US President Donald Trump seriously intends to turn his disdain for the international system into concrete policy. His decision to impose a XNUMX percent punitive tariff on many Chinese products could seriously undermine global trade. Regardless of the fact that he made a last-minute decision to exempt EU goods from those tariffs, Europe may still find itself in the firing line. It is now clear that Trump's "America First" approach will not allow the rules-based international order to remain intact. The United States designed the post-war order and for decades demanded its implementation. But at this moment the situation has changed. Trump's recent moves are not only about trade, but also America's departure from Pax Americana.
Few countries are as tied to the post-war order as Germany, which, like Japan, owes its economic revival after 1945 to a trade system based on clear rules. The German economy is highly dependent on exports, which means that it is extremely vulnerable to trade barriers and punitive payments imposed by major trading partners.
Trump's protectionist policy challenges the entire economic model of Germany, since its creation in the 1950s. The fact that Trump has repeatedly singled out Germany as one of America's closest allies in Europe is not unimportant. When optimists say that Trump is talking more than he is doing - that his statements on trade, as well as threats to North Korea, are just part of the negotiating strategy - pessimists can ask a reasonable question: What if Trump actually does what he says?
Germany should have no illusions about what a transatlantic trade war could mean. Regardless of its membership of the EU and its single market, Germany stands to lose more than anyone due to its trade dependence and the current state of transatlantic power relations.
Undoubtedly, the EU member states that accused Germany of arrogance could now view this with malice. But the weakening of the EU's largest economy will automatically affect the entire bloc. And this is not a moment for disunity. The UK's exit from the EU has already caused political dissonance among member states, and anti-European populists have just won a coalition parliamentary majority in Italy.
Worse, neither Germany nor the European Commission, which deals with trade issues on behalf of EU members, is now in a position to stand up to Trump. The stupidity of German politicians who decided to ignore long-standing criticism of the country's persistently high balance of payments surplus has now appeared in pure form. If the German government were to reduce the surplus - which reached a new record level last year - by increasing domestic investment, Germany would be in a much better position to respond to Trump's threats.
When we think about the possibility of a transatlantic trade war, we must remember the statement, usually attributed to Mahatma Gandhi, that the system "an eye for an eye will make the world completely blind." A service-for-service transatlantic trade war will make all countries losers and could usher in a new period of isolationism and protectionism. If it goes far enough, it may even lead to the collapse of the world economy and the disintegration of the West. Precisely because of this, the EU has no other choice but to reluctantly lead the negotiations.
One of the expected consequences of Trump's trade revolution is that it will push Europe towards China, which is already moving towards the EU through its One Belt and One Road initiative - investment and infrastructure projects in Eurasia. To the extent that East-oriented alternatives to transatlanticism will grow in the next few years, reaching the right balance between East and West for Europe will be one of the most complex challenges. On this day, Europeans have to worry not only about Russia, but also about the new superpower China.
The destruction or disruption of the system of transatlantic trade relations is neither in the interest of the US nor in the interest of Europe. Chinese leaders are probably celebrating in a small circle because of the Trump administration's promise to "make America great again" because it has so far undermined US interests and given China hope of becoming great again. Indeed, despite the tariffs that Trump recently announced on China in response to its alleged infringement of intellectual property rights, one could be forgiven for thinking that the main goal of Trump's policy is to help the Chinese in their quest for global influence.
After taking office, one of Trump's first moves was to withdraw the US from the Trans-Pacific Partnership, a trade agreement that created a bulwark against China in the Asia-Pacific region. Now China has a chance to establish trade rules in a region that accounts for about 60 percent of the world's economy. In an identical way, the effect of Trump's import tariffs on steel and aluminum will essentially help China while hurting America's European allies. We can hardly blame the Chinese for seeking to profit from an unexpected chance.
In the coming months, Europe's fundamental weakness will become even more apparent. Its prosperity depends on America's willingness to provide security guarantees and the implementation of a liberal international order.
When the US abdicates its duty for atavistic nationalism, Europeans must rely on themselves. Let us hope that Europeans can act quickly to preserve their unity and save the international system that has provided peace and prosperity for generations.
The author was the Minister of Foreign Affairs of Germany 1998-2005; he played a key role in the founding of the German Green Party, whose leader he was for almost 20 years
Copyright: Project Syndicate, 2018.
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