The Trump Trap: An Economic Race for Hegemony

Rising from the ashes and rubbles of World War II, the United States has indisputably served as the hegemon for the last 70 years. This power lasted through challengers like the Soviet Union and tumultuous events like the Cuban Missile Crisis. With the U.S.’s worldwide dominance, it has projected this widespread perception that military force prevails over everything else. After a recent standoff near the island of Taiwan that involved unprecedented military exercises by the Chinese military, it seems Beijing is now ready to defend its sovereignty from all foreign intervention, including the iron fist of Washington. Despite the resurfacing of tensions over issues such as Taiwan and the South China Sea, they have not escalated to the military level — not even skirmishes have occurred between China and the United States.

In fact, if we look at recent trends, the current situation should not be surprising at all. Until 2021, China’s military spending as a percent of its GDP has been consistently declining since the 1980s. This reality renders the U.S.’s strategic blueprint in East Asia — one still based on military presence — rather outdated. After a series of proxy wars and political turmoil that saw the collapse of the USSR and the stabilization of the unipolar (solely one dominant country) world order, the race for world domination in the 21st Century is bound to be different and take place in a new realm. China has long been pursuing success in the economic field, and it is steadily coming to fruition. With China’s massive increase in financial and human capital, it begs the question of whether the country presents a genuine challenge to U.S. hegemony. While arms races still exist, the Thucydides trap — the idea that challenger will engage in warfare with the standing hegemon — is slowly fading; rather, it is paramount to examine how China and the U.S.’s economic policies, specifically on foreign aid and trade, will rewrite (or maintain) the balance of power in a modern world.

Since 1945, the U.S. has long believed in imposing neoliberal policies on other countries to spread the “American” way of living and governing. From the Marshall Plan that drastically reduced interstate barriers to trade in exchange for U.S. foreign aid, to International Monetary Fund (IMF) loans that forced developing countries to liberalize, the U.S. has a long history of adding stipulations to foreign aid investments. These policies have been nothing but controversial. Studies have found that the conditions of U.S. foreign aid make it impossible for developing countries to reach long-term economic goals such as reducing poverty and allowing local small businesses to prosper, and that the U.S.-led IMF was idle for the most part towards poorer nations during financial crises simply because they did not meet the liberalization goals set by the U.S.

Unsurprisingly, these policies have not fared well with alliance-building. Countries who are the U.S.’s “allies” on paper frequently go against the U.S. in international institutions such as the UN. America also has not succeeded in planting a positive image of itself in the minds of people in the developing world. A 2014 study found that a whopping 54% of the developing world population have unfavorable opinions towards the US, and that figure is predictably even higher now after the Trump Administration’s diplomatic disengagement with most developing nations and his harmful rhetoric that deemed them “s**thole countries”.

China’s approach to foreign aid, on the other hand, has been a breath of fresh air to the developing world. Dating back to 1961, when China provided thousands of tons of food aid to Albania even while Chinese citizens were starving at home themselves, the unconditional nature of China’s generous policies in comparison to their U.S. counterparts has instantly won the approval of governments and the hearts of ordinary people in developing nations. While the more novel Belt and Road Initiative includes punitive policies to sanction countries that do not pay loans back, China is essentially building infrastructure for dozens of countries in exchange for extracting raw materials. It is no surprise, then, that China’s presence and influence has been skyrocketing in Africa and Latin America in comparison to the U.S.

In creating a global image for itself, China has been able to use the aforementioned hostility toward America to its advantage. And while Chinese workers have had their fair share of xenophobia abroad, it is nowhere near the level of anti-American resentment in the world, especially during a time where populists and demagogues manipulate these emotions to gain power globally. A major factor that fueled Victor Orbán’s recent populist movement in Hungary was his anti-American rhetoric. Despite decades of using foreign aid to expand America’s sphere of influence, the conditions added to their loans have caused these efforts to have not been very successful. On the other hand, China’s much less stringent loan program is gaining momentum with President Xi’s regime that aims to restore the imperial glory of ancient China.

