After alienating allies with tariffs, Donald Trump is entering China trade talks ‘unprotected and alone’

‘This is really the US going it alone,’ said a former adviser to George W Bush. ‘By assaulting all our allies, we leave ourselves standing unprotected and by ourselves in a way we really never have been’

PUBLISHED : Saturday, 02 June, 2018, 1:56am
UPDATED : Saturday, 02 June, 2018, 4:16am

The Trump administration’s decision to impose tariffs on products from its top allies could weaken the hand of US Commerce Secretary Wilbur Ross as he travels to Beijing to try to fend off a trade war with China. That, at least, is the view of many long-time trade analysts and China watchers.

“This is really the US going it alone,” said Philip Levy, senior fellow at the Chicago Council on Global Affairs who was a trade adviser in the George W Bush administration. “By assaulting all our allies, we leave ourselves standing unprotected and by ourselves in a way we really never have been.”

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Wendy Cutler, a former US trade negotiator who is now vice-president at the Asia Society Policy Institute, framed it similarly: “We are alienating all of our friends and partners at a time when we could really use their support.”

After briefing reporters on the administration’s decision to affix tariffs on imported steel and aluminium from Canada, Mexico and the European Union, Ross left for Beijing for negotiations aimed at resolving a dispute over China’s aggressive efforts to challenge US technological supremacy.

Trade analysts say that US President Donald Trump and his team should be enlisting their allies to present a united front to China. After all, US friends like Japan and the EU share many of the same gripes about China. They decry rampant theft of intellectual property and Chinese overproduction, which has flooded world markets with cheap steel and aluminium.

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US Trade Representative Robert Lighthizer joined with EU trade commissioner Cecilia Malmstrom and Japan’s economics minister, Hiroshige Seko, in issuing a vague statement from Paris on Thursday that urged unidentified countries to do more to protect intellectual property and to reduce overcapacity.

But the US undermined the alliance on Thursday by instituting the tariffs of 25 per cent on steel and 10 per cent on aluminium. Canada, Mexico and the EU all vowed to retaliate by penalising American products.

Canadian Prime Minister Justin Trudeau, noting that Canadians and Americans have been allies for 150 years and fought and died together in the second world war and in Afghanistan, chided the Trump team.

“Americans remain our partners, friends and allies,” Trudeau said, before imposing C$16.6 billion ($12.8 billion) of tariffs on American-produced products.

“This is not about the American people. We have to believe that at some point their common sense will prevail. But we see no sign of that in this action today by the US administration.”

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Europe has also been sent reeling by Trump’s actions. European Commission President Jean-Claude Juncker said on Thursday that “each time I think of Trump, I am lost”, while Malmstrom said Friday that the tariffs would further harm transatlantic ties.

“The Europeans and Canadians are on their own when it comes to the US, at least until the next election,” said Judy Dempsey, editor in chief of Strategic Europe, the blog of the Carnegie Europe think tank.

“The Europeans are competitors for Trump in trade, on values and human rights. With the authoritarian regimes he does not face that and he seems much more comfortable with the Russians, with North Korea, with the Chinese,” she added.

Europe has moved ahead with a slew of retaliatory measures on US products – it previously identified bourbon, a mainstay of Senate Majority Leader Mitch McConnell’s home state of Kentucky, and cranberries, which are grown in House Speaker Paul Ryan’s native Wisconsin as possible targets – and has said it will file a complaint with the World Trade Organisation.

Mexico has announced its own tariffs on US products, including grapes and pork belly.

Now, as its former allies distance themselves, the US is turning to China and to a stand-off that has taken some confusing turns.

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Last month, the Trump administration proposed tariffs on US$50 billion of Chinese imports to punish Beijing for forcing US companies to hand over technology in exchange for access to its markets. Trump later ordered his top trade negotiator to seek up to another US$100 billion in Chinese products to tax.

China responded by targeting US$50 billion in US products, including soybeans – a shot at Trump’s base of support in America’s heartland. Rising tensions between the world’s two biggest economies alarmed investors and business leaders.

They were relieved last month when the US and China declared a ceasefire after talks in Washington. Treasury Secretary Steven Mnuchin said then that the trade war was “on hold”. And the tariffs were suspended after China agreed to “substantially reduce” its trade surplus with America by buying more US products.

The truce didn’t last long.

Trump, facing criticism from some in Congress for cozying up to Beijing, on Tuesday renewed his threat to impose the tariffs on China.

His hard-line trade adviser, Peter Navarro, contended Wednesday that Mnuchin’s conciliatory comments about China were “an unfortunate sound bite”.

Critics say the administration should be picking its trade fights far more judiciously.

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“This is dumb,” said Senator Ben Sasse, Republican of Nebraska. “Europe, Canada and Mexico are not China, and you don’t treat allies the same way you treat opponents.”

Levy, of the Chicago Council on Global Affairs, also warned that “there’s still a risk that this escalates into a trade war.”

“Our allies and partners are going to be pressured by China to take their side,” he added. “In this environment, it’s hard for them for to be very pro-US.”

And as the US goes its own way, the EU is having to seriously consider a near-term – and possibly long-term – future that does not include America as a close partner.

“Trump’s full-frontal assault against his allies has blurred lines and caused incomprehension,” said Elvire Fabry, senior research fellow at the Jacques Delors Institute think tank in Belgium.

The question for Europe now is how to counter a president who has called the EU a “vehicle for Germany”, praised Britain’s Brexit vote and lashed out at Nato for freeloading.

Fabry said the Europeans were now pushing a “new narrative” in which, as the world’s biggest market of 500 million people, they will lead a push to preserve the “regulated globalisation” that Trump is trying to overturn, Fabry said.

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For that, they have tried to enlist the same country as Trump has: China.

In a symbolic step, EU diplomatic chief Federica Mogherini appeared alongside the Chinese foreign minister in Brussels, Belgium, on Friday just hours after the US tariffs took effect to call for a “rules-based global order”.

She also cited trade deals that the EU is negotiating with several countries including Mexico, which was also hit by the new tariffs.

But Dempsey, of the Carnegie Europe think tank, warned that Europe had to rely on itself.

“They can build on those trade relationships, but they are not a substitute for Europe’s future direction,” Dempsey said.

Just what that direction is, however, remains unclear.

Europe is already under strain from internal crises, with the rise of a populist government in Italy sparking fears of fresh turmoil in the euro zone and Spain shaken by the ousting of its prime minister on Friday.

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Dempsey said that Europe was badly lacking the strong leadership of German Chancellor Angela Merkel, whose power seemed to have been sapped by her struggle to form a coalition government and by her frosty relationship with Trump.

“Europe needs to pull together and show unity,” Dempsey said, urging Merkel to get behind the EU reform programme of French President Emmanuel Macron.

Europe is putting its credibility on the line with its confrontation with Trump, said EU energy commissioner Miguel Arias Canete, who became the first western official to visit Tehran after Trump pulled out of the Iran nuclear deal.

The EU has joined Russia and China in trying to keep the deal alive despite heavy US sanctions on Iran.

“Can Europe stand strong in the face of US interests? The Iranians have their doubts. I think this subject is crucial and will determine the role of the EU,” Canete said.

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The tensions threaten to come to a head when Trump meets Nato leaders in Brussels on July 11 and 12.

“The very concept of an ‘ally’ risks being called into question” at the summit, said Fabry.

Agence France-Presse contributed to this report.