U.S. President Donald Trump in Washington, D.C., U.S., February 5, 2026. REUTERS/Al Drago
During his speech at the 2026 World Economic Forum (WEF) in January, President Donald Trump claimed that the U.S. economy has never been "hotter." And he insisted that the United States' North Atlantic Treaty Organization (NATO) allies will be in a weak position if they don't fully embrace his economic policies.
But Steve Rattner, a frequent economic analyst for MS NOW and a former U.S. Treasury Department official under the Obama Administration, has a radically different viewpoint. In an op-ed published by the New York Times on February 10, Rattner lays out a variety of ways in which the U.S. is falling behind economically.
Rattner recently visited Mainland China, and one of his big takeaways is that Trump's tariffs are hurting the U.S. — not slowing down the Chinese economy.
"The only real solution is to get our house in order and beat China at its own game," Rattner argues. "The need to do so is only growing, because the commotion of Mr. Trump's first year back in office has set America back. In addition to manufacturing, China is threatening America's preeminence in a range of fast-growing sectors, including artificial intelligence and pharmaceutical drug development. While he has tried to cut our spending on important government functions like basic research, China has made them national priorities."
Rattner continues, "China's progress in AI has been stunning…. For all of Mr. Trump's tariff bluster, we are not winning this trade war. The Asian goliath powers on as the world's largest exporter, its trade surplus having notched a record $1.2 trillion last year."
The former Treasury Department official warns that "competing against China will be difficult" for the U.S. "under the best of circumstances," but he has some recommendations. And Rattner cites the CHIPS and Science Act, which was signed into law by former President Joe Biden, as the type of policy the Trump Administration should be pursuing.
"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. "Unfortunately, the Trump Administration's incoherent policies are creating a truly bad set of circumstances.
For starters, we need to reverse the cuts that Mr. Trump has made to investments in science and other areas…. What Mr. Trump should learn — as should everyone else — is that we are not going to beat China by imposing tariffs or by attempting to negotiate trade agreements that China would probably violate."
Rattner continues, "Importantly, sound industrial policy does not mean taking stakes in companies or demanding royalties, as the Trump Administration has been doing. Outpacing China has to begin at home, by getting our own economic house in order — a challenge that also should motivate Mr. Trump to rethink a large range of his policies."