Exclusive Interview | Lee Jones: The Contemporary Cold War is the “Neoliberal Cold War,” with Deep Intertwining Between the US and China, Making Decoupling Difficult
The second Trump administration saw the president using tariffs as a tool to reorder global power. Debate over this phenomenon has been persistent and polarized: commentators either criticize Trump as delusional or interpret his actions as part of a grand strategic gambit. Professor Lee Jones of Queen Mary University of London argues that while there is some truth in both views, they miss the central dynamic at play—the breakdown of neoliberalism, to which all Western democracies are failing to offer a coherent response. Trump, in attempting to bolster American hegemony by emulating Reagan-era politics of the 1980s, has in fact accelerated its decay.
Lee Jones is Professor of Political Economy and International Relations in the School of Society and Environment, Queen Mary University of London, and a research associate at the Second Cold War Observatory. A leading expert on Southeast Asia and China, Prof. Jones’s research and teaching span politics, political economy, and international relations, with a strong thematic focus on sovereignty, intervention, and state transformation. His most recent project examines the emerging “New Cold War” between the United States and China. The Carter Center spoke with Professor Jones to explore the logic underpinning Trump’s tariff strategy, its implications for U.S.–China relations, and the shifting global order amid a new era of great-power competition.
Alice Liu: Professor Jones, over the summer you published an article titled Trump’s Tariff Gamble and the Decay of the Neoliberal Order. Can you introduce our readers to this piece?
Lee Jones: That piece in American Affairs is an attempt to make sense of how the Trump administration’s global trade war impacts both China and the entire world. Most observers either dismiss Trump’s officials as insane or frame their approach as some strategic gambit. Some even draw parallels to the Volcker shock and the Reagan-era economic policies. I tried to thread the needle between these two positions and argued that while the Trump administration is highly personalistic and idiosyncratic, a deeper logic still underpins its actions.
We see a significant change from the first Trump administration, when he struggled to staff the administration and had to depend on unreliable individuals. This time, loyalists and followers with whom he shares a common worldview have populated much of the state apparatus. To make sense of their tariff policies, I examined the outlook that guided their decisions. Then I explained why their worldview is narrow and limited and why they are very unlikely to be able to achieve their objectives. I view the Trump administration as a symptom of the decay of the neoliberal order rather than a decisive resolution to the problems generated by it.
AL: One of your key arguments is that the most important political dynamic at work today is the decay of the neoliberal order. How is that so, and how does understanding that erosion help us understand the current moment in the US and worldwide?
LJ: I argue that the neoliberal order is decaying both globally and domestically. Neoliberalism in the advanced capitalist democracies, especially those underpinned by American hegemony, is in rapid decay. This is evident in the hollowing out of democracy and declining civic participation in public decision-making from the 1980s onwards.
Since the global financial crisis, there has been mounting discontent with the highly technocratic rule that reduced meaningful democratic participation and instituted economic policies that have often inflicted significant harm on ordinary people. That discontent found expression principally in a populist backlash that emerged from the void opened between elites and the public. This backlash appears across the political spectrum in America, though the left has proved less willing to consider violent disruption to the neoliberal order.
Internationally, the whole system of neoliberalism was promoted and protected principally through American leadership, beginning with Reagan and then accelerating under Clinton in the 1990s. The agenda of promoting free trade, open markets, intellectual property, human rights, and other liberal political norms was consistently backed by American economic and military power. That system is now crumbling as the internal contradictions of neoliberalism within the U.S. have removed the American linchpin.
The erosion of neoliberal elites’ domestic legitimacy has allowed a right-wing populist takeover of the Republican Party in the form of Donald Trump, signaling a shift away from the political structures of the 20th century. The previous era of mass politics, broadly divided along class lines—between a left wing representing the working class and a right wing representing capital and the property-owning middle—has broken down. Instead, today’s contest pits the embattled guardians of the neoliberal order on the center-left or -right, who prefer a technocratic and liberal managerialist approach to politics, against populist challengers from the sidelines.
Traditional working-class constituencies, long abandoned by their traditional representatives on the political left, are turning to the populist right, who at least seem to offer some kind of response to their grievances. A new political divide is emerging, partially around class but also around generations and education. That is happening in the United States and its leading allies like the UK—which fundamentally drove Brexit—and across the European Union.
