China Embraces economic openness on the win-win model, Trump embraces unilateralism, the EU remains confused

Trump’s negative rhetoric on both China and the European Union 

When it comes to Donald Trump’s geopolitical wars of words, apart from Venezuela and Iran, Trump’s greatest rhetorical ire is reserved for China and the European Union (EU). But while The US only formally established relations with the People’s Republic of China in 1979, American policy makers had championed European unity since the 1940s and have since become strong supporters of both individual European nations and the EU.

Much of this has changed under Donald Trump. While Trump has been the most vocal supporter of Chinese Taipei’s breakaway government than any President since prior to 1979, he has also cast much doubt on America’s once automatic support of the European Union. Trump’s best friends in Europe tend to be Eurosceptics while just prior to his own election in 2016, Trump openly endorsed Britain exiting from the European Union.

Trump also continues to accuse China of “screwing” the United States on trade deals, “taking advantage” of “stupid” US Presidents prior to his arrival in Washington and has also bizarrely accused Chinese of “living too well”. Still, the US President nevertheless continues to refer to Chinese President Xi Jinping as a “good friend”. By contrast, de-facto EU strongwoman Angela Merkel has a deeply frosty relationship with Trump as do most EU big wigs in Brussels.

In July of this year, Trump said the following of the EU,

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

Yesterday, he offered an even stronger criticism of Europe. When asked about America’s traditional alliance with the EU, Trump stated,

“I mean, what’s an ally? We have wonderful relationships with a lot of people. But nobody treats us much worse than the European Union. The European Union was formed in order to take advantage of us on trade, and that’s what they’ve done”.

When the interviewer accused Trump of offering a hostile response, Trump stood firm saying,

“It’s not hostile. You know what’s hostile? The way they treat us. We’re not hostile,” he shot back. “We’ve been the stupid country for so many years”.

China or Europe – what does Trump dislike more? 

China remains a more important trading partner with the United States than the EU, although both Europe and China run trade surpluses with the United States. While Trump is clearly displeased about running trade deficits with any nation or single market, Trump still appears to be more optimistic about China, perhaps not least because America’s businesses community seems to be far more concerned with leaving trading doors open with China rather than Europe.

While the US business community has been rather muted regarding Trump’s rhetoric on Europe as many US businesses are bitter about the EU’s insular trading model, when it comes to China, the Trump White House has already been publicly rebuffed by important elements of the US private sector. As China continues to open up its market to new imports, the Trump trade war has prohibited US companies from taking advantage of easier access to the world’s largest national market in terms of purchasing power parity (PPP).

Furthermore, while US companies manufacturing goods in the EU typically only manufacture good destined for the European market, US companies producing in China are producing goods for global export, including exports back into the United States. Thus, many companies are overtly worried that Trump’s hostile attitude towards China could impact this relationship negatively.

Not only does the US Chamber of Commerce continue to oppose Trump’s trade war with China, but recent events have shown that America’s big tech corporations have little appetite for indulging anti-Chinese conspiracy theories involving cartoonish allegations of corporate espionage conducted by the People’s Liberation Army. Furthermore, US air carriers Delta, United and American Airlines have all defied Washington by modernising their references and codes for flights into Taipei in order to accurately reflected the One China Policy. Beyond the United States, other western corporations are also finding that having good relations with China is essential for business.

At some level Trump must be aware of these facts even though he tends to play them down when promoting his trade war with China before domestic audiences. Yet at a personal level, when it comes to animosity, the EU finishes well ahead of China in terms of Trump’s self-evident mentality.

While Trump tends to speak about China as a rival that he respects at a certain level – particularly due to his seemingly good personal relations with President Xi, Trump’s rhetoric and self-evident feelings about the EU are those of contempt, not only because of the trade deficit but because the EU has come to represent the last bastion of global liberalism now that Trump has radically transformed the position of the United States in respect of the liberal ideology.

Europe continues to antagonise the US and lack necessary enthusiasm in respect of China 

It is a fact that amidst the Trump trade war, the EU has increased its interest in China on many levels, particularly where trade is concerned. It also remains the case that many European policy markers continue to cling on to a parochial view of free trade that prohibits Brussels from displaying overt enthusiasm for a free or nearly free trading agreement with China (the likes of which the EU recently signed with Japan after a lengthy negotiation period).

A united front of an EU that embraces free trade with China combined with a China that looks to open its markets to many foreign producers including European ones could represent an important positive bulwark in the global battle between free trade and unilateralism. Yet because the EU has failed to diversify, energise and modernise much of its economic outlook, China still has far more global options in looking for trading partners outside of the United States.

The fact of the matter is while working closer with China could give the EU more leverage against Washington in Trump’s highly anti-European trade war, the enthusiasm for implementing such a win-win + leverage strategy in Europe remains unconvincing. Because of this, Europe is missing a golden opportunity for its own businesses and consumers.

Conclusion 

In this sense, Europe’s lingering Sino-scepticism has ironically gifted China even further leverage in the trade war as now Chinese officials can tell Washington that if the trade war is not resolved soon, the Cadillac’s on Chinese streets will be replaced by Mercedes vehicles while European agricultural goods could replace those that China was heavily importing from the US prior to the trade war.

China can gain from more trade openness with either the US, EU or ideally both. This is almost certainly what will happen in the long term in any case. For the EU however, confusion over the state of Atlanticism combined with the inability to tell China openly that a free trading agreement of some kind is the way forward, continues to stifle European progress in an age where the world is becoming divided between the win-win free trading relationships pioneered by China and the unilateralism of Donald Trump’s United States.

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