WWEconomics: Kayfabe and the Trade War

How the US-China Trade War Became Political Theater

Roland Barthes and WWEconomics

Piledrivers and Spinebusters

The arena echoes with stomping feet and clapping hands. The lights flash, blinding, various colors and pops until it all becomes one. The crowd roars, and the ring is alive with the fire of people waiting for something they know isn’t quite real - but it’s real enough to matter!

On one side of the ring, China, calm and unflinching. On the other, the United States of America, pacing, shouting insults, hurling accusations, fists clenched, raising tariff rates, negotiating to negotiate¹. Trade war! Everyone takes from US! The US has been taken advantage of! The air is thick with manufactured outrage. But here's the thing - it's all kayfabe, professional wrestling's term for staged reality to work the crowd.

Everyone is glued to the fight.

And after about six weeks of tossing chairs and a few piledrivers, something unexpected happens - the US exits the ring. I mean - they have adjusted tariffs more than 50 times since January 20th, as The Washington Post reports, with no real or meaningful outcome.

But… what happened?

The audience is somewhat confused. Some are cheering in relief for a 90 day rollback (they didn’t want to even be at this fight) and others demand more action. This was supposed to be the big battle, the showdown that would shake the global order, the tariffs that would replace the income tax, make America great again… right?

What we witnessed in the recent US-China trade negotiations was political theater. The Trump administration threatened apocalyptic tariff rates, complete economic decoupling, the works. Against that manufactured crisis, the actual outcome - a reduction from Trump's proposed 145% tariffs down to 30% (with China reciprocating from 125% to 10%) - looks like blessed relief. As the Wall Street Journal Editorial Board wrote:

This is a win for economic reality, and for American prosperity.

Make that a partial win for reality […] Investors are cheering at this border-tax reprieve, since this is a step back from mutual assured trade destruction.

Classic wrestling psychology: threaten a chair to the head, and a slap seems merciful.

Roland Barthes and the Symbols of Wrestling

This is all intentional - not in some conspiracy theory way, but in the performative aspect of politics way. Roland Barthes writes in The World of Wrestling (one of my favorite essays of all time) the power lies not in the punches, but in the symbols:

What is thus displayed for the public is the great spectacle of Suffering, Defeat, and Justice. Wrestling presents man's suffering with all the amplification of tragic masks. The wrestler who suffers in a hold which is reputedly cruel (an arm-lock, a twisted leg) offers an excessive portrayal of Suffering; like a primitive Pietà, he exhibits for all to see his face, exaggeratedly contorted by an intolerable affliction […] wrestling is the only sport which gives such an externalized image of torture. But here again, only the image is involved in the game, and the spectator does not wish for the actual suffering of the contestant; he only enjoys the perfection of an iconography.

But what wrestling is above all meant to portray is a purely moral concept: that of justice. The idea of 'paying' is essential to wrestling, and the crowd's 'Give it to him' means above all else 'Make him pay.'

It’s about the abstract concept of justice, in both wrestling and politics (at least how it works right now). A picture of winning. And in trade policy kayfabe, several players profit from the performance:

• Political careers: Trump's base gets red meat about "fighting China" while actual policy remains relatively moderate. Chinese leaders can claim they stood firm against American bullying.

• Corporate interests: While the crowd watches the ring, real deals happen backstage. Saudi Arabia commits to billions in Boeing purchases and Starlink. Tech giants like Nvidia, AMD, and Amazon announce investments in the Kingdom's AI Zone. Trump plans to accept a luxury Boeing 747-8 jet from Qatar.

• The financial sector: Markets rallied on the "compromise," rewarding investors who bet on moderation over the threatened extremism.

The losers? American consumers paying higher prices, workers in trade-dependent industries, and anyone seeking actual solutions to real economic challenges. The prize isn't just the championship belt (a jet?) but the illusion of trade wars and grandstanding, while everyone mostly knows the final outcome. It's all designed to keep the crowd (the global public) engaged with a performance. Flood the zone, etc.

The Real Economic Impact of Kayfabe

I had the incredible opportunity to join CBS Sunday Morning to talk about the economic impact of tariffs, joining the owner of Busy Baby, the Small Business Person of the Year. She is planning to sell her products abroad, because she can’t afford to sell in the US. Thousands of other small businesses are at risk.

