“The rules-based system just hasn’t worked. China’s system is so opaque that you can’t see the subsidies. And when you’ve got China not interested in new rules and the US not interested in a referee, you’ve got two of the world’s biggest actors who aren’t on board.” — Soumaya Keynes

It would have been nice to get John Maynard Keynes on the show to get his critique of Trump’s trade war. But in the long run, we’re all dead — even old Maynard. So instead, we found his great-great-niece, Soumaya Keynes — Financial Times columnist and co-author of How to Win a Trade War: An Optimistic Guide to an Anxious Global Economy.

Having already appeared on Jon Stewart this week, Soumaya has a bit of Keynesian star quality about her. But she’s also a first-rate economist. Her thesis is that the old rules-based trading system that her great-great-uncle helped design after World War II is gone. And it ain’t coming back. China’s subsidies are so opaque that rules can’t be written to constrain them, let alone enforced. The US is no longer willing to submit to a referee. Without the two biggest players, no rules-based system is meaningful.

So — now what? Keynes says we must think like a trade warrior. Donald Trump should leverage the tools available — but use them strategically. Trump’s error in his second term was not being tough on China while being too tough on everyone else, especially allies like Canada and Mexico.

Soumaya Keynes’ most contemporary idea might be her most Keynesian one. John Maynard Keynes proposed penalties for countries running large trade surpluses as well as those running deficits — recognising that global imbalances are a two-sided problem. That idea didn’t make it into the 1944 Bretton Woods agreement. Eighty years later, in equally anxious economic times, his optimistic great-great-niece is reviving it.

Five Takeaways

•       Can Trade Wars Be Won? Yes, Sometimes: The conventional wisdom: no one wins a trade war. Keynes and Bown agree — in theory. In practice, countries in a weaker position cave. History has examples: France in the late nineteenth century told its trading partners they were renegotiating treaties, and the smaller partners complied. Trump’s tariffs in his first term produced concessions. The problem is not that trade wars can’t be won. It’s that the smaller power’s only defence — coordinating with other smaller powers — is extremely hard to sustain. There’s always an incentive to cut a deal first.

•       China Is the Doper on the Sports Field: Keynes’s sharpest analogy: the global trading system is like a sports game that needs rules to ensure a level playing field. China’s subsidies — cheap credit, corporate handouts, opaque support for state-linked companies — are the equivalent of performance-enhancing drugs. The problem is that unlike doping in sport, China’s subsidies are invisible. You can write a rule saying China won’t give these handouts. But you can’t verify compliance. And without enforcement, rules are meaningless. The WTO has not solved this. Nothing has solved this.

•       Trump Was Right About China, Wrong About Everything Else: Keynes is careful here. She credits Robert Lighthizer in Trump’s first term with identifying China as the real problem and building a focused strategy. In the second term, Trump put tariffs on everyone simultaneously — which dissipated leverage, alienated the coalition of allies needed to pressure Beijing, and mixed up the problem of China’s subsidies with grievances against Canada, Mexico, and the EU. If you were genuinely tough on China, you wouldn’t have put tariffs on everyone. You would have been more targeted.

•       The Rules-Based System Is Gone and Isn’t Coming Back: Why can’t we return to the system Keynes’s great-great-uncle helped build? Two reasons. China’s subsidies are too opaque to write enforceable rules against. And the US has lost confidence in any international referee — a long and complex story, but the result is that America won’t submit to neutral adjudication. Without the two biggest players, no rules-based system is meaningful. Yearning for the old approach is not an option. A new strategy is needed — and that’s what the book is about.

•       AI and the Next Trade War: Services: AI is central to the US-China conflict already — chip restrictions, military advantage, economic supremacy. But Keynes’s less-noticed observation: AI could fundamentally reshape international services trade. The UK, for example, is a massive services exporter — finance, legal, consulting, accounting. If AI eliminates demand for those services, the UK faces a new current account crisis, new trade tensions, a new wave of economic conflict. Nobody knows how this plays out. Which is why, she suggests, the tools in the book will remain relevant for longer than the current tariff cycle.

About the Guests

Soumaya Keynes is an economics columnist at the Financial Times and host of The Economics Show with Soumaya Keynes. Before joining the FT she spent eight years at The Economist. She co-founded the Trade Talks podcast with Chad Bown during Trump’s first term.

Chad P. Bown is the Reginald Jones Senior Fellow at the Peterson Institute for International Economics and former Chief Economist at the US State Department under President Biden.

Together they are the authors of How to Win a Trade War: An Optimistic Guide to an Anxious Global Economy (Simon & Schuster, May 26, 2026).

References:

•       How to Win a Trade War: An Optimistic Guide to an Anxious Global Economy by Soumaya Keynes and Chad P. Bown (Simon & Schuster, May 26, 2026).

•       Soumaya Keynes on The Daily Show with Jon Stewart, May 19, 2026 — referenced in the interview.

•       Episode 2892: Jason Pack on the Iran war — the companion episode on America’s strategic distractions from the China problem.

About Keen On America

Nobody asks more awkward questions than the Anglo-American writer and filmmaker Andrew Keen. In Keen On America, Andrew brings his pointed Transatlantic wit to making sense of the United States — hosting daily interviews about the history and future of this now venerable Republic. With nearly 2,900 episodes since the show launched on TechCrunch in 2010, Keen On America is the most prolific intellectual interview show in the history of podcasting.

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