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Niall Ferguson: How to Win the New Cold War
To Compete with Chine, Trump Should Learn from Reagan
By WWSG exclusive thought leader, Niall Ferguson
Donald Trump’s 2024 presidential campaign very deliberately echoed the one that Ronald Reagan ran in 1980. “Peace through strength” and “Are you better off today than you were four years ago?” are the two Reagan slogans that are best remembered today. Less well known is that in 1980, Reagan used the slogan “Make America great again,” including in his convention acceptance speech.
Few commentators have paid much attention to these parallels, partly because the two presidents’ personalities are so different, partly because paying tribute to Reagan has long been a vacuous ritual for Republican candidates. But the analogy is instructive—and Trump should use it to his political and strategic advantage, remembering (as others have forgotten) what exactly “peace through strength” turned out to mean in the 1980s. Although it has become fashionable to credit the Soviet leader Mikhail Gorbachev with ending the Cold War, in truth it was the Reagan administration that forced Moscow down a path of reform that ultimately led to drastic disarmament and the end of the Soviet empire in eastern Europe.
Reagan opened with strength. He boldly reasserted the American rejection of communism as an ideology and Soviet expansionism as a strategy. At the same time, he initiated a major increase in defense spending that sought to exploit U.S. technological superiority. When the right time came, however, he pivoted to a series of summit meetings with Gorbachev that ultimately produced stunning breakthroughs in both disarmament and European security.
As he makes clear in his book The Art of the Deal, Trump lives to bargain. “There are times when you have to be aggressive,” he writes of one real estate coup, “but there are also times when your best strategy is to lie back.” Trump firmly believes that, in a negotiation with a strong adversary, one must open aggressively—but then seek the crucial moment to settle. Today, the United States finds itself in at least the sixth year of a second cold war, this time with China, a confrontation that has become even more dangerous under the Biden administration. In his first term, Trump recognized the American need to contain China’s rise and convinced Washington policy elites, despite their initial skepticism, that this required both a trade war and a tech war. In his second term, he should once again begin by piling on the pressure with a fresh show of American strength. But this should not be an end in itself. His ultimate goal ought to be like Reagan’s: to get to a deal with Washington’s principal adversary that reduces the nightmarish risk of World War III—a risk inherent in a cold war between two nuclear-armed superpowers.
SAME DIFFERENCE
There are, of course, major differences between Trump and Reagan. Trump is a protectionist; Reagan was a free trader. Trump is as hostile to illegal immigration as Reagan was relaxed about it. Trump is as sympathetic to authoritarian strongmen as Reagan was keen to promote democracy. Trump’s public personality is as abrasive as Reagan’s was genial, as vindictive as Reagan’s was magnanimous.
Also important to note is that the economic context when Reagan was elected was quite different from today: it was far worse. Inflation, as measured by the consumer price index, was at 12.6 percent in November 1980. The unemployment rate was 7.5 percent and climbing; it would peak at 10.8 percent in December 1982. Interest rates were sky-high: the effective federal funds rate was 15.85 percent. The economy had emerged from recession in August 1980 and would return to recession a year later. By contrast, at the time of the 2024 election, inflation was 2.6 percent, unemployment 4.1 percent, and the federal funds rate 4.83 percent.
Nevertheless, the resemblances between Trump and Reagan—and their times—are numerous and significant. It is easy to forget, for example, how widely Reagan was feared at that time by liberals at home and abroad, as well as by Washington’s adversaries. As Max Boot shows in his new, revisionist biography of Reagan, he was seen at the time of his first election victory as “an amiable dunce,” in the words of the Democratic Party grandee Clark Clifford. The liberal journalist Nicholas von Hoffman wrote in Harper’s that it was “humiliating to think of this unlettered, self-assured bumpkin being our President.” It was routine for cartoonists to depict a crazed Reagan astride a falling atomic bomb, like the character T. J. “King” Kong in the movie Dr. Strangelove. Trump is depicted the same way today. Reagan was mocked, belittled, and condescended to more than any other major politician of his era—and so, today, is Trump.
Consider also the strength of their political positions. On the one hand, Reagan won in 1980 by a much larger margin than Trump did in 2024. Carrying 44 states, Reagan was elected president with 489 votes in the Electoral College and a popular vote margin of 9.7 percent. Trump’s win was no landslide: 31 states, 312 Electoral College votes, a popular vote margin of around 1.6 percent. On the other hand, the Republican Party, under Trump, will control both chambers of Congress, whereas under Reagan it had only the Senate. Moreover, Trump moved the Supreme Court decidedly to the right with his three first-term appointments, whereas the court during Reagan’s term was distinctly more liberal.
