This is a summary of Prof. Jeffrey D. Sachs’ interview in the South China Morning Post from August 4, 2025—evaluating how US President Trump is contributing to the development of the global system where the hegemony of his country—together with Western states—will be terminated.

The tariff truce between China and the United States is set to end in August. What do you forecast will happen after that? And what will happen to trade relations1 between China and the US for the rest of US President Donald Trump’s2 second term?

The United States learned that it can’t impose its will on China. The rare earth threat3 by itself was enough to cause the US to reconsider. So, almost immediately after putting on the high tariffs, the US backed down. And both sides know that each has some chokeholds on the other. For that reason, we might expect the two sides to maintain certain limits on the trade frictions in the years ahead. There will be, therefore, some kind of agreement, but it won’t stick in the details, and frictions will continue to wax and wane, with neither side definitively imposing its will on the other. The basic reason is that both sides have a mutual gain from continued trade. I’m hopeful that a measure of rationality will therefore prevail.

The biggest challenge, of course, is the behavior of the US. The US started this trade war. This is not two sides fighting each other, but rather the US fighting China. We should remember that. The US needs to show some prudence at this point. I do suspect that there is a chastened view among many senior US officials. Trump himself is unpredictable. He has a very short attention span. Agreements with Trump don’t stick. So, I don’t foresee a quiet period, but I do foresee some limits to the competition because each side can do damage to the other, and both sides have a strong reason to achieve some cooperation.

You have mentioned in other interviews that Trump lacked a coherent strategy in foreign policy, including his handling of China. Why do you think this? And what do you see ahead for China-US relations?

The most fundamental trend in the world economy is the rapid rise of the non-Western economies, led by China and including Russia, India, Southeast Asia, and, in future decades, Africa. The US is flailing about trying to maintain its dominance in a world in which the emerging economies are rising rapidly. The US will not be able to prevent the emergence of multipolarity, but it will try. Trump will try one thing or another, but without success or coherence. Multipolarity has already arrived.

The broad pattern of economic convergence—in which the emerging economies narrow or close the income gap with the high-income countries of the West—means that Western hegemony is over. This is leading to deep frustration, not only in the US political class but also in Europe as well.

China vastly outproduces the United States in advanced industrial goods, such as EVs, solar power, wind power, advanced nuclear power, batteries, low-cost 5G, and many other key technologies. China incorporates AI into advanced manufacturing processes more than the US.

Many European leaders feel that if they stick with the US against China and Russia, then maybe the Western hegemony will continue. This is delusional in my view but nonetheless creates a lot of noise, friction, and risks of conflict. None of it is a coherent strategy, however.

The US has no strategy to stay ahead of China. In fact, the US can’t succeed in that. We hear a lot of US saber-rattling against China, Russia, and the BRICS countries. This is all dangerous. I think the heated rhetoric by itself can become a self-fulfilling prophecy of war. There are a lot of ignorant people in the US political leadership, and I worry very much about their naivety and delusions.

This, in my view, is essentially the origin of the “trade war.” The US decided during 2010-2015 that China is now a threat to US primacy. The US has tried a lot of things to block China’s continued rise, including a military buildup in East Asia; export restrictions on hi-tech goods, especially advanced chips; economic sanctions on key Chinese companies; investment restrictions by US companies and ownership restrictions on Chinese companies in the US; high tariffs against China’s exports; and others. But none of this stops China’s rise. China’s development results from hard work, ingenuity, high rates of saving, high rates of investment, very effective long-term planning, and a very skilled, very entrepreneurial generation of business leaders, especially young business leaders. Those fundamental strengths continue despite America’s anti-China policies.

Trump’s policies are accelerating the move of top scientists to China. My overall view is that Trump is creating a lot of noise and some real dangers, but with no real strategy and no likelihood of success in holding back China’s rise. That’s a good thing. The rest of the world benefits from China’s economic success, including the US.

In your last Open Questions interview4, you talked about “the deep state,” a complex vested interest group in industry, the military, and other spheres. Does the deep state want military conflict with China? And do foreign governments—such as China and Russia—believe in the existence of a deep state, which many dismiss as a conspiracy theory?