What we must understand here is that Trump is not some weird aberration that was going to go away in four years. Even if he steps down, he is likely to be succeeded by somebody relatively similar. And with the ultimate scrambling of neoliberal politics, there is no ability to put the genie back in the bottle. I see Trump as symbolizing the advanced decay of the neoliberal order in the United States and, of course, globally.
AL: You argue that Trump’s style of nationalism denies internal problems and externalizes blame. Why is this denial so central to his movement’s identity?
LJ: I argue that decay, delusion, and denial shape much of contemporary politics. As the neoliberal order decays, denial and delusion drive political elites to avoid a full reckoning with their own responsibility.
In the era of neoliberal globalization, Western state power was devoted to dismantling the post-war Keynesian and Fordist settlement, instituting neoliberalism at home, and then promoting it very aggressively abroad. This is the world that they created; they really don’t have anybody else to blame for the fact that it has gone sour. But there’s always the desire to avoid taking responsibility for contemporary disorder.
Western neoliberals often blame the populists, who are promoting division, or they blame foreign powers. Russia was blamed for Trump winning the 2016 election without any foundation whatsoever. It was also blamed in the UK for Brexit. These are attempts to deflect responsibility by the very people who created the system that is now falling apart, with the implication that everything was fine until these malign forces came along, while the eradication of those forces promises a solution. This is totally inaccurate, as those malign forces are often simply a product of the world created by neoliberalism. Contemporary populism is a reaction to neoliberalism, and Russia, insofar as it poses a threat to the West, is obviously reacting to the expansion of NATO by liberal states.
However, right-wing populists—while benefiting from and accelerating neoliberal decay—also have their own forms of delusion and denial. Trump embraces tariffs to reconfigure globalization so that it works better for certain forces in the United States. But it’s not clear at all that he has the interest, ideas, commitment, or resources to fundamentally reconfigure the American political economy. It’s therefore very unlikely that the tariffs are going to be the magic wand in revitalizing the American industrial base, which would entail a great deal more investment and state intervention.
This makes it tempting for Trump to blame China, or other foreigners, for America’s woes. Despite America being the most powerful state on the planet since at least 1945, having created the structures of the post-war liberal economic order in the West and then globalizing those structures after the fall of the Berlin Wall, the Trump administration tends to externalize responsibility for the sorry state of American society. They blame wicked foreign actors for tricking, deceiving, or ripping off the United States, rather than thinking about why those structures were created in the first place and for and by whom.
The creation of the post-1945 order reflected a mix of post-war geopolitical interests—staving off communism—which allowed countries in Europe and East Asia to recover and become prosperous under the American security umbrella but ultimately benefited the United States and allowed it to win the Cold War. And it was the interests of U.S. capital that were allowed to dictate post–Cold War foreign economic policy, at the expense of many ordinary working-class Americans. Right-wing populists, not wanting to engage with these realities, seek external scapegoats to blame and rally the nation behind the flag.
AL: You wrote that “the Trumpists are Reaganites, unwilling and unable to take responsibility for a world created by Reaganism.” What continuity do you see between the 1980s Reaganomics and today’s Trumponomics?
LJ: There’s a huge overlap. Fundamentally, in the 1980s Reagan was trying to reverse a sustained period of relative decline in American economic primacy. Post-war American aid to Western Europe and Japan had allowed those nations to rebuild their economies while at the same time causing a relative decline in American competitiveness. This caused a great deal of consternation in Washington policy circles. A book titled The Coming War with Japan argued that because Japan was rising and it was out-competing various American industries in things like semiconductors and automobiles, there was an impending U.S.–Japan clash.
In response, Reagan embarked on a very aggressive international trade policy, which involved pressuring American military allies to change the relative valuation of their currencies against the dollar, various trade restrictions, and an aggressive military-industrial policy at home to try to revitalize key sectors, notably semiconductors, and boost American export competitiveness.
Trumpists today are quite explicit that they take inspiration from Reagan in trying to reboot globalization to reassert American primacy by changing the terms of trade and forcing various structures. There is a fairly coherent worldview behind what Trump is doing, a wish to reconfigure security and economic relationships to “stop America from getting ripped off”; that’s why it’s ridiculous to just dismiss him as mad or insane.