The resemblances between Trump and Reagan are numerous and significant.
Like Reagan—who was shot by John Hinckley, Jr., barely two months after his inauguration—Trump has survived a brush with death at the hands of an assassin. In each case, survival was accompanied by a sense of divine oversight, although neither man was especially devout. Like Reagan, too, Trump has vowed to reduce the size of the federal government. Both men were committed to supply-side reforms (in particular, deregulation), as well as spending cuts. And, like Reagan, one of Trump’s first-year priorities will be to extend the tax cuts of his first term. Also like Reagan, Trump is very unlikely to balance the budget.
It is true that some of Trump’s nominees are more outlandish than anyone Reagan ever considered for a cabinet-level job: consider, for example, Kash Patel, a midlevel official during Trump’s first term whom Trump has tapped to lead the FBI and who has vowed to purge “the deep state” of Trump’s enemies and critics, and Tulsi Gabbard, an idiosyncratic former Democrat whom Trump has tapped as director of national intelligence despite her lack of experience and her puzzling sympathetic views of Vladimir Putin’s regime in Russia and Bashar al-Assad’s regime in Syria. Many remember nostalgically the stars of the early Reagan years: James Baker as chief of staff, Caspar Weinberger as secretary of defense, and the wunderkind David Stockman as director of the Office of Management and Budget. But few have any memory of James Edwards, who had served as governor of South Carolina but whose training as an oral surgeon scarcely qualified him to be secretary of energy, the post for which Reagan nominated him in 1980.
What about Trump’s very un-Reaganite fondness for tariffs? On the campaign trail, Trump talked about a “universal” tariff of up to 20 percent on all goods coming into the United States and a 60 percent tariff on all imports from China. Twenty-three Nobel laureate economists have warned that Trump’s economic policies, “including high tariffs even on goods from our friends and allies and regressive tax cuts for corporations and individuals, will lead to higher prices, larger deficits, and greater inequality.” But Trump seems more likely to deliver disinflation, as did Reagan, partly through lower oil prices and an already cooling labor market. And although Reagan was certainly in favor of free trade, it would be a mistake to caricature him as doctrinaire on the issue. He was not above pressuring Japan into imposing “voluntary” quotas on its automobile exports, which were then undercutting cars manufactured in Detroit.
Economists also worry that Trump may undermine the independence of the Federal Reserve. They might not know, however, that Reagan startled Fed chair Paul Volcker at their first meeting by saying, according to Boot’s biography: “I’ve had several letters from people who raise the question of why we need the Federal Reserve at all. They seem to feel that it is the Fed that causes much of our monetary problems and that we would be better off if we abolished it. Why do we need the Federal Reserve?” Initially dumbstruck, Volcker recovered and explained that the Fed had been “very important to the stability of the economy.” However much Trump dislikes today’s Fed chair, Jay Powell, he knows—as does his nominee for Treasury secretary, Scott Bessent, a Wall Street veteran—the importance of market confidence in the independence of monetary policy.
HAWKS AND DOVES
Historians tend to judge modern presidents more by their foreign policy successes and failures than by their domestic achievements. Like Reagan, Trump will inherit several foreign policy crises from his predecessor. Back in 1980, Iran and Iraq were at war and the Soviets had invaded Afghanistan. Today, Iran is at war with Israel, rather than with Iraq, and it is Ukraine, not Afghanistan, that is in the Kremlin’s cross hairs. Back then, Nicaragua had just succumbed to the communist Sandinista revolution. Today, Venezuela is a failed state after 25 years of the Chavistas. All in all, the world seems more perilous than at any time since the end of the Cold War. China has supplanted the Soviet Union as the United States’ principal rival—a superpower that is both economically and technologically more formidable than the Soviets ever were. China, Russia, Iran, and North Korea are now cooperating openly both economically and militarily. It is not hyperbole to refer to them as an axis akin to the one Washington and its allies faced during World War II.