The tariffs created “front-loaded demand, elevated price pressures, and acute policy uncertainty” and that will likely continue even with the rollback, coupled with potential weakening labor market data and higher inflation. More data points:

• Yale Budget Lab estimates that the compromise will still will cost the average household about $2,300 a year.

• It will leave the Federal Reserve with an uncertain path for monetary policy with Nick Timiraos saying they might retool

• Pete Boockvar highlights the shipping costs - the “World Container Index for a 40 ft container saw the Shanghai to LA price rise by 16% w/o/w, by $423 in absolute dollars, to $3,136” - and now China-US container bookings have jumped 277%

• Walmart is raising prices this month, saying “the full impact of tariffs on consumers has yet to come”

• Goldman has a paper on the long-term effects of the tariffs, which include lower growth, less innovation, and more rent-seeking.

We Actually Don’t Even Need Tariffs

But - what is all this theater for? Are we perhaps fighting something that… isn’t real?

Gary Winslett has an excellent piece out in the Washington Post tearing down the veil of the illusion that we need tariffs to reshore manufacturing to the US, pointing out that the Rust Belt died and came back to life in the South, not Mexico. He writes:

Manufacturing doesn’t chase nostalgia; it follows the bottom line. Likewise, MAGA world is loath to accept how much immigration has helped the South outcompete the Midwest […]

Both parties prefer simple villains, whether it’s China or greedy corporations. But what’s needed isn’t more warm fuzzies about the way things used to be or globalization scapegoating. It is a clear-eyed approach that understands why companies choose Alabama over Ohio and that embraces the choices made by Southern states.

Greg Rosalsky also has a great piece in LAist going a bit deeper - not only do we have manufacturing in the US, but we can’t even hire enough people. There are over 500,000 open manufacturing jobs now. Recruiting and retaining workers is hard. They need people trained not tariffs.

John Lettieri has a great thread going into why globalization is good actually, pointing out the wage growth and benefits we’ve collectively gained from working with the rest of the world. But these nuanced realities don't play in the arena! Kayfabe requires heroes and villains, not supply chain logistics.

WWE Really Works in the Age of Computer

Today's political theater plays to two audiences: humans and algorithms. Every big tweet, every escalation in rhetoric gets amplified by social media systems that reward engagement over any sense of reality, making all of this worse. As Karl Taro Greenfeld notes in the Atlantic:

Some of our friends, people who donated and phone-banked for Democrats, are saying that they’re no longer paying attention to news or politics. Another one decries the constant reporting on Trump’s transgressions as clickbait for liberals. In other words, they are finding ways to cope by disengaging. But when I make the mistake of logging onto social media or watching Fox News, the would-be authoritarians among us seem to have boundless energy and redoubled enthusiasm

And of course it’s this way. Outside the ring, algorithms that track engagement and reactions. They want Trump at the microphone, making wild promises, creating viral moments, and he wants that too!

The crowd has to respond to every flare-up in the narrative because everything is at stake, or at least it seems that way. Chief Justice John Roberts of the Supreme Court says there are real threats to the rule of law (even the ref is warning the match is rigged?)

Of course you’re going to tune into the World Wrestling Americatainment channel.

On top of all of this, a big beautiful Tax bill that calls for tax cuts and will add about $4T to the deficit over the next decade.² Kayfabe is staged reality, sure, but the theatrics have very real costs.

The Championship Belt

We’re increasingly watching a simulacrum of politics, a simulation where the real consequences of a trade deal or a policy shift are overshadowed by the perceived drama. Because of this, the true effects of the trade deal, the policy changes, and the corporate maneuvers are obscured by the illusion of political engagement. The focus on tariffs keeps the spotlight on symbolic victories, while deeper, structural issues like worker retraining and investment in future industries remain sidelined.

In professional wrestling, everyone knows the outcomes are predetermined. The championship belts change hands according to storylines written in advance.

The show will continue because the incentives align: politicians get attention, corporations get deals, and algorithms get engagement, whatever. As Barthes pointed out, wrestling is about symbolic conflict - not real violence. The same could be said for the trade war. The real fight is happening behind the scenes, where the deals are made. In the end, both wrestlers leave the ring richer, the audience leaves poorer, and the kayfabe continues.

Thanks for reading.

1. Scott Lincicome has a great piece in the Atlantic (apparently my favorite magazine at the moment) discussing TPP - if we had just *stayed* in it, tariffs would have been much lower and all of this drama could have been avoided!

2. Great read from CATO on the bad parts of this Big, Beautiful Bill