The New Cold War
America, China, and the Echoes of History
At the dawn of the administration of U.S. President Donald Trump, I predicted in Foreign Affairs that Trump’s “America first” agenda would set in motion tectonic forces beyond his control. As the ground shifted beneath their feet, longtime U.S. allies would lose confidence in U.S. leadership and credibility. They would adapt by hedging their bets, moving away from alignment with a United States no longer willing to promote and defend the liberal world order that it had sustained since 1945. The evidence for this hedging would be in adjustments by U.S. allies to their approaches toward geopolitics, economics, and climate change.
One year after Trump’s inauguration, the liberal order has not collapsed. But it is in distress as the president turns his back on the world the United States made to embrace a nationalist and isolationist foreign policy. Although they still hope that Trump’s abdication of global leadership is a temporary aberration rather than a lasting inflection point, U.S. allies and partners are making contingency plans.
SAFE EUROPEAN HOME
The tendency toward hedging is most marked in transatlantic relations, the bedrock of the post-1945 liberal order. At NATO’s Brussels summit in May, Trump rattled Europeans by suggesting that his country’s commitment to the alliance was contingent on their reimbursing American taxpayers for U.S. military expenditures while declining to endorse Article 5 of the North Atlantic Treaty, which covers collective defense. Although he belatedly affirmed the United States’ commitments two months later, Europeans got the message. “The times in which we can fully count on others are somewhat over, as I have experienced in the past few days,” German Chancellor Angela Merkel said after the Brussels summit.
Europeans have hardly abandoned the Western alliance, but Trump’s unpredictability is spurring them to take greater responsibility for their own defense. In June, EU member states launched a new European Defense Fund, promising to increase their own defense spending by 4.3 percent. Beyond bolstering the continent’s capacity to stand up to Russia, these new capabilities are designed to increase the EU’s “strategic autonomy” vis-à-vis the United States. In addition, 25 of the EU’s 28 member states have agreed to endorse an EU defense pact, known as Permanent Structured Cooperation, that “could cover projects ranging from new battle tanks to the deployment of multinational forces.”
America’s most important European allies, such as France and Germany, have also been alienated by Trump’s coziness with Russian president Vladimir Putin, his affinity for authoritarian leaders generally, his unquestioning embrace of Israel in its dispute with the Palestinians, and his clumsy hectoring of UN member states regarding the U.S. decision to move its embassy from Tel Aviv to Jerusalem. They have resisted his efforts to scupper the Iran nuclear deal, too, insisting that it will persist regardless of U.S. withdrawal.
Trump’s “America first” lurch has sent shock waves through the Asia-Pacific as well. Traditional U.S. allies are suddenly wondering whether the United States remains a credible partner capable of (or interested in) preserving the regional balance of power, or even meeting its treaty obligations. Australia, for instance, is debating whether it can rely on the United States to balance China’s rise. Canberra’s foreign policy white paper, released in November, recommends what Michael Fullilove of the Lowy Institute calls a challenging “gymnastic move,” namely: “hedging against the dual risks of a reckless China and a feckless United States.”
Other historic U.S. allies and partners are also embracing self-help. Japan’s defense spending is set to reach record levels as Tokyo responds to North Korean provocations and Chinese maritime assertiveness. South Korea is accelerating its own arms buildup to counter the threat from North Korea, and President Moon Jae-in has declared his intention to assume wartime operational controlof the ROK’s military from the United States, which would otherwise command South Korea’s 650,000-member military in the event of war. At the same time, Trump’s bellicose threats against Kim Jong Un’s regime, which many in the South consider provocative, risk driving a wedge between the United States and its longtime ally.
Singapore, meanwhile, is hedging in another direction, as I anticipated a year ago. Although the United States remains its most important security partner, the city-state has boosted military ties with China, conducting more bilateral exercises with the Chinese navy and army. In sum, nations that have long encouraged the United States to counterbalance China are now placing side wagers in the event that their American patron falters.
Hedging is also occurring in the global economy, as the Trump administration abandons U.S. leadership on trade liberalization. Immediately after his inauguration, the president withdrew from the Trans-Pacific Partnership (TPP). This was a devastating blow to U.S. diplomatic credibility, with geopolitical as well as economic implications. Trump has also moved to renegotiate the North American Free Trade Agreement (NAFTA)—though his demands on Canada and Mexico are so extreