Mastercard Chair Warns: U.S.-China Tensions May Lead to Deliberate Economic Split!

The relationship between the United States and China has long been fraught with complexity, experiencing numerous shifts in trade policies. With the introduction of new tariff measures, these tensions are expected to escalate further.

Tariff Tensions Under Trump’s Administration

President Donald Trump, who has been re-elected, ran his campaign with a strong focus on imposing steep tariffs not only on China but on all foreign countries, a move that economists believe could lead to dire repercussions for domestic prices and international trade relations. During the Fortune Global Forum held in New York City, Merit Janow, who serves as both an independent board chair at Mastercard and a professor at Columbia University, provided insights into how these policies might affect American businesses. She reminisced about the strained U.S.-China relations following the Tiananmen Square massacre in 1989, acknowledging the dark times that followed before the two nations entered periods of beneficial mutual trade.

Janow observed, “There are significant structural tensions between the U.S. and China. The prevailing sentiment in the U.S. that China is our main geopolitical rival is likely to persist. Consequently, the impact on businesses will vary greatly depending on the sector.”

Increasing Challenges in U.S.-China Relations

Over the past decade, Janow noted, the relationship between the U.S. and China has become increasingly strained. Despite President Biden’s efforts to reduce tensions and foster stability at the APEC summit in November this year, challenges continue to mount, according to her. She highlighted the technology sector as a particular area of contention. As both nations strive to dominate the technological landscape, they have imposed increasing competitive restrictions to maintain their lead. This aspect of geopolitical and business rivalry illustrates how companies in both countries might begin to diverge more distinctly as tariffs rise and competition intensifies.

“Are we heading towards a deliberate decoupling?” Janow questioned. “There are many uncertainties about how this situation will develop… We are not entirely sure how extensively this tariff strategy will be implemented and what its consequences will be. However, are there still businesses expanding in China? I believe there are.”

While it’s premature to predict the exact outcomes of Trump’s proposed tariff strategy, Janow mentioned that there is considerable discussion regarding how these tariffs might exacerbate tensions between American and Chinese firms. She pointed out that after a decade of efforts, Mastercard was finally granted a license to operate in China in 2023 and established a joint venture in May of the same year. Yet, she cautioned that not all businesses might enjoy similar success, as outcomes can vary greatly depending on the industry and specific circumstances.

“The risks, the opportunities, and the structures differ significantly across sectors and historical contexts,” she explained.

This session was hosted by McKinsey & Company. The panel included:

• Eric Clark, CEO, North America, NTT Data
• Merit Janow, Chairperson, MasterCard; Dean Emerita and Professor, Columbia University
• Kristin Peck, CEO, Zoetis
• Sebastian Picardo, President and CEO, Holt Renfrew
• Olivia White, Senior Partner and Director, McKinsey Global Institute, McKinsey & Company
• Moderator: Geoff Colvin, Senior Editor-at-Large, Fortune