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“Trade Wars are Good”

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.” – Donald J. Trump

As I understand it, trade wars mainly affect the leading competing exporter nations.

In 2017 China was the world’s leading exporter, as it has been for some time. It exported $ 2263 billion in goods, many of them in Trump’s view unfairly.

The U.S. was number two, exporting $ 1547 billion in goods, two-thirds the Chinese figure. (Makes sense, one might say, since there are three times as many people in China as in this country.)

But the third largest exporter is Germany, whose population is one-quarter of the U.S.’s but whose $ 1448 billion export sales nearly equal those of this country. Trump finds much unfairness in this too.

Then comes Japan, then the Netherlands, followed by South Korea and Hong Kong. and then a slough of other European countries (France, Italy, UK, Belgium) before Canada, Mexico, Singapore. Yes, the Netherlands and South Korea both export more than the UK.

Russia, India, Brazil, Saudi Arabia and South Africa are well down on the list. You’d be surprised by some of the major exporters. Singapore exports more than Russia, and Vietnam exports more than Indonesia. The trade wars Trump has provoked won’t mainly affect these countries. (One should note however that Brazil is going to experience a windfall as China in retaliation for U.S. steel tariffs substitutes Brazilian soy beans for those of Illinois, Ohio and Minnesota.)

The trade wars are all about Europe, Northeast Asia, and immediate neighbors in North America. These are for the most part the U.S.’s traditional post-World War II allies. Trade wars with them seem to mainstream commentators foolish; Trump doesn’t understand markets and foreign trade, they say, while Wall Street tanks. They do indeed seem a sop by a beleaguered U.S. president wanting to be seen by his base as a champion of the working class, posturing as a defender of jobs (while actually throwing thousands out of work due to retaliatory tariffs, including those China has placed on U.S. soybeans, pork and steel pipes and the EU led by Germany has placed on U.S. motorcycles, bourbon and peanuts).

Basically, the U.S. has declared economic war on its closest friends, and the friends think, why are you doing this?

Meanwhile as the NATO summit in Brussels approaches, EU-NATO ties are becoming ever more intimate. This does not necessarily mean closer EU-U.S. ties. It suggests that the European economic and political alliance which so strongly overlaps the military one is more and more coordinating a continental military-industrial complex potentially independent of the U.S., should a trans-Atlantic split ever require it.

Key U.S. allies were shocked and puzzled by the behavior of Trump at the G7 meeting in Canada (including the egregious insults aimed at host Justin Trudeau) and worry about what he will do and say at the Brussels meeting (other than demand once again that Germany and other member nations pay their full 2% of GDP towards NATO expenses as specified in the NATO charter).

The Norwegian NATO chief Jens Stoltenberg just issued a terse statement saying that the U.S.-Europe military alliance is not necessarily eternal. This followed EU President Donald Tusk’s grim statement following Trump’s announcements on steel tariffs, “With friends like this, who needs enemies?” While Europe is less important to the U.S. as a market than it once was, relative to East Asia in particular, it comprises a political union, common market, and military union led by to the United States. Its border with Russia is the main front in the post-Cold War confrontation with that country, NATO expanding to provoke the occasional Russian response as in Georgia in 2008 and Ukraine in 2014.

So to provoke a trade war with Europe, as Trump did May 31 in announcing heightened tariffs on aluminum and steel, is to provoke the U.S.’s closest traditional political, economic and military allies into responding in kind. The Harley-Davidson news story draws public attention to the consequences. Tariffs, counter-tariffs, corporate need to follow the highest rate of profit, failure of tariffs to “protect jobs.”

But the trade measures also risk political and military implications. Already Trump has earned the contempt of European leaders, particularly Merkel; his manifest ignorance and penchant for insult naturally produce that contempt. Nor can the Europeans hope that at least around the buffoon there are responsible U.S. officials with whom they can work. They keep getting fired and often don’t seem to speak for the president.

The U.S. has withdrawn from the Paris Accord on climate, and from the Iran nuclear deal, broken with the world in recognizing Jerusalem as capital of Israel, imposed travel restrictions on Muslims, and in other ways seems positively determined to alienate both European governments and public opinion. Most people in this country find Trump’s tweets ridiculous. Imagine how the Germans see them. What is the basis for the Atlantic Alliance, under the circumstances?

Should the allies wait until 2020 to address that question?

As for the military aspects: again, the NATO chief just acknowledged that “some are doubting the strength of that bond,” and that there are “differences” within the alliance, adding “we may have seen the weakening” of ties and “it is not written in stone that the transatlantic bond will survive forever, but I believe we will preserve it.”

Formation of NATO (1949) followed the Marshall Plan (1948). First the Truman administration carved out its Atlantic Alliance, attempting to buy off the working class in its zone of post-war Europe with reconstruction aid and privileged access to the U.S. marketplace (and thereby prevent the expansion of socialism). Then it rallied its capitalist anti-Soviet allies into a military alliance. That alliance still maintains an anti-Russian mentality and program. Some within it worry about Trump’s supposed affinity with Vladimir Putin. His proposal en route to the G7 meeting that Russia be re-admitted into the G7/G8 encouraged these worries.

It is reported that soon after the NATO gathering Trump will meet with Putin in Helsinki next month. It was reported that during his Singapore summit with Kim Jong Un, Trump made agreements without consulting (and surprising) South Korea. Possibly in Helsinki Trump may make agreements surprising NATO, like the removal of U.S. troops from Poland. And maybe NATO will start to fray as European citizens more question its relevance, while the loss of shared values and inception of trade wars weakens the Atlantic political alliance.

By all means, let there be ongoing trade wars between the three top exporters China, U.S., Germany. Let Trump make dumb decisions playing to his base, and dismay his base with their actual ramifications (like the loss of jobs). Let him alienate Europe and shatter the Atlantic Alliance; it was never benign to begin with. Let the U.S. influence on the EU further decrease; it was exerted largely through Britain, and has been diminished by Brexit.

Let the U.S. bark at its European allies as well as China, demanding that they stop purchasing Iranian oil or face U.S. secondary sanctions. The demand is so obviously outrageous (following the JCPOA and its abandonment by the U.S.) that it must strike the threatened parties as a statement by Washington that it has officially adopted Mafiosa tactics. It wants to be seen as cruel and bullying; better to be feared than loved.

But while one has to fear the U.S. military capacity, the U.S. ability to steer the world economy is not what it was in 1945, when the U.S. GDP was half the world’s. Now it is roughly equivalent to the EU’s. Mike Pompeo cannot demand that the world obey when he demands it comply in a campaign to destroy Iran. Trump cannot expect that when he raises tariffs on European steel Europe will not retaliate.

We cannot expect the existing world to continue as it is, or assume current alliances will eternally hold. That the current order might crumble through trade wars as opposed to hot wars is actually a pretty cheery thought.

More articles by:

Gary Leupp is Professor of History at Tufts University, and holds a secondary appointment in the Department of Religion. He is the author of Servants, Shophands and Laborers in in the Cities of Tokugawa JapanMale Colors: The Construction of Homosexuality in Tokugawa Japan; and Interracial Intimacy in Japan: Western Men and Japanese Women, 1543-1900. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, (AK Press). He can be reached at: gleupp@tufts.edu

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