On July 4, U.S. President Trump signed the 'Great and Beautiful Act,' which, while satisfying supporters, has analysts warning that the move could delight Chinese President Xi Jinping. The act is expected to add $4.1 trillion in debt and eliminate clean energy subsidies, effectively withdrawing the U.S. from the renewable energy competition and paving the way for China's dominance in the industry.

According to Barron's analysis, if Xi Jinping's Communist Party were to devise a blueprint to weaken America’s potential over the next decade, it would be hard to do better than Trump's 'Great and Beautiful Act' signed on July 4. The act was primarily designed to placate Trump's base, extending tax cuts initiated during his first term and temporarily waiving taxes on tips and overtime, among other campaign promises. It also cuts social welfare programs, aligning with the long-standing positions of conservatives.

The most expensive act in history flags concerns over debt, yet Republicans may have unwittingly handed much of the nation's future to China. The Committee for a Responsible Federal Budget (CRFB) indicates that this act will increase the national debt by $4.1 trillion by 2034. Should many of the temporary provisions become permanent, the debt could skyrocket to $5.5 trillion. Such enormous expenditures mean that the U.S. Treasury would increasingly have to rely on China and other Asian countries, which are the largest buyers of U.S. bonds. Currently, Beijing holds $757 billion in U.S. debt, and should they increase their holdings, Xi Jinping's influence over Trump's economic policies would expand.

The U.S. withdrawing from the clean energy race presents an unprecedented advantage for China. China’s ambitions to dominate renewable energy, electric vehicles, and sustainable infrastructure are currently bolstered politically by the 'Great and Beautiful Act,' which supports coal and ends tax credits for clean energy, effectively signaling the U.S. has voluntarily exited the competition for solar, wind, and geothermal energy. Asian expert Jeff Kingston noted that the U.S. is giving up on 'major growth markets' and 'embracing loser energy,' asserting, 'Beijing will be toasting this news with champagne.'

Indeed, BYD, a Chinese electric vehicle manufacturer, has every reason to celebrate. The company’s outlook is brighter than ever, with projections indicating its revenue will surpass Tesla in 2024. Thanks to Republican assistance, Chinese electric vehicle startups and battery manufacturers have a smoother path to dominate the global market. Concurrently, multiple policy risks threaten the U.S. economy as Trump is cutting government personnel and raising tariffs, potentially leading the world’s largest economy to a recession. Despite a stable labor market, the high import taxes set to take effect next month pose a clear threat to employment prospects. Trump’s act also marks the most significant cuts to the social safety net in decades, with millions set to lose health care coverage.

Brookings Institution economist Robin Brooks highlighted attention should be paid to the recent 'counterintuitive price movements' of the dollar and U.S. bond yields. The dollar has fallen against other G-10 currencies this year, and Brooks expresses concern that this 'is particularly troubling' as the decline coincides with rising U.S. interest rates, akin to the situation in the U.K. last year that led to a debt crisis under Prime Minister Liz Truss.

While the Republican Party might be inadvertently pushing the U.S. into a debt crisis, Trump is steering the Federal Reserve towards a 'China-like' direction. His ambiguous stance on firing Federal Reserve Chairman Powell continues to unsettle global markets. If imitation is indeed the highest form of flattery, Xi Jinping's inner circle must be blushing at Trump's Chinese-style policy shift since January 20. Trump has also sought to silence news organizations brave enough to report the facts, mirroring the style of the Politburo. He has threatened to sue The New York Times and CNN, compelling ABC and CBS to capitulate through settlements. Trump's preference for central planning is becoming increasingly apparent, as his insistence on loyalty from U.S. businesses reflects a methodology more akin to Xi Jinping and Putin. For instance, Trump approved U.S. Steel's acquisition of Japan’s Nippon Steel with the condition that Japan grant the U.S. a 'golden share,' preventing name changes, plant closures, or layoffs without Trump’s consent.

Xi Jinping has spent decades positioning China to challenge American dominance. With the passage of the 'Great and Beautiful Act' alongside Trump's 'China-like' policies, the Republican Party is making it easier for Beijing to achieve its goals. Barron's concluded that while Trump's act may shout 'America First,' it cannot conceal one fact: Xi Jinping's China is celebrating a historic victory.