But the huge difference from the 1980s is that Reagan had a coherent alternative model in mind. Looking at how the Bretton Woods system was falling apart, they tore up that Fordist and Keynesian model and instituted a new one based on neoliberal precepts. This time, Trump and his wider circle have only a partial sense of what has gone wrong and can’t offer an alternative model. They can’t rip up neoliberalism and shift back to some laissez-faire order; they’re already in that laissez-faire order. What they’re doing instead is engaging in a highly chaotic economic experiment that attacks parts of the system while reinforcing others. This is why I analyze Trump’s attacks on key aspects of the neoliberal order as both a symptom and an accelerant of its decay.
AL: If Trump’s economic policies only serve to deepen decay, what would genuine renewal require? Do you see an alternative path that leads towards a more stable or equitable international order?
LJ: I do not. At the moment, I’m very pessimistic. I think we’re in a period of very sustained decay because the architects and the followers of neoliberalism do not really understand what is happening. Policymakers tend to respond to the contradictions within neoliberalism as the result of external or internal malign forces. They attempt to either deny the legitimacy of these challenges or give simplistic explanations of what’s going on, such as attributing it to a cultural backlash or racism.
The failure to understand what is happening means that there’s not much capacity to develop an alternative to it. Bidenomics was about as close as you could get to an alternative model. Through its industrial policy restrictions, Bidenomics alienated traditional trading allies whilst trying to shore up American primacy. It was also a heavily constrained experiment because the neoliberals in Congress, including on the Democratic side, hollowed out much of what was genuinely novel and transformative about what Biden’s people were trying to push.
There was early talk about a “new supply-side economics” trying to raise living standards and provide education, social care, and healthcare as part of having a healthy, dynamic economy. All of that basically got whittled away, only leaving some money for infrastructure and technology that was closely related to national security. Hence the focus on high tech, on the CHIPS Act, and on semiconductors.
Therefore, very few people had seen very much benefit from Bidenomics by the time of the last election. And the Democrats played their hand very badly by dismissing talk of inflation as a right-wing talking point and saying, “Well, we’ve done all this great stuff for everybody,” but most people were simply not feeling the benefits. Consequently, the state of the economy played to Trump’s favor, and Trump has subsequently cut back a lot of the progressive or alternative elements whilst continuing to dabble in a very haphazard and non-strategic way in industrial policy.
If that’s the outcome in the United States, a country with enormous fiscal capacity, it’ll be much more difficult for other advanced capitalist states to come up with any meaningful alternative. I’m speaking from London, where the current Labour government, having talked before the election about industrial policy and mobilizing investment to address infrastructure, a diluted version of Bidenomics, ended up with a homeopathic version, with no real funding attached to it at all. We’re mired in the same rut.
Throughout Western Europe I see only continued political drift with no alternative project in the offing. Neoliberal austerity is being combined with militarism and higher defense spending, which won’t revitalize the economy or win back popular consent. We’re likely to see only continued chipping away at neoliberalism and various sorts of mutations within it but no decisive break from it.
China isn’t in the position of offering a systematic alternative to neoliberalism either. It has risen within a neoliberal order, and it still very much benefits from a relatively open trading system. China also does not have an exportable ideological or political model, even if parts of the West are interested in imitating elements of its state capitalism.
AL: China benefits from the liberal order for sure, but does it also benefit from the decay of it?
LJ: At this stage, overall, I would say no. I think the Chinese leadership is looking at the United States with a great deal of concern. The decay of the neoliberal order is expressed in the West, in part, through alarmism about China’s rise. And this is not baseless: it’s very clear that the accumulation of vast export surpluses in China equates to the existence of vast trade deficits in the West, which is clearly connected with the shifting of industrial production away from Western economies to China. This is principally the result of Western policy decisions, but obviously Chinese policy has also played a role.
China has—just as the United States did when it was just setting out—used aggressive industrial policy and trade restrictions to climb the industrial ladder quickly. And that is now posing a direct threat to the competitiveness and sustainability of Western economies. That is a contradiction within neoliberalism itself, and that has caused a great deal of concern, not just in the United States, but also in Europe. And that’s also put a target on China’s back.
