Donald Trump’s trade policy isn’t about achieving balanced trade, as many assume, but about aggressively reshaping global economic dynamics. His goal is to sever allies’ trade ties with China entirely, halting all inbound supply chains. This strategy isn’t solely about protecting American jobs; it’s a calculated move to curb China’s industrial ascent and maintain U.S. dominance. By forcing allies to decouple from China, Trump aims to eliminate a near-peer competitor, mirroring the unchallenged U.S. hegemony post-WWII and after the Soviet Union’s collapse. This approach underpins critical issues like preserving the dollar’s reserve currency status and managing America’s fiscal debt, with advisors like Miran arguing that coerced allies could be pushed to buy longer-dated U.S. treasuries to ease debt pressures while boosting markets.

This gambit, however, carries immense risks. China holds significant leverage and could retaliate by dumping U.S. bonds and equities, destabilizing markets and fueling domestic unrest against Trump. Forcing Europe to abandon trade with China risks economic devastation for allies with little say in the matter, potentially pushing them toward economic “seppuku.” Escalation could lead to catastrophic outcomes, such as China targeting Taiwan’s semiconductor industry, critical for global technology and AI development. Yet, the potential rewards are substantial: neutralizing China’s rise could secure U.S. dominance, resolve issues like the fentanyl crisis by cutting Mexico’s access to Chinese precursors, and instill fear in adversaries like cartels or Middle Eastern actors, who might see a U.S. willing to risk global conflict as unyielding.

The success of this high-stakes strategy hinges on how key players respond. Trump’s team, including figures like Bessant and Miran, has likely anticipated second-order effects, suggesting a tolerance for significant market turmoil. To enforce compliance, Trump could pressure allies through economic coercion, threatening NATO’s viability or withdrawing swap lines, likely deploying these measures forcefully to maximize leverage. The real variables aren’t tariff rates or public messaging but whether Japan and Saudi Arabia capitulate swiftly, or if China escalates, potentially invading Taiwan. While critics may dismiss Trump’s circle as incompetent, the calculated audacity of this “economic blitzkrieg” suggests a deliberate embrace of risk, with outcomes resting on how adversaries like Xi Jinping choose to respond—gloves on or off.