Sir Niall Ferguson

But the only way the United States could counter it would be, in fact, by taking naval action.

So the worry in Washington and in Honolulu is, what if we're confronted by something that's ambiguous and hard for us to react to?

So the betting market isn't really asking the right question there.

The question is, does China assert its notional rights since, after all, we accept that there is only one China?

And if it does, can the Trump administration stop a gradual Hong Kongization?

of Taiwan.

I was just in Hong Kong.

One of the interesting conversations I had was with somebody who said, the way that the Chinese, the way that Beijing is treating Hong Kong right now, which is relatively gently economically, though very firmly politically, is to signal that one country, two systems is okay.

for business.

And it's okay for most people in Hong Kong.

That's an ad to Taiwan ahead of what will be a pretty subtle but meaningful pressure from Beijing.

And I think that's the scenario to watch out for.

Because if you ask the hawks in the Trump administration, well, what will you do then?

They'll say, well, we can't possibly do nothing.

We have to act

Because this would be a fundamental challenge that would lead implicitly to the end of American primacy in the Pacific.

The Japanese would see that immediately.

And it would put TSMC in the hands of Xi Jinping and can't let that happen.

And then you'll go to the president and the president will say, as he said to John Bolton in a famous chapter in John Bolton's memoir, he picks up the sharpie and he says...

You see this Sharpie, John.