The world is mesmerised — and unsettled — by US President Donald Trump’s tariffs.

With near-daily headlines about changing duties on almost everything, it’s easy to fixate on the drama of the moment. Markets tremble, and pundits rush to interpret whether Trump’s latest volley is tactical brilliance or economic madness.

But instead of getting swept away by the noise, we would do well to pause and consider the bigger picture.

Beneath the disruptive rhetoric and headline-grabbing narratives lies a deeper strategic realignment – one that centres not just on trade, but on the very future of the global order. At the heart of this contest is not just China, but America’s own future.

To some, Trump’s “America First” agenda may appear erratic or impulsive. But a closer look reveals the logic.

Since his first term, Trump has pushed to reverse decades of globalisation. He frames this as a fight to save the American economy from decline, calling for the reassuring of industry, revival of US industrial capacity and return of manufacturing jobs. Trump also repeatedly emphasises the urgency of large federal budget cuts to reduce the enormous national debt, and pushing back against de-dollarisation by other countries.

This combination has been referred to as the “Mar-a-Lago accord” – not an official document, but metaphorical shorthand for Trump’s worldview and those of his economic allies.

It’s often contrasted with the Bretton Woods consensus of the mid-20th century, which emphasised free trade and multilateral co-operation. In that light, the “Mar-a-Lago accord” signals a break from global integration in favour of strategic economic retrenchment.

In this context, Trump’s latest tariffs are scaffolding for a larger structure. He has made it clear that, this time tariffs are not a short-term negotiating ploy, but a new floor for economic realignment.

Historically, the US maintained low average tariffs, around 2% to 3%, to promote free trade. However, recent policy changes have led to substantial increases.​ As of April 2025, the average effective US tariff rate stands at approximately 22.5%, the highest since 1909.

This surge is primarily due to the implementation of a universal 10% baseline tariff on most imports, coupled with higher so-called “reciprocal” tariffs targeting specific countries.

While some allies and economists warn of damage to global supply chains and inflationary risks, Trump’s camp believes bold, fast action is needed to “Make America Great Again” (the MAGA narrative) to claw back lost advantages and stem the tide of de-dollarisation.

The status of the US dollar as the world’s reserve currency has long underwritten America’s power and prosperity. If more countries settle trade in yuan, euros, or local currencies — as BRICS countries increasingly do — the supremacy of the greenback will continue to erode. This would have profound consequences for US borrowing, financial influence, and strategic leverage. It cannot be allowed to happen.

The US embrace of dollar-backed stable coins and the development of a government-backed digital dollar are not just about financial innovation – they are part of a broader strategy to protect America’s global influence.

In a world where China’s digital yuan and BRICS countries are building alternatives to the dollar, these digital tools give the US a way to stay competitive. Just as tariffs are changing trade flows, digital dollars are expected to help the US fight back against de-dollarisation and maintain its role at the centre of global finance.

Meanwhile, China has not stood still. Long aware of rising US unease, Beijing has been preparing for strategic decoupling.

Since the launch of its “Made in China 2025” plan a decade ago, it has focused on upgrading its manufacturing base, mastering high-tech sectors and reducing dependency on Western technology. Its development principle of “ecological civilisation” also signals green growth is the chosen way forward. China now leads in many technologies, including electric vehicles, battery storage, renewable energy and drones.

Alongside this, China is investing heavily in education, science and innovation. From primary schools to top universities, artificial intelligence, semiconductor design, and biotech are seen as national priorities. Just recently, China announced that AI education would begin at the elementary level.

Beijing’s long game is clear: winning the future not just by competing in current industries, but by dominating the next wave of technological transformation.

What has changed is that US-China competition is no longer veiled by diplomatic niceties. The breakdown in relations is evident as open warfare. Beijing’s leaders have described this era as the “greatest transformation in a hundred years". The view from Washington, particularly under Trump, is that America has to act fast.

The divergence in leadership style makes the confrontation even more stark. Trump is mercurial and combative, drawing legitimacy from the ballot box, arm-twisting US allies, and mobilising his base with bravado.

Chinese President Xi Jinping presents a measured leadership style, drawing performance legitimacy from lifting hundreds of millions out of poverty and steering China’s rise as a global economic and technological force. His approach stands in stark contrast to Trump’s combative and unpredictable style. Yet, both leaders are focused on securing their countries’ futures.

While China emphasises a peaceful international environment as essential for the continued development of itself and the Global South, the US — more accustomed to shaping global affairs — has, at times, employed destabilising tactics to preserve its strategic edge.

There is urgency for the US: declining life expectancy, crumbling infrastructure, underperforming schools and unsustainable debt. These are not abstract concerns. US life expectancy is now lower than in China. American households carry crippling debt, while education rankings are sliding.

So, tariffs are deployed as a tool, and while they can be lifted at any time, in practice they function as a blunt instrument to rebalance trade, generate government revenue, pressure companies to reassure production, and pull countries away from China’s economic orbit.

Tariffs for different countries can be used to forge new trade alliances – or fracture existing ones. Could the US eventually ask allies to curtail trade with China, creating a bifurcated world economy? Possibly. The US wants to break the Belt and Road Initiative – China’s global infrastructure and investment strategy.

Trump’s goals have not gone unnoticed. On 6 April, Singapore’s prime minister issued a stark warning, calling the new wave of tariffs “arbitrary, protectionist, and dangerous". He urged his citizens to “brace yourselves”, declaring that a “seismic change in the global order” is now underway. His remarks reflect a growing international concern: that the US is no longer just adjusting trade policy, but actively reshaping the rules of the global economy.

China has ramped up its diplomatic efforts. Its foreign policy now revolves around the idea of a “community with a shared future” – a subtle rebuke to MAGA’s nationalistic logic. By offering a co-operative alternative to US-driven blocs, Beijing aims to appeal to smaller and medium-sized powers caught in the crossfire.

This is the deeper story behind the headlines. We are not just witnessing tariff hikes, but a titanic struggle over which model will shape the 21st century: US-style capitalism that champions freedom and profit maximisation, or China’s market socialism, where state planning, state-owned enterprises, and private business coexist alongside redistribution of wealth. Both systems have flaws, but for many in the Global South, the Chinese model stands out for its rapid development and visible gains.

As these two giants butt heads, the rest of the world feels the tremors. It’s tempting to focus on personalities or policies of the moment and besmirch China and socialism. But we all sense the tectonic plates grinding below. The era of strategic confrontation has begun.