Perhaps Trump will share Reagan’s early luck. Within minutes of Reagan’s first inaugural address, Iran released the 53 American hostages it was holding in Tehran. Trump may get good news even sooner, depending on the steps Israeli Prime Minister Benjamin Netanyahu decides to take against the Islamic Republic’s nuclear facilities. Compared with a year ago, the strategic situation of Israel has been greatly strengthened. Iran’s various proxies—Hamas and Hezbollah, in particular—have suffered major losses, and the Islamic Republic’s capabilities in both air attack and air defense have been exposed as feeble. Few other states in the region seem very sorry at the reverses inflicted on the moribund regime of Supreme Leader Ali Khamenei.
By contrast, the news from Ukraine is unlikely to be good. Trump has repeatedly pledged that he will end the war there but without specifying how—and wars are notoriously difficult to end. More than three years passed between President Richard Nixon’s opening peace initiative in 1969 and the agreement for which Secretary of State Henry Kissinger and North Vietnamese General Le Duc Tho received the Nobel Peace Prize. The negotiations that eventually produced peace between Egypt and Israel in 1979 lasted more than five years.
In Ukraine, negotiations will be extremely difficult, partly because only one side desperately needs a cease-fire, and that is Kyiv, whose army is dangerously close to its breaking point. Outmanned and outgunned, Ukraine’s military is also overstretched, thanks in part to its bold but perhaps foolhardy incursion into Russian territory. It is not obvious why Putin would enter peace negotiations when his forces seem close to a breakthrough in several areas along the frontline. The Biden administration’s lifting of restrictions on what Ukraine can do with U.S.-supplied weapons has come too late to turn the tide. In terms of weapons deliveries, Russia continues to receive more support from allies than does Ukraine, and Moscow has also received additional troops from North Korea.
In facing this set of challenges, Trump should look to Reagan’s example. At first, Reagan escalated the arms race with the Soviets; U.S. defense spending rose 54 percent between 1981 and 1985. He deployed intermediate-range nuclear missiles to Western Europe, launched the Strategic Defense Initiative missile defense system in 1983, and armed the mujahideen in Afghanistan, who inflicted heavy casualties on the Soviet forces that had invaded in 1979. More generally, Reagan did not hesitate to use U.S. military force when he saw American interests threatened. In 1983, he ordered U.S. forces to invade the Caribbean island nation of Grenada, after its Marxist-Leninist regime had descended into internecine violence. He also ordered the bombing of Libya in April 1986, in retaliation for the bombing of a discotheque in West Berlin, which had killed an American soldier.
But Reagan was not always a hawk. He did little in response to the imposition of martial law in Poland in 1981. He agreed to reduce arms sales to Taiwan in 1982. And he did not retaliate when Iranian-backed Shiite militants bombed a U.S. barracks in Beirut in 1983, killing 241 members of the U.S. armed forces engaged in a doomed peacekeeping mission.
Nothing captured this flexibility more than Reagan’s about-face from brinkmanship to détente with Gorbachev. In talks in Reykjavik in 1986, the two came close to agreeing to abolish all their nuclear weapons. In the end, they pledged to drastically reduce intermediate-range nuclear missiles on both sides of the Iron Curtain. So radical were the steps Reagan took in his second term that he was criticized for going too far by the original architects of détente, Nixon and Kissinger. Indeed, Kissinger privately called the Reagan-Gorbachev agreement the “worst thing since World War II.”
The most impressive thing about Reagan’s apparent turn from brinkmanship to deep disarmament is how little resonance these criticisms found outside the pages of conservative journals such as the National Review. The Intermediate-Range Nuclear Forces Treaty was ratified in the Senate, 93 votes to 5. The peace that ended the Cold War enjoyed widespread legitimacy more than a year before the fall of the Berlin Wall provided Reagan with symbolic vindication.
LET’S MAKE A DEAL
At the beginning of his first term, Trump’s most important foreign policy priority was competing with China. But competition quickly evolved into containment and ultimately confrontation. Trump did not intend to start a second cold war. But his strategy revealed that one had already begun, owing in no small part to the logic of Chinese leader Xi Jinping’s strategy of achieving parity with and then superseding the United States.