China’s success in expanding in influence through foreign aid is a sign of what might be coming in the global race to the top. Additionally, on the quest to find more allies, the two superpowers inevitably have to interact with each other. In the case of such an interaction, traditional realist international theory would defer to the Thucydides Trap, a term named after the famed Greek general. The Thucydides Trap theorizes that a military conflict is likely to ensue after an emerging power challenges an existing power (75% chance of war historically). For instance, when Sparta feared the rise of the Athenian city-state, it launched a war and left Athens and the rest of Greece in ruins. However, this concept may no longer hold true in 2022. Wars between major countries, even proxy wars, are scarce in the modern global landscape, while economic issues are at the crux of great power competition.

The trade war between the U.S. and China during the Trump administration is emblematic of this new trend. Trump treated the rise of China as a threat to the U.S.’s status in the world and waged economic warfare in response, but the tariffs and other stipulations applied by the Trump administration were met with fiery tactics. From cutting agricultural imports to imposing tariffs of their own, Beijing’s countermoves have produced results that have left the U.S. devastated.

Not only did the U.S. fail to fulfill its goal of moving manufacturing jobs back domestically, but the economic losses suffered by American farmers potentially cost Trump the 2020 election. The trade war inflicted much more severe economic losses on the U.S. compared to China, especially wreaking havoc on the stock market. The prolonged turbulence exacerbated an already stagnated economy, while the Chinese economy continued to grow. One can even argue that the conflict served as the fuse for a resurgence in extreme Chinese nationalism, such as Xi’s recent assumption of “Wolf warrior diplomacy.” Gaining the advantage in the U.S.-China trade war has emboldened Beijing to act aggressively abroad and pose challenges to U.S. supremacy, as seen in the case of Taiwan and its continuous usage of aggressive rhetoric.

Economic domination involves winning on all fronts. With the saturated strategic alignments of Europe and East Asia, the next crucial step towards hegemony is the ability to secure financial ties with developing nations. Thus, the stark differences in foreign aid policies of the two countries also play a critical role in the U.S.-China race for hegemony. With the U.S. clinging onto demanding globalization policies, it is rapidly losing its control over the developing world. Conversely, China’s lofty loans are increasing Beijing’s influence over those countries. Combined with its economic leverage over the U.S. in the trade war, China may become the global hegemon in the near future, despite political shortcomings.

With the development of advanced nuclear warheads and the possibility of robot soldiers, the high cost of mutually assured destruction means warfare between powerhouse nations is becoming less likely day by day. Leaders also have to take into account the increasing political costs of initiating war in the modern world, which is why the odds of physical clashes are extremely low. For these reasons, I coin the term the Trump Trap, as a replacement for the archaic theory of the Thucydides Trap. The Trump Trap argues that an economic, not military, conflict will follow as a rising power confronts the hegemon, and its gears are about to start turning with the non-violent clashes between China and the U.S.

There are limitations to the Trump Trap, as small-scale military operations could be involved in an economic war. Because Taiwan is the largest semiconductor exporting country in the world and it has a strong tech supply chain with the U.S., targeted strikes that aim to destroy the chip industry would be disastrous to the U.S. economy. What further nuances the theory is that any confrontation results in zero-sum (perhaps negative-sum) game between China and the US. An all-out economic conflict between the two countries may inflict heavy losses on both sides because of the interconnectedness of their economies. So just like the Thucydides Trap, the Trump Trap is not 100% bound to be triggered.

With the Trump trap in mind, it seems obvious that China has the potential to take over as the new global leader. In a world where soft power triumphs, the outlook for hegemony requires multi-dimensional economic policy. Not only is it important for a hegemon to build alliances through effective foreign aid, but it is also necessary for a country to succeed in commercial disputes against its rival.

For the U.S., this means that their time as world hegemon is dwindling. The glorious days of unipolar domination are approaching their end unless she can take a commanding lead in the still ongoing trade war against China and use investment to win over allies. But one fact is definitely reassuring. Since military might is no longer equated with absolute power, the consequences of the Trump Trap are much tamer than that of the Thucydides Trap. While the U.S. may lose some of its cultural influence around the world, Washington will certainly not be destroyed like Athens was thousands of years ago.

Nevertheless, what manifests for the rest of the world may not be ideal. One only needs to look to the early days of the Cold War to determine how chaotic the international community would become in a bipolar world. To avoid such a catastrophe, the U.S. needs to act now and radically alter its economic policies.

Leo Huang ‘26 studies in the College of Arts & Sciences. He can be reached at h.yuliu@wustl.edu.

Photo courtesy of Flickr under the Creative Commons