The anti-neoliberal backlash in Western states is populist, nationalist, and increasingly militaristic—that’s dangerous from the Chinese perspective. The Chinese leadership’s view for a long time has been that eventually the United States will turn on China and will try to throttle it as a competitor because America cannot stand any challenge to its primacy. They took what happened to Japan in the 1980s as proof of that. The Chinese leaders try to keep open the window of opportunity for as long a time as possible where the Chinese economy can grow and China can strengthen itself militarily to be able to withstand the inevitable American attack.
That mentality was borne out, in some sense, by the election of President Trump and the inauguration of a much more hostile policy by the United States towards China. All great powers suffer from myopia, being unable to see the way in which they may be responsible for problems. The problem is always created by somebody else. The Chinese themselves, by engaging in aggressive behavior in the South China Sea, the crushing of civil liberties in Hong Kong, and the repression of human rights in Xinjiang, have alienated many foreign governments. But from their perspective, they just externalize that and blame it on Western government propaganda.
The United States has indeed become much more active in recent years in trying to rally other states against China, to get them to choose sides, and to get them to impose various trade and security restrictions against China. The Chinese rightly see that as dangerous for China’s ongoing development.
So, on one level, the crisis in and self-implosion of American hegemony obviously creates the possibility for a more multipolar order, where the United States is less able to just impose its will on everybody else. To that extent, China and Russia welcome relative American decline. But they can also see that a declining American hegemon is a dangerous force in the world that perhaps creates a lot more danger than opportunity in the short run.
In a sense, the American turn to an aggressive posture towards China has come too soon; the Chinese are not yet ready to risk open confrontation with the United States. The Chinese policy establishment sees itself as cautiously managing an extremely dangerous declining hegemony. What we clearly see is that the Chinese are neither willing nor able to step up and provide the global leadership that the United States has provided over recent decades.
AL: Do you think that China eventually will step up to this role of a global leader, as many have predicted?
LJ: It’s not clear to me that the Chinese are that interested in doing so. This gets to very fundamental and contentious questions about what China wants and what drives great power leadership and bids for hegemony. The way that many international relations scholars tend to think about hegemony and the rise and fall of great powers is that all great powers always want to dominate the world ultimately. I’m not sure that’s entirely true. I don’t think of states as behaving in uniform ways. Not every state is the same in its rise and fall.
There are clearly very specific dynamics in the rise and indeed fall of recent world hegemons. British hegemony in the 19th century was fueled by the Industrial Revolution and a liberal ideology of free trade and racist ideas of civilizational superiority. U.S. hegemony reflects American exceptionalism, the idea of the United States as a “city on the hill,” providing a beacon and a model for the rest of the world, which is also fueled by evangelical Christianity.
China is quite different. In the Cold War, they certainly promoted a revolutionary ideology and provided a considerable amount of assistance to communist and socialist forces in the Third World, wanting to see themselves at the head of a Third World revolutionary force. That was a revolutionary regime that no longer exists; those days are long gone. China is now a fundamentally capitalist state, one that is rather conservative in its orientation. It focuses on the maintenance of international structures to support its ongoing domestic stability, regime security, and economic development. China exhibits willingness to tolerate a great deal of external diversity in the world in order to pursue its domestic objectives.
I would argue that China doesn’t have a particular ideological preference; it does business with liberal states and authoritarian states alike. Although it is willing to work on demand with authoritarian regimes to advise them about how to do development and how to promote political and social stability, say, there is not a clear “China model” that China is trying to push out and promote. At the moment, it adopts a kind of live-and-let-live approach, which is obviously a critique of American exceptionalism and liberal ideology, which argues that nations shouldn’t be subject to external criticism or pressure based on their own domestic choices.
The Chinese want to make the world safe for their own autocracy, but that doesn’t mean that they’re promoting autocracy. Whereas the United States, to “make the world safe for democracy,” took the view that other states should be democratic, and we should confront non-democratic states and contain communism, and then, after the Cold War, expand democracy through the use of sanctions, the use of military force, et cetera. China’s proposals for global order are largely centered around the United Nations system, emphasizing cooperation among states and non-interference in states’ internal affairs.
