But what matters for assessing the balance of power in this trade waris something called substitutability. China can impose punishing tariffs on America’s agricultural exports, soya beans and sorghum with little or no inflationary consequence at home, simply by substituting these imports and buying elsewhere in the global market.

At least in the short term, the US has no substitutes for China’s rare earths and minerals, crucial in so many areas, and China knows this.

This is also true of many other countries, such as Japan, Australia, India and Turkey, which conduct more trade with China than they do with America and which will not want to stymie the flow of important goods by taking the US’s side over China’s.

Reducing US dependence on certain Chinese imports is not a straightforward task. Manufacturing of iPhones, for example, could move elsewhere — India has been mooted — but it will take a long time and will be costly. China now has a comparative advantage in logistics, manufacturing supply chains and engineering. It is no accident that China dominates in the production of smartphones and so many other products: it is far cheaper to produce them there. Prices of these products will rise as supply chains are reconfigured.

This is the second way in which things are unbalanced: the trade war is mainly causing a shock for the US in terms of what it can import (a supply problem) and a shock for China in terms of finding adequate markets for its goods (a demand problem).

But China has the knowhow, the determination and the resources to make up for this deficiency of demand, and it may be able to do so quickly. It could do this by stimulating domestic demand, which it has ample room to do because domestic consumption is a low percentage of GDP.

China’s GDP in purchasing power parity (what goods people can actually buy with their money — the standard way economists compare the size of economies when prices differ) is higher than America’s, which could again give it room to grow domestic demand for goods.

China can also strengthen its systems of social protection and increase wages; labour share remains lower than in most other countries.

There is scope for large increases in government expenditure. This could be in science and education, which would extendits lead over the US in engineering, or the environment and health, or making it easier for tens of millions of citizens to move from the countryside to towns and cities.

It can thus make up for the deficiency of aggregate demand from loss of exports to the US without resorting to “dumping” them on the rest of the world, though there is some evidence of this happening in the short term.

The supply-side adjustments that the US needs in such a trade war are far harder to implement and would require years of increased investment, training and infrastructure.

Moreover, the US has made the challenge of this adjustment all the greater. The on-again, off-again tariffs, combined with the drastic public sector cuts implemented by Doge — the so-called Department of Government Efficiency — have wreaked havoc on private and public sectors alike. Moving production to the US will require massive upfront investment yet, because of all this disruption, no firm can be sure about the economic environment three months from now, let alone four years from now.

Even the trade deficit may worsen. Trump talks about bringing back manufacturing jobs, but manufacturing jobs today make up less than 10 per cent of US employment. He is looking to the past, not the future. Even if he were successful in resuscitating American manufacturing, it would not create good jobs for workers in the deindustrialised parts of the country. Cars these days are made by robots, with the best companies employing as many engineers and researchers as production workers, and the production-line work is often not paid well.

Today, it’s the service and knowledge sectors that really matter, yet almost surely America’s longstanding trade surplus in these services will diminish, particularly given the damage Trump is doing to its considerable soft power: tourism is falling off a cliff, foreign students are discouraged from studying in the US, the rule of law is being tested and the president is waging a massive battle on the country’s leading universities.

The last point makes the long-run prospects even bleaker, because universities produce the advances in science that are the cornerstone of this country’s technological dominance. There goes a source of our enduring competitive advantage in America. China, meanwhile, has built dozens of new universities over the past decade.

It’s understandable why China, with its enormous economic heft, would find Trump’s trade demands unacceptable, especially given his treatment of other countries as second-rate entities, subservient to the new American emperor and required to approach him deferentially to get a better deal.

But Europe should find Trump’s demands unacceptable too. Its combined GDP is greater than that of the US. Of course, if each nation within Europe genuflects at the foot of the emperor, hoping to carve out a better deal than the others, Trump will have the advantage — and he is counting on that.

Rejecting Trump’s trade vision is not just a matter of how well businesses or the stock market do in one country or the other, today or tomorrow. It is essential to uphold some semblance of the international rule of law — a rules-based international order — that Trump is seeking to dismantle.

Throughout the centuries, we’ve learnt that the rule of law is necessary for individual freedom and collective prosperity. It is especially important as a way to curb demagogues, whose confidence in their own judgment leads them to crush the rights of others and ignore collective wisdom.

These are the laws and ideals that have helped sustain America’s prosperity for many decades. Squandering them would, ironically, further damage the US’s position in its economic competition with China.

Joseph Stiglitz is an economics professor at Columbia University and a recipient of the Nobel Memorial prize in economic sciences. His latest book, The Road to Freedom: Economics and the Good Society, is out now in paperback (Penguin, £10)