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by Rod D. Martin
June 2, 2026
More than a year ago, both before and after Donald Trump announced his “Liberation Day” tariffs, I told you that China could not win a trade war with the United States. My reasoning was straightforward: China’s economy is far weaker than its official numbers pretend, its demographic collapse is leading it off a cliff, and its only way out — even in the short term — is exports, particularly to the U.S. market.
Not long after I started sounding that alarm, Treasury Secretary Scott Bessent gave a long-form interview explaining Trump’s tariff strategy. Buried inside it was something far more important.
China, he said, has the most imbalanced economy in modern history. It is trapped in a deflationary recession — perhaps depression — and trying to export its way out. Its own people do not trust the yuan. They want to get their money out. The Chinese Communist Party will not let them.
