Why Donald Trump can't bully China on trade

Beijing holds trillions of dollars in US debt and any trade disruption could lead to huge price rises in the budget stores on which many Americans rely

As US President Donald Trump proceeds to destabilise the postwar global economic order, much of the world is collectively holding its breath. Commentators search for words to describe his assault on conventional norms of leadership and tolerance in a modern liberal democracy. The mainstream media, faced with a president who might sometimes be badly uninformed and yet really believes what he is saying, hesitate to label conspicuously false statements as lies.

But some would argue that beneath the chaos and bluster, there is an economic rationale to the Trump administration's disorderly retreat from globalisation. According to this view, the US has been duped into enabling China's ascendency, and one day Americans will come to regret it. We economists tend to view abdication of US world leadership as a historic mistake.

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