A leading US economist has likened Donald Trump’s tariff battle with China to the Vietnam war, arguing that both sides will be caught in a quagmire and unable to find a face-saving exit.

Adam Posen, the head of the Peterson Institute in Washington and a former Bank of England policymaker, spoke to the Guardian after penning an article for the US magazine Foreign Affairs. He said Trump’s tactics had “echoes of presidents Johnson and Nixon in the Vietnam war, unable to believe that they wouldn’t win if they only upped the attacks, and unwilling to negotiate a real peace”.

Posen said Trump and the US treasury secretary, Scott Bessent, who defended high tariffs on China on Wednesday, were “profoundly mistaken”, accusing them of boasting about the level of self-harm the US was willing to inflict on itself and how this would secure victory against China.

Many economists have accused White House advisers of misunderstanding the mechanics of international trade and how industries manufacture across borders, sometimes to benefit from cheaper labour, but also to access skills and technologies unavailable in their home country.

Rollercoaster financial markets, which have struggled all week to put a price on the tariff war, were spooked on Friday after China increased its tariffs on US goods from 84% to 125% and the US returned fire, saying it would push the total to 145%.

China has become the main battleground after Trump agreed a 90-day moratorium on the punitive tariffs he aimed at most other countries, leaving a 10% import charge in place.

Source: Theguardian