Former Treasury official warns why 'competing against China will be difficult' for the US
U.S. President Donald Trump has been parading his aggressive trade policies as an "economic miracle," but experts like Steve Rattner, a former U.S. Treasury Department official, believe he needs to rethink his stance to compete with a "Goliath" like China. Amid the U.S. battling a weak labor market and high costs, Rattner says China has made stunning progress in key sectors in his op-ed in the New York Times.
In his 2026 World Economic Forum speech at Davos, President Trump claimed the U.S. was the "hottest" economy, and it would outshine the rest of the world. Most recently, appearing in an interview with NBC News' Tom Llamas, he said the U.S. was "there now" and that he is "very proud of it." Despite the claims, the numbers on the ground paint a mixed picture of the economy, with low to middle-income families struggling in the country. Moreover, while the President claims he has used tariffs as "a tool" to bring trillions of dollars worth of investment, reports argue they have done more damage. Thus, similar concerns were raised by Rattner, currently a frequent economic analyst for MS Now, in his op-ed in the Times.
In his piece, Rattner recounted his recent trip to mainland China and laid out a number of ways the U.S. was falling behind its Asian rival. One of his big takeaways was that the tariffs were hurting the U.S. more instead of slowing down the Chinese economy. "For all of Mr. Trump’s tariff bluster, we are not winning this trade war," Rattner wrote. "The Asian Goliath powers on as the world’s largest exporter, its trade surplus having notched a record $1.2 trillion last year. That overall increase suggests that many Chinese goods are simply passing through middleman countries before reaching U.S. shores," he explained.
Rattner argues that the only way to keep up with Chinese growth is by fixing internal issues and "beat China at its own game," he suggested, adding that the need to do so should be acted upon with urgency, as Trump's chaotic policies have set America back. "While he [Trump] has tried to cut our spending on important government functions like basic research, China has made them national priorities,' Rattner noted. He added that apart from manufacturing, China is threatening America's preeminence in a number of key sectors, including Artificial Intelligence, automotive, and pharmaceutical drug development.
The former Treasury Department official warned that "competing against China will be difficult" for the U.S. under the best of circumstances, and for starters, the president needs to rethink the cuts he made to investments in science and other areas. Rattner cited the "CHIPS" and "Science Act," which was signed into law by former President Joe Biden, as an example of the type of policy that the current administration should be pushing.
"Clearly, we need to rethink our industrial policy — the way we can deploy our government resources to support strategically important industries, which is our version of state-directed capitalism," Rattner explains. However, he notes that, unfortunately, the administration has pushed incoherent policies that have worsened the situation. "Importantly, sound industrial policy does not mean taking stakes in companies or demanding royalties, as the Trump Administration has been doing. It means fixing the U.S. economy first, getting our own economic house in order — a challenge that also should motivate Mr. Trump to rethink a large range of his policies," he wrote.
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