AL: Many policy commentators describe the current US-China rivalry as a second Cold War, and I’m curious as to what you think about it. Do you find this an accurate characterization, or is it missing parts of the reality?
LJ: This is also a hugely contested area. There are obviously massive differences between the first Cold War between the United States and the Soviet Union and the so-called second or new Cold War between the United States and China.
First, there is no clear ideological division today. The 20th-century Cold War was not simply a geopolitical competition; it was a struggle between two distinctive approaches to ordering human societies, politics, and economics. That battle over political principles is what gave the Cold War its extremely tense, deeply bitter, hostile, and structural characteristic.
The postwar decades saw a domestic struggle between left- and right-wing politics, grounded in distinctive social blocs, which mapped onto that geopolitical contest. Today, there’s admittedly a distinction between democracies and autocracies, which the Biden administration emphasized. But unlike the revolutionary struggles for socialism and communism that prevailed through the Cold War, now there are very few countries that have revolutionary struggles for democracy. So that’s one significant difference.
The second big difference is that the new cold war is a struggle within capitalism. China has risen within the neoliberal order. It has been a principal beneficiary of neoliberal policies pursued since the 1980s. Its rise is a contradiction within neoliberalism. Binary distinctions between the so-called Chinese “state capitalism system” and American “capitalist system” are increasingly blurred as the Western side moves to embrace non-neoliberal features.
Despite those differences, I think it’s fair to call it a Cold War in the sense that it is an increasingly structural conflict characterized by deep hostility and competition across many different domains, which nonetheless does not boil over into direct war. It is a cold war—not the Cold War in its classic sense, but a lowercase “c” and lowercase “w.” If we think of “cold war” as a general term—structural hostility manifesting across all conceivable spheres of human activity but stopping short of direct military conflict—then we can say that there is a cold war in progress.
Many of the people argue against using the term “cold war” because they don’t want to see this confrontation taking place, which is a noble goal. But in my view, it is too late: it is already taking place. It seems deeply entrenched. I’m very skeptical that President Trump can pull off some miraculous trade deal that will settle all the various grievances that the United States has with China, because to satisfy American grievances, the Chinese would basically have to capitulate and abandon many of their developmental goals. I just don’t see that that’s going to happen.
All that said, I emphasize that today’s cold war is a neoliberal cold war, for three reasons. Firstly, this conflict has arisen from a contradiction within neoliberalism itself, i.e., the relative decline of the United States and the rise of China. Secondly, the antagonists in this new Cold War are states that have themselves been transformed by neoliberalism, resulting in the significant hollowing out of state capacities needed to compete internationally. Thirdly, it is being played out within a global economy transformed by neoliberalism.
In the first Cold War, there were some financial and trade linkages between the two blocks, but they were minimal. This time around, the interpenetration between the two sides is immense, and neither side seems willing to blow up those linkages completely. For all the talk about decoupling or even de-risking, the West and China remain deeply mutually imbricated economies.
The rest of the world has also built up all these ties under neoliberal globalization. Not only are they not interested in participating in a cold war between “democracies and autocracies”– because that doesn’t connect in any meaningful way to their domestic politics– nor are they interested in choosing sides, having built up all kinds of linkages between the two sides during the era of neoliberal globalization, when this was not considered geopolitically significant.
So, these countries have become what I and colleagues call “polyaligned”. They have multiple different alignments. They may rely on the United States for financing, for technology, for investment, and perhaps for military imports. They may rely on China for trade, exports, or domestic security cooperation. With respect to security, different sectors may be networked with different external parties.
To unravel those complex and diverse ties, to decisively choose sides, to readopt a bloc mentality, and to seal off the blocs would involve enormous and wrenching social, economic, and political dislocation that not even the key protagonists—the United States and China—are willing to enact, still less the rest of the world, which is polyaligned and wishes to remain polyaligned.
But nonetheless, the hostility persists. There is a new cold war, but it is playing out in a world transformed by globalization. That’s what we must try to understand—and what my current research is all about. And it’s very difficult because you can’t just reach back into the past for templates and historic analogies and pretend that past conflicts are going to play out in the same way.
