How trade wars become real wars

“For the past 40 years, the world’s two largest economies have both embraced globalisation based on understandings about how the other would behave,” says Gideon Rachman. The Chinese assumed that the US would continue supporting free trade; the Americans believed that Chinese economic liberalisation would eventually lead to political liberalisation. Both those assumptions have now been shattered – raising the risk that any future trade war could one day “slide into a real war”. Until now, China’s geopolitical ambitions have been restrained by the need to keep the West’s markets open. But if America’s protectionism escalates – as seems likely – that calculation will change. No longer willing to live within “a Us-designed and dominated world order”, Xi Jinping’s China is already promoting its “new authoritarianism” as an alternative model to Western democracy. The combination of a protectionist America and an assertive China is “potentially explosive” – particularly when both are led by “nationalists who frequently stoke feelings of wounded national pride”.