The deep state means the permanent security system of the United States and its partners in Europe and in East Asia, including Japan, Korea, and other places where the US has military bases and other security institutions. It includes the military, the CIA, the military contractors, and the politicians who serve the military-industrial complex.

Does such a deep state exist? Yes. The US has around 750 overseas military bases, and many of them are in East Asia. The US has many major military contractors with hundreds of billions of dollars of annual business with the US government. The US fights overt and covert wars pretty much non-stop, some of which are proxy wars (in which the US arms and funds Ukraine to fight Russia), and sometimes open conflicts with heavy US involvement, as in Iraq and Afghanistan. The US has the extensive global networks of the CIA and other intelligence and covert institutions. All of this constitutes the deep state. Presidents come and go, but the underlying foreign policy is consistent and set largely out of view of the public and without any reference to public opinion.

When Obama replaced [US president George] Bush Jr, and Trump replaced Obama, and Biden replaced Trump, and Trump replaced Biden, on the PR level there was alleged to be change, but in fact very little policy change occurred. For example, how much foreign policy change was there when Obama succeeded Bush Jr.? Very little. Obama launched many wars, just as Bush had done. Obama’s team actively participated in the coup in Ukraine in 2014 that set the path for the Ukraine war. Obama went to war against Libya. Obama gave the CIA the order to overthrow the Syrian government. All of this was a continuation of the policies of the Bush period.

Trump continued most of the same policies. Trump continued to build up the Ukraine military. The Trump administration dismissed the Minsk 2 agreement that could have prevented the escalation of the Ukraine war. There was not any major change between Obama and Trump.

When Biden came in, their claim again was that there would be a new foreign policy, but it didn’t happen. What did Biden do with China? He continued Trump’s tariffs. He continued Trump’s hardline rhetoric. Biden absurdly divided the world between the so-called democracies and autocracies, which was an incredibly naive approach, as I said from the beginning.

Biden escalated the Ukraine war. He rejected all attempts at peace negotiations, including the Istanbul process that could have ended the Ukraine war in 2022. When it came to the Middle East, Biden was complicit in Israel’s ongoing genocide. So, Biden did very little differently from Bush Jr., Obama, and Trump before him.

Now, Trump has returned. What’s the real difference? Trump is different in style, in his unpredictability, nastiness, self-dealing, and endless flip-flops. Yet, in terms of basic foreign policy, Trump is not very different from his predecessors.

This is the sense in which "deep state" means an ongoing consistency of the US security institutions that run American foreign policy. American foreign policy is not determined by public opinion, or Congress, or even the president in large part. Look instead to the CIA, the Pentagon, and the other parts of the deep state.

The deep state also determines the politics of US vassal states. Many observers consider Japan to be a US-occupied country, with Japan’s foreign policy basically subservient to the US. One can say the same about many other countries. Where the US has military bases, the host countries tend to act like occupied countries, bending their own foreign policy to that of the US.

The US deep state is profoundly arrogant, thinking that it can have its way around the world. The US deep state thinks that it can dominate not only US allies, which is typically true, but also China, Russia, Iran, Brazil, and others. When US arrogance becomes too strong, we face the danger of disaster. That’s what happened in Ukraine. The US thought that it could push Russia around to its will. It could not. The attempt to assert US power in Ukraine led to war.

US arrogance deeply worries me. Trump certainly is not a strategist. There’s no long-term plan. The US is playing poker, but not very well or wisely. It often bluffs. The whole approach can lead to war.

Notes

1 South China Morning Post. (n.d.). US-China trade war. South China Morning Post.
2 South China Morning Post. (n.d.). Donald Trump. South China Morning Post.
3 Xu, X. (2025, July 9). China’s rare earth dominance to continue as US investment lags: Analysts. South China Morning Post.
4 Ma, J. (2024, July 8). Open Questions | Why US moves have failed to ‘contain’ China and instead ‘bring us close to war’. South China Morning Post.