Trump’s Trade War With China is Based on Envy – His Trade War With Europe is Based on Disdain

On paper, the current protectionist trade war that Donald Trump has launched against China and the EU appear similar. Both China and Europe have trade surpluses with the United States that the US President has described as “screwing” the US economy. But while Trump has targeted rival China with tariffs along with historic allies including Japan, South Korea, Canada, Mexico and the EU, his attitude to each remains fundamentally different.

Today, Donald Trump gave the most specific statement to-date on his feelings towards the trade war with Europe vis-a-vis that with China. Trump said,

“The European Union is possibly as bad as China, only smaller”.

Trump’s relationship with the European Union was never good and indeed, one sees that this attitude was present even prior to his election in 2016. Prior to the November 2016 election in the United States, candidate Donald Trump stated that if he were British he would have voted for Brexit. Carrying this theme forward, it has been reported that Trump recently told French President Emmanuel Macron to take his country out of the EU that Paris helped to found as the European Coal and Steel Community in 1952.

 

 

By contrast, while Trump has had negative things to say about the American trade deficit with China, he has frequently praised China’s undeniable success with the clear implication being that Trump wishes the US could emulate Beijing’s achievements. Trump’s relationship with Chinese President Xi Jinping appears to be strong as the US President has often called his Chinese counterpart a “friend”, while praising joint achievements even in the midst of the off-again and now very much on-again tariff war with China.

 

 

Against this background, it can be surmised that today’s statement where Trump claimed that the EU is “almost as bad” as China but “smaller” (aka less significant) in actual fact means something akin to: ‘With China the trade war isn’t personal – but with the EU it is’.

When contrasted with his rhetoric on China, Trump’s rhetoric on Europe has been far more unfriendly and much more cynical. The US President’s personal relationship with German Chancellor Angela Merkel has been described as dismal, while his relationship with other major EU players is little better.  In spite of appearing to have warm feelings for French President Macron – much of the time Trump’s relationship with the French leader is a source of embarrassment for Paris, not least because French officials are having a difficult time downplaying Trump’s alleged but seemingly believable statement to Macron that he should exist the Europe Union – the very body Macron is desperate to reform on his terms.

In spite of recently slapping new tariffs on Chinese exports, Trump has shown that ultimately he does have the ability to work with Beijing towards win-win economic compromises – albeit not on as frequent a basis as Beijing and much of the US business community would like. Trump’s ability to work with China to ease economic tensions was manifested in the recent ZTE deal, which will allow the Chinese telecom manufacture to resume economic relations with the US in exchange for reforms to the corporate governance of the company.

While no such deals with Europe appear to be on the horizon, plenty of anti-European rhetoric on a variety of subjects is forthcoming from the US President. While Trump has praised President Xi’s leadership, he has openly undermined Angela Merkel’s domestically unpopular open door policy which has seen the migrant crisis consume wider pan-EU political discussions, while also lambasting Europe on issues ranging from trade to NATO.

 

 

Thus, one sees that on a wide range of issues, Trump is uniformly unimpressed with Europe while his personal praise for Xi and his apparent admiration for China’s success means that while he believes that both China and the EU have given the US a “bad deal” in terms of of trade – he nevertheless approaches China with a form of respect (even if it is a grudging respect), while his approach to Europe is one of open contempt.

In many ways, European leaders have themselves to blame for this reality. Even though Trump’s feelings on the matter are doubtlessly motivated by his personal dislike for European ultra-liberalism, the fact that the EU has been so reticent to diversify its international trading relationships means that unlike China which trades with the entire world to great effect, the EU is largely boxed in to a neo-liberal Atlanticist model that Trump is rapidly putting on the scrap heap.

In order to gain leverage against the US in the seemingly medium to long term trade war, the EU could have and should have intensely engaged in discussions with China to create a free or near-free trading partnership. Simultaneously, Europe could have and should have dropped its economically self-defeating sanctions against Russia.

 

 

While the hand of the inevitable will likely push the EU closer to China, Russia and other eastern partners in the future, for the moment, the European Union has failed to capitalise on a crucial opportunity and as a result, Trump does have the European back against the wall – the very place he wants it to be.

Likewise, Trump has little choice but to respect China because unlike the EU, China can fight back against Washington’s trade war even though China did more to try and prevent Trump from jumping into a protectionist mindset than the more aloof European leaders ever attempted to do. China’s economic strength and its diverse multi-continental trading partnerships means that while China can more than leverage the US throughout the course of future discussions, the EU does not have this crucial flexibility.

 

 

In China, Trump sees the red flag of economic success in spite of ideological differences. In Europe, Trump tastes blood and looks ready to humiliate European leaders into a dramatic climb-down on trade, NATO funding, the JCPOA (aka Iran nuclear deal) and possibly even relations with Russia in the very near future.

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