Donald Trump’s trade war with China was always more about bravado than strategy. It began with grandstanding and promises of “easy wins” but has ended, predictably, in retreat and humiliation. The world saw it, China seized the narrative, and American allies were left bruised, skeptical, and economically exposed.

The phrase “chickened out” might sound juvenile, but it’s the phrase that went viral across Chinese social media when Trump quietly backpedalled on his tariff threats. Even the Wall Street Journal, in its more restrained tone, admitted that “China called Mr. Trump’s bluff and seems to have won this round.” That admission sums up what many economists and trade analysts have long suspected: Trump was never playing a coherent game—he was winging it, and he lost.

What Trump Did Wrong

Trump’s trade war was rooted in a fundamental misunderstanding of how tariffs work. At every rally, he claimed that China would pay for the tariffs. In reality, tariffs are taxes on imports, and those taxes are paid by American importers, passed down to U.S. consumers and businesses. The American people—not China—footed the bill. Prices rose. Supply chains fractured. Farmers, small businesses, and consumers suffered.

To make matters worse, Trump weaponized tariffs not just against China, but against allies: Canada, Mexico, the European Union, Japan, and South Korea were all targets. The U.S. began looking like a hostile, unreliable trading partner—unwilling to honor past agreements and quick to punish without notice.

And the promised “big, beautiful” trade deal with China? It never materialized. China didn’t concede. Instead, it responded with precise retaliatory measures that hurt key U.S. industries and swung global opinion against Washington. Beijing emerged as the calmer, more rational actor. Trump, on the other hand, looked erratic—at times threatening, then suddenly conciliatory, even begging President Xi Jinping to engage. When asked if he’d hold China accountable for COVID-19 in trade talks, he backed off with a whimper.

Even Wall Street had had enough. The markets cheered not when Trump talked tough, but when he backed down. Investors understood what he refused to admit: tariffs cripple economic growth, damage global confidence, and undermine U.S. credibility.

The Fallout: Damaged Trust and Shifting Alliances

The fallout from Trump’s trade war extends beyond the economic numbers. It dealt a major blow to America’s global reputation. Longtime allies began questioning the reliability of the U.S. as a trading partner. Japan pursued its own deals with the EU. Canada and Mexico leaned into diversification. The EU deepened trade with China. ASEAN countries began aligning more closely with Beijing’s economic sphere.

Even worse, Trump’s erratic trade tactics gave China an unexpected diplomatic gift. As Washington burned bridges, Beijing built new ones—positioning itself as a more stable, rules-based partner in a rapidly changing global economy. The U.S. saw its influence wane across the Indo-Pacific, while China advanced initiatives like the Regional Comprehensive Economic Partnership (RCEP), excluding the U.S. entirely.

A Path to Recovery and Restoring Trust

The United States can still recover, but it must first acknowledge the damage—not just to the economy, but to relationships. The path forward requires humility, clarity, and a return to multilateral cooperation.