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US President Donald Trump is welcomed by Japanese Prime Minister Shinzo Abe as he arrives to play golf at the Mobara Country Club in Mobara, Chiba Prefecture, east of Tokyo, on May 26. Photo: Reuters
Opinion
Macroscope
by Anthony Rowley
Macroscope
by Anthony Rowley

Donald Trump has a friend in Japan, even as the trade war puts US alliances to the test

  • America’s relations with its allies will be sorely tested by the economic fallout of the escalating trade war, which increasingly shows the US president is mistaken in believing China will cave in quickly when under pressure
Anthony Rowley
Anthony Rowley
Why you can trust SCMP
US President Donald Trump landed at the weekend on America's “unsinkable aircraft carrier in the Pacific” (as former prime minister Yasuhiro Nakasone once referred to Japan), at a time when the trade war with China is looking unlikely to be an “easy win” – and could turn out to be a new Pearl Harbour. 

Having shunned alliances at the national level, the US leader needs personal allies wherever and whenever he can find them, and Japanese Prime Minister Shinzo Abe is offering Trump not just a deck to land on but one of the few shoulders he can cry on if things go wrong.

Coming just a month before Trump is due in Japan anyway for the G20 summit in Fukuoka, his current visit to Tokyo looks more like an attempt to rally waning support than a triumphal state visit. It could even suggest that Trump is planning to skip the summit.

He has blundered into confrontation with China with all the aplomb and finesse of a circus elephant seizing a trick cycle and attempting to ride it across a swaying tightrope. There is no safety net and the collateral damage to the dismayed audience could be severe.

The hapless (one might justifiably say clueless) US leader has miscalculated in two respects – China's determination and ability to withstand a crude trade assault, and the extent of the global fallout that is resulting from an ill-considered and unilateral rush into battle.

As this economic fallout gathers pace, the US leader will find the already slim ranks of his allies among heads of state thinning even further, so much so that, by the time the G20 summit comes around next month, he may feel that the meeting will be an uncomfortable confrontation.

Abe will remain an ally because the US – and its current president especially – is the only buttress that Japan has against the rise of a China that has already displaced it as the world's second-largest economy and which is on its way to becoming a regional hegemon in Asia.
What would Chinese hegemony look like? A lot like US leadership

But relations between Trump and the leaders of other G20 advanced and emerging economies will inevitably sour as the global economic fallout of Trump’s trade war takes an increasing toll on global confidence, investment, consumption and growth.

To quote the OECD’s latest Economic Outlook, “escalating trade conflicts and dangerous financial vulnerabilities threaten new weakening of activity by undermining investment and confidence worldwide”.
The IMF, too, noted in recent days that, though the impact of the US-China confrontation on global growth is still relatively modest, the “latest escalation could significantly dent business and financial market sentiment, disrupt global supply chains, and jeopardise the projected recovery in global growth”.

Further escalation in other areas, such as the auto industry, could eventually impact emerging market bonds and currencies, and slow investment and trade. Higher trade barriers would “disrupt global supply chains and slow the spread of new technologies”, while more import restrictions would also “make tradeable consumer goods less affordable, harming low-income households disproportionately”.

‘Don’t go too far’, China tells US in phone call about recent disputes

Critically for Trump, the IMF found that “consumers in the US and China are unequivocally the losers from trade tensions”. The tariffs collected in the US have been borne almost entirely by US importers, and some have been passed on to US consumers.

All this must be clear to Trump and his advisers. They believe trade wars can be “surgical strikes” (as US wars in the Middle East were supposed to be) and that China will cave in quickly. But the evidence so far does not support such simplistic thinking.

As Chinese economist Xing Yuqing has said, the trade war “will slow the growth of the Chinese economy for sure. But it will not drag it into a crisis or recession. China can strengthen economic cooperation with EU and Japan, which can provide the necessary technologies China needs”. Chinese scientists and engineers can help overcome the US denial of access to technology. China, says Xing, has “huge room to grow domestically” and “huge capital and human resources which can support growth of its economy”.

Trump will not be happy to acknowledge all this before his G20 peers.

Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs

This article appeared in the South China Morning Post print edition as: Trump in need of a friend as alliances are put to the test
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