Donald Trump and Xi Jinping being friends could actually turn out bad for the global economy

Donald Trump calling Xi Jinping “my friend” again might seem like old news, but their growing bromance could actually slam the global economy harder than a wrecking ball.

Trump, stepping back into the Oval on January 20, has all intentions of smacking China with tariffs and potentially starting a trade war. Now his chatter about mutual respect and “two-way streets” has analysts bracing for chaos. The president tends to do that from time to time.

And China isn’t exactly sitting pretty right now. The country is dealing with sluggish growth, deflation, a real estate meltdown, and debt that’s piling up faster than TikTok trends.

Trump’s past approach to Beijing wasn’t exactly gentle, and with his new team full of “China hawks,” it’s clear he isn’t coming back to play nice. Xi might smile through gritted teeth at the “friend” label, but this uneasy friendship has disaster written all over it. And don’t even get us started on how Russia’s president Vladimir Putin, who is Xi’s actual best friend, fits into all this.

China’s economy is hanging by a thread

Let’s talk numbers because they don’t lie. China’s domestic demand is a disaster. Consumers aren’t spending, growth is crawling, and confidence is nowhere to be found. On top of that, the real estate sector—once a crown jewel—is in freefall.

Local governments are drowning in debt, and there’s no clear rescue plan in sight. To make things worse, deflation is creeping in. Prices are dropping, which might sound great, but it’s really just another red flag signaling a stalled economy.

And this is where Trump comes in like a bull in a china shop. According to Bloomberg Economics, if tariffs triple by the end of 2026—as many expect under Trump—China could lose 83% of its sales to the U.S.

On January 7, the U.S. president told a conservative talk show host that he and Xi had already started talking through their representatives. Trump called Xi “strong and powerful” but made it clear this “friendship” isn’t a one-way street.

He’s still accusing China of ripping off the U.S. economically and has no plans to let that slide. China’s Foreign Ministry gave a diplomatic response, saying it values “stable and healthy” trade relations based on mutual respect.

But let’s be real: if these guys become friends, they’d have to turn into enemies shortly after. Neither of them is known for going down without a fight, and Xi would rather die than let Trump embarrass him by undermining his ‘hard-earned power.’

That Inauguration invitation was already disrespectful enough. And Trump has been intentionally trying to start a beef with Putin, whose first action after November 5, was to extend an olive branch to the man who once called him “buddy.”

But hey, dealing with Trump has never been easy. Not for Americans, not for his cabinet, not for the Federal Reserve, and certainly not for financial markets. He thrives on keeping people on their toes. It’s incredible to witness.

A new trade war will break global supply chains

If Trump goes ahead with his tariff hikes, it’s not just China that gets hit. The entire world economy could feel the blow. Global supply chains, already stretched thin after years of disruptions, could snap under the weight of new tariffs.

Prices for goods everywhere would skyrocket, and shortages could creep into critical sectors like tech and manufacturing. Remember the chip shortage? Picture that, but worse.

Meanwhile, stock markets could go haywire. Investors hate uncertainty, and a full-scale trade war between the world’s two biggest economies is the kind of uncertainty that sends markets into freefall.

Foreign investment in China, already shaky, might collapse altogether. Wall Street and crypto markets are a little too sensitive to economic uncertainty.

Elon’s Tesla factory in Shanghai complicates things

Enter Elon Musk, because of course, the king of the nerds is always at the scene of the crime. His Tesla factory in Shanghai is its largest globally, cranking out more than half of the company’s cars. This factory operates under conditions most foreign companies can only dream of.

Thanks to special concessions from the Chinese government, Elon’s Shanghai plant is wholly owned, a rare arrangement in China. And according to Trump, this guy is now America’s “First Buddy.” They’re obsessed with each other. And why wouldn’t they be? Elon gave Trump’s campaign hundreds of millions of dollars.

Now analysts think he might use his influence to soften Trump’s stance on China, especially when it comes to tariffs on electric vehicles. Tesla, after all, depends heavily on its Shanghai factory to keep up with global demand. Plus, Elon and Xi get along really well… for obvious reasons.

Xi isn’t taking Trump’s bait outright, but he isn’t ignoring him either. China has kept communication channels open and seems cautious about making any sudden decisions.

However, Xi loves Putin. He famously said their friendship “had no limits.” So if Trump starts a fight with Putin, like he seems a bit determined to, it’s not up for debate who Xi would side with.

Both countries need America to sustain their economies, yes, but their leaders would never do it at the expense of their self-respect. And that’s what it will come down to in the end. RIP to the global economy.