Trade war could be hint of US pullback

One of my reporting tasks in recent weeks has been to look at the bigger picture behind US President Donald Trump’s trade skirmishes.

He, of course, threw further fuel on the fire by announcing tariffs on a further $200 billion of Chinese goods on Sept 17. China has not been uniquely in the firing line, with Canada, Mexico and the European Union also targeted.

You don’t exactly win friends (although I suppose you may influence them) by imposing sanctions on their exports.

The big question therefore is whether this is all part of the United States abdicating the global leadership role it has enjoyed for more than 70 years.

Trump, more than any president before him, has brought Pax Americana to a head.

First there was the pulling out of the Trans-Pacific Partnership, which put stress on the US alliances in Asia, then the withdrawal from the Paris climate accord, and since then we have had him questioning Washington’s commitment to NATO and the extraordinary falling out with his fellow Western leaders at the Quebec G7 summit in June.

Now his unilateral trade actions undermine the World Trade Organization (formerly the General Agreement on Tariffs and Trade), one of the three pillar institutions of the Bretton Woods Consensus (the others being the International Monetary Fund and the World Bank) on which the US-dominated global order has been built.

Martin Jacques, the British journalist and academic and also author of When China Rules The World, one of the experts I interviewed on this, believes that Trump’s America First approach is not some aberration in the country’s history but a return to the past.

He says that for most of its history the US had been relatively isolationist and had operated much like any other nation-state.

This changed after World War I, he said, with then-US president, Woodrow Wilson, leading the setting up of the League of Nations with the US finally adopting a much bigger role after World War II.

“It can either pursue alliances or adopt an isolationist position. There can be little doubt about the direction it is now moving,” Jacques said about the US current choices.

Clearly the global order has to change just to accommodate the rise of China and other emerging nations.

Trump, however, seems intent on speeding the whole process up. Certainly, if he wanted support for some Middle Eastern or other war, he would now face a coalition of the unwilling.

Trump, however, derives his power from people who don’t want any more of these adventures.

A full-blown trade war would not be much fun for anyone and might be the catalyst that plunges the world economy into another recession.

“The world might be a very fragmented and disorderly place for a while,” said Stephen Roach, senior fellow at Yale University’s Jackson Institute of Global Affairs.

If Trump is not re-elected in 2020, we might have a more conventional president with a different agenda, although one senses public opinion in the US has shifted irrevocably, even among Democrats, on the country’s future global role.