Trumponomics Why China Is Gaining the Upper Hand in Trump’s Trade War with Arthur Kroeber
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Oct 22, 2025 
Arthur Kroeber, co-founder of Gavekal Dragonomics and author, dives into the intricacies of the US-China trade war. He reveals how recent events have tilted power dynamics in favor of Beijing, especially through their control of rare-earth exports. Kroeber discusses the concept of 'weaponized interdependence,' illustrating how both nations are leveraging their economic ties as tools of power. He also highlights the complexities multinational companies face, from rising compliance costs to strategic uncertainties, all amid a backdrop of mutual deterrence.
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Weaponized Interdependence Emerges
- The US expanded export controls, and China retaliated with rare earths export rules, showing both sides can weaponize economic interdependence.
- Arthur Kroeber argues this recent tit-for-tat reveals China now has real leverage against the US.
Entity List Expansion Triggered Retaliation
- Kroeber recounts the Commerce Department's rule expanding the entity list to include 50%‑owned subsidiaries.
- He notes this move likely added thousands of firms to the list and prompted Chinese warnings at Madrid talks.
Rare Earths As Strategic Leverage
- Henry Farrell and Abe Newman's concept of "weaponized interdependence" explains how networks become instruments of power.
- Kroeber highlights China now uses its rare earth chokehold to exert geopolitical pressure.