Today, the new cold war is being waged unremittingly in multiple domains, from Ukraine to the Middle East, from space to cyberspace. But the biggest risk to world peace is surely in East Asia, where Chinese military exercises suggest that Beijing is preparing for a blockade—or a more ambiguous “quarantine”—of Taiwan at some point in the coming years. At present, the United States has few good options for such a contingency. In an interview last June, Admiral Sam Paparo, the head of U.S. Indo-Pacific Command, spoke of his intention, in the event of a Chinese blockade, “to turn the Taiwan Strait into an unmanned hellscape using a number of classified capabilities . . . so that I can make their lives utterly miserable for a month, which buys me the time for the rest of everything.” But the United States does not yet have the maritime drones and other weapons Paparo has in mind. Even if it did, using them against Chinese naval forces would risk a fearful escalation into full-blown war, with the potential to culminate in a nuclear exchange. Whatever “the rest of everything” means, it does not offer the least clarity about how such a showdown would end.
Trump’s commitment is to avoid entangling the United States in more “forever wars” and, above all, to prevent a third world war. In his memoir, John Bolton, who served as Trump’s third national security adviser, describes how the president repeatedly deviated from planned talking points when meeting with Xi because of Trump’s desire to strike “the big deal” with Beijing—“the most exciting, largest deal ever,” as Trump described it. To that end, he was willing to cut China slack in the U.S.-Chinese tech war by relaxing measures against Chinese firms such as ZTE and Huawei. And for the same reason, as Bolton relates, Trump was unwilling to press China on issues such as its crackdown on Hong Kong pro-democracy protests (“I don’t want to get involved. We have human-rights problems too.”) and China’s repression and large-scale imprisonment of Uyghurs in Xinjiang (which Trump explicitly approved of during a conversation with Xi).
The new cold war is being waged unremittingly in multiple domains.
In Trump’s view, a “big deal” might be the only way to avoid having to start a war that the United States might not win. “One of Trump’s favorite comparisons,” Bolton recalls, “was to point to the tip of one of his Sharpies and say, ‘This is Taiwan,’ then point to the Resolute desk [in the Oval Office] and say, ‘This is China.’” It was not just the discrepancy in size that bothered him. “Taiwan is like two feet from China,” Trump told one Republican senator. “We are 8,000 miles away. If they invade, there isn’t a fucking thing we can do about it.”
Whatever members of his national security team may imagine, a deal with Xi should remain Trump’s ultimate objective in his second term. The close involvement of the high-tech entrepreneur Elon Musk in the Trump transition also points in the direction of détente with China, as a strategy of confrontation is not in the interests of Musk’s electric vehicle company, Tesla.
Such a deal could not be a giveaway, in which Beijing enjoyed tariff reductions without having to dismantle its extensive system of industrial subsidies. Nor could it allow China to resume exploiting high-tech supply chains for the purposes of espionage and possibly sabotage. But it would make sense, as it did in the 1980s, for the two superpowers to pursue disarmament. The current nuclear arms race is a lopsided one in which Washington’s foes expand their arsenals while nonproliferation applies only to U.S. allies.
A crucial element of any U.S.-Chinese agreement would have to be a return to the 1970s consensus on Taiwan, whereby the United States accepts that there is “one China” but also reserves the option to resist any forcible change to Taiwan’s de facto autonomy. The erosion of this “strategic ambiguity” would not enhance American deterrence but merely increase the risk of a “Taiwan semiconductor crisis” akin to the Cuban missile crisis of 1962.
A Trump-Xi deal, however, can come only after the United States has reestablished a position of strength. After ratcheting up frictions over trade in 2025 and 2026—which will hurt the Chinese economy more than it hurts the U.S. economy, as in 2018–19—Trump should adopt a more conciliatory stance toward China, just as Reagan dramatically softened his attitude toward the Soviet Union in his second term.
SURPRISES IN STORE?
Trump’s foreign policy looks superficially more dangerous than Biden’s. But it was the Biden administration’s incomprehension of deterrence that set in motion a series of disasters, first in Afghanistan, then in Ukraine, and then in Israel, and created the conditions for what would be a much larger disaster: a Chinese blockade of Taiwan. In a similar way, Reagan’s critics at home and abroad accused him of risky brinkmanship, whereas in fact it was during the term of his predecessor, Jimmy Carter, that the Soviets invaded Afghanistan—one of the most perilous moments in the Cold War.
In 1980, many would have scoffed at any prediction that Reagan would end the Cold War—that he really would deliver peace through strength. Today, the argument that Trump might pull off a similar feat will strike many as absurd. But historical wisdom consists partly of remembering how unlikely epochal events seemed, even just a few years before they happened. Success in foreign policy can remake a presidential reputation beyond recognition. So it was with Reagan. So it may yet prove with Trump.
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