1937-40 period.
Taiwan currently represents that fulcrum. If she is defended by a strong US-led alliance, China can be very likely contained without a world war.
There is a total case for believing that Chamberlain and the French should have stood up to Hitler in 1938. However we are faced with the facts that both Britain and France were at the end of a 10 recession, which in Britain had 6 million men on the dole and most of our industrial power running on empty. Even in America it took WW2 to revive the economy and empty the unemployed registers.
Both nations were also haunted by what had happened in 1914-18. WWI is so far in the past now that we can forget what a shock it was the world of the early twentieth century. Nothing even remotely like it had ever happened in human history, and they knew it. Even Winston Churchill, that most bellicose of men was frightened by the memory, one of the reasons why he was so reluctant to countenance an earlier over-Channel invasion during WWII which he thought would result in the same sort of slaughter he had witnessed on the Western Front.
Some historians have also suggested that all the statesmen who would have had a good deal more backbone than Chamberlain and his ilk proved to have had died in their youth on the Western Front. That, of course, is an unprovable hypothesis, although the fact that many of the cream of English society had indeed volunteered, gone over, and not returned cannot be denied.
I agree that if China is deferred by strong US led alliance, that China can be contained. But our Asian allies have always been very ambivalent about confronting China.
You're probably right about the Sudetenland crisis, but the leaders of France and Britain knew that their populations simply weren't up for another war at that point. If Chamberlain had come home Issuing an ultimatum to Germany, parliament and the public may have voted him out the next day.
Industrial military production of all the major WW2 combatants roughly tracked the Hitler-led diplomatic initiatives. E.g., Occupation of Rhineland in '36, etc. Such that by mid-'39, all major combatants were almost fully mobilized with near-full military output.
My point is that in '37 or '38 Germany was no more ready for war than France/UK.
I've read several history books that the German general staff was promising peak readiness in 1942. My basic point was Germany was more psychologically prepared for war than France or Britain in 1947.
The Wehrmacht's officer corps was pretty amazing overall, throughout the war. The Brits weren't bad mostly; while the French in '39-'40 were mixed.
The divisional TOE's and weaponry of UK/FR/GE in '40 were also nearly identical by divisional type (Line Infantry, Reserve Infantry, Motorized Infantry, Cavalry, etc.).
If the Panzer breakthrough at Sedan had been repulsed/contained (all it would've taken was 1-2 more infantry divisions dug in facing the river), it's conceivable the Allied armies could've held the line at the Belgian border for many more weeks. Even months.
How much do you actually know about the Chinese-Taiwanese relationship?
A fair bit more than my fellow guai-lou ren. And yourself?
I had a Taiwanese friend for a few years, so I got a glimpse of how multidimensional the relationship is, that's all.
I actually think that from the Chinese perspective, all their military activity is *defensive* - they regard Taiwan as part of China, and above all they want to prevent it from being taken over by foreign-backed separatists. As with Taiwanese and American military build-ups, actual war is a last resort and they would prefer to succeed via political, cultural, economic means, something I find very thinkable given the extremely broad interactions between Taiwan and the mainland.
I lived in S & Se Asia for ~6 years, practiced in CA as an Acupuncturist for 25 years, finished a doctorate in Hangzhou, and have been practicing Chinese internal arts for (off and on) 40+ years. I also have some Taiwanese friends.
Taking Taiwan is an obsession with the Mainlanders. As was Hong Kong before it. Amplified by centuries of grievance against foreign invaders/oppressors, and now supercharged by a nascent sense of Manifest Destiny. I agree they'd rather "reunite" with Taiwan peacefully--if only to prevent damage/destruction of TSMC's hi-end chip fabs. But they're fully prepared to take it by force. Xi has set 2027 as the date by which the PLA & PLAN are to be sufficiently bulked up for a successful invasion. War is almost certainly coming.
I don't think the analogy is perfect, for several reasons.
First, there are many more players on the field. In 1914 the four large economies of the world were Britain, France, Germany, and the US. Now there are dozens of players. In 1914 Britain could cut Germany off more effectively from the rest of the world economy. Noah's strategy does not seem to explicitly discourage China from accessing the world market, just providing alternative sources of important goods. It seems more like an antitrust strategy, making sure there are alternatives sources of critical goods, raising up competition to Chinese monopolies.
Finally, Germany's position physically encircled by Britain, France, and Russia made that country believe that a struggle to the death was inevitable. In contrast, China, due to its size and population obviously cannot be conquered or occupied.
Targeted tariffs would not cut China off from the world the way Germany and Japan were cut off.
Germany was treated as a friend after the war, because they were defeated and the west needed support for its rivalry with the new enemy, the USSR. China has not been defeated, nor is there any reason to be soft and fuzzy towards them as they build up their army and navy complete with swarms of drones, hypersonic missiles and fleets of transoceanic cable cutters.
I feel like the way we talk about China and how its economy are actually doing are completely at odds with each other? The CCP is spending $2 dollars to get $1 in growth through export subsidies and it is only a matter of time before it collapses.
If anything we should be encouraging even more Chinese imports because the CCP is paying to make us stronger while they are growing weaker.
Their economy is doing at least as well as ours from a geopolitical standpoint. We pay our $2 to subsidize healthcare and consumption - at least China's getting $1 in growth via manufacturing from their $2. Sucks to be a Chinese citizen, but they're willing to tolerate that pain to continue to invest.
And I think you're underestimating how hard it would be for us to compete if (when) China turns off their subsidy. They're investing in capabilities that already would allow them to destroy our manufacturing cost competitiveness in an unsubsidized competition. If they decide not to subsidize anymore, or even block us out completely, we have no choice but to start paying a much greater share of GDP to buy Chinese goods.
As always, I enjoy reading Noah’s thoughts. I’m not nearly enough of an economist to know if he’s right or not, although I think he is, but unfortunately he’s also right that the Trump administration is above all else a deep well of irrationality and stupidity. a combination that has led more than one nation into the abyss.
his love of industrial policy drives me up the wall. He says "smart industrial policy" but there is no such thing because the amount of support for "key industries" never actually goes away, it just gets more entrenched and makes them non competitive.
Isn't it the case that most newly industrialized countries had vigorous industrial policy during their climb out of poverty?
Yes it is. There is smart industrial policy and dumb industrial policy. There is a reason that Asia succeeded while South America failed.
Free market Ideologues are rare to find today, but they should be summarily dismissed
We fought the Chinese Army during the Korean War. We failed to defeat them either on land, sea or in the air. The Communist Regime was only four years old and sent its soldiers into battle during one winter wearing plimsols. Over 75% of the POW’s we captured elected to stay in the West. No one in his or her right mind would want to start a war with China and I believe the Chinese leadership feels the same. However, having been humiliated by the West on several occasions during the 18th and 19th centuries, the Chinese are determined that it will not happen again (the Opium Wars of 1842 were a total disaster for China and shameful by the British to force opium on the population of China). That the British negotiated the lease of Hong Kong was the only redeeming point of the negotiations.
The United States slip into authoritarianism does not make it an appealing leader of countries against China.
One of the premises of Noah's proposal is that Trump no longer plays any role in US politics. Europe welcomed America's return after the presidencies of George W bush and Trump 1.0.
This is an optimistic take on the damage done. Europe will welcome us leadership back when maga is gone. Just like uk is not back in the fold after Brexit.
I was hoping you'd write a piece like this Noah. I'm 99% sure that we're all where we are now by accident misadventure and incompetence rather than any form of actual planning, but maybe there is a way out of this clustershow after all. I honestly do believe that this administration makes its decisions based on what it reads in the WSJ or sees on cable news, so the more people that talk about what a coherent trade policy that does effectively tackle China, the better.
PS I also think that the reason Trump un-exempted his exemptions over the weekend was because there were too many headlines about it. Maybe we all just need a pact to not say anything when he does something right?
I’m pretty sure Trump doesn’t read the WSJ, and if anyone on his cabinet does they wouldn’t talk to him about it. The WSJ opinion page have been harshly honest in saying the tariff policies are stupid and counterproductive, so Trump automatically puts them in the fake news bucket.
Good article, I think the damage is already done. Bessent may be leading the negotiations but the final say goes to Trump who has made it clear his goal is to eliminate our trade deficit. Overall: the US has abandoned its effort in containing China.
Thanks Noah, this was a much needed note. One thing that wasn't stated, maybe not needed as everyone knows, is the incredible inequality between most of the world and how China treats its workers, environment and trade laws. Is there anything that can address these issues directly besides a blunt force instrument like a tariff? Is there any reason to think they would comply?
Hot take: in this scenario, where an administration is in power that is concerned about geopolitical threat to democracies from authoritarian China, shouldn't they realize that an authoritarian government is likely to be in power in the US about 50% of the time, and try to yield some of our power to more responsible international actors while we still can?
I think it is also useful for Noah and other proponents of this approach to expressly identify the objectives of these policies (national security, containment of China, productivity, employment, etc). Both the identification of objectives (which are also benchmarks for determining whether a policy is succeeding on its own terms) and the objectives themselves would provide a contrast with the approach taken by the Admin, which is aimless, self-defeating, and ultimately unaccountable given its character and its focus on means instead of measurable ends.
I'd also focus on learning the hurdle rates that investors and companies have for larger-scale capital investments in US capacity (that could influence the level and duration of trade restrictions), along with relocating/training skilled labor to work where investments will be made.
"If this sounds familiar, well, it should. Two trade treaties, the TPP with Asia and the TTIP with Europe, would have gone a long way toward creating this sort of common market among non-Chinese manufacturing nations. Both were killed by Donald Trump."
An important fact. It is also a fact that Hillary Clinton opposed TTP and TTIP was not a priority of the Biden Administration. As Scripture says, "First cast out the Beam that is than own eye ..."
The Democrats are not actually for free trade or agreements, Biden didn’t remove Trumps first tariffs and even added new ones. Schumer had votes to eliminate the section 232 national security trade exceptions in 2021 but never brought it to a vote. Even now Whitmer is meeting with Trump in the White House to support his tariffs “for the autoworkers “ but ashamed to be photographed there.
I hope it was clear that I agree with all of this!
She should be ashamed!
Obama had a plan to box China in—and then socialists stepped in. The TPP was kneecapped by progressives and then killed by Trump.
https://open.substack.com/pub/alexvayslep/p/how-trump-repeatedly-helps-china?r=49h0uf&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
This readership seems to be a pretty anti-China group. But I'll suggest that there are many reasons why Noah's idea is not only (i) a bad idea economically but also (ii) riddled with myriad practical problems, and so (iii) it won't happen. ... Have you considered why Japan attached the US at Pearl Harbor? ...
Two points to add to this good analysis.
1.) You did not mention that the US CBP already has a regulation called 'substantial transformation' that is used to determine whether a final good made from intermediary goods gets subject to the tariff rate on the country making the final good or not when it enters the US. This framework could be used, and updated as needed, to tackle the problem of transshipment that has been going on for decades.
2.) Your analysis is not alone (did Miran do so either?) in not including the fact that US trade numbers with China only reflect the value of the final goods shipped from China, even when the intermediary goods to make those goods originated in countries other than China. If we are going to pursue an accounting for the value of Chinese inputs for non-China export countries, we're going to need that army of people to do the same for non-Chinese inputs into Chinese exports.
This is complicated stuff. So much for 'trade wars are good and easy to win.'