No one should be surprised at Transactional Trump’s attempts at tearing down the postwar, multilateral world order. But the diplomatic debacle at the G7 summit last weekend in Charlevoix, Quebec has brought the West into uncharted waters. By the time the annual retreat of the leaders of the advanced economies had ended, Trump had left close US allies thoroughly dejected and scared about the future.
The massive US trade deficit, at the hands of both allies and rivals, is at the heart of Trump’s grievance. But instead of taking steps towards raising American manufacturing’s competitiveness, Trump has acted belligerently and announced tariff hikes on several US imports. This has forced US allies in the West to consider imposing counter-measures on several products that are made in America.
To be clear, Trump is not without leverage. The EU block enjoys American security – in the form of NATO – from Russian expansionism in the East. Trump regularly brings up the fact that the US mostly pays for this “protection” while the EU enjoys massive trade surplus with the US. After forcing them to agree to pay more for their defence last year, Trump is threatening a trade war this year to reduce that surplus.
Despite being aware of its retaliatory power, China has avoided confrontation so as not to upset its domestic stability, which is linked to rising per capita income. It is hoping that giving Trump a “win” – through trade concessions as well as a potential North Korea denuclearization deal – would keep him interested. Trump has played along, but a major US-China breakthrough on trade still eludes Beijing.
While China has a few cards to play, the EU – and Canada, whose tariff response got Trump all riled up at the summit, forcing him to not sign the G7 joint communiqué – are on a weaker ground against Trump’s bellicosity. The West is clearly in a crisis. European leaders have publicly warned that they can no longer trust the US to play its stabilizing role in the continent and beyond. Trump’s tearing apart of one international agreement after another – and now tariff impositions – have necessitated that conclusion.
If Trump indeed means (trade) war, it wouldn’t end well for US workers or consumers. The West’s best hope is to wait out Trump, who seems more interested in befriending strongmen than holding allies closer. It increasingly seems that the West will need to do without America for a while, for Trump may have a serious shot at getting re-elected in 2020. Question is: does the West have the gumption for realignment away from the US to preserve the “rules-based international order”?
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