Trump’s casino-style “playing with fire,” gambling with the future prosperity of businesses and consumers in both the US and China, is escalating. He was betting that if he raised the stakes—increasing the bet, as in poker—Xi Jinping’s China would fold, but instead, Xi matched and raised again. That was unexpected. So Trump thought, “Fine, let’s raise it again. That ought to force a fold.” But when he pushed the bet again, China upped the ante once more. China’s current stance is essentially, “Go ahead and raise it as much as you want; we’re in this to the end.” That was completely unexpected.

At this point, the odds are stacked against Trump. The reason lies in a fundamental difference: the US is a democracy, while China is an authoritarian state.

As the tariff war escalates, those forced to pay the price are businesses and consumers in both countries. Companies struggling to sell their products and consumers facing rising prices are both growing increasingly dissatisfied. The sentiment is: “Why should we be the ones footing the bill for Trump’s casino bets?”

Meanwhile, the US, being a democratic nation, will hold midterm elections next fall. If the current situation continues, American voters will likely turn against the administration. Fundamentally, the difference between the Republicans and Democrats has never been that great. And so, Trump stands to lose. On the other hand, Xi Jinping’s third term runs through 2027. And in China’s one-party system, no matter how much frustration builds among businesses and consumers, he can clamp down on it and still manage to get re-elected for a fourth term, or even stay in power beyond that.

Which is why, if the US–China retaliatory tariff war drags on, there’s a strong chance that Trump will be the first to fold. What was supposed to be a winning “deal” to please the American people may instead end in defeat, with the public stuck paying the price.

Facing mounting backlash, Trump will likely resort to desperate appeals, all the while calling out, “My good friend Xi Jinping!” Trump’s casino-style approach to dealmaking is bound to trigger a cascade of unintended consequences. The market already seems to be pricing in a loss on Trump’s casino-style strategy.

Frustrated by Trump’s abrasive negotiating style, nations around the world seem to be finding unexpected common ground. Trump may look like he’s scoring a major win on tariffs, but in reality he’s teetering on the edge of a major crisis. Will he manage to turn things around?

Hirotaka Shimizu
Chairman and CEO
Kamakura Shinsho, Ltd.

Image material：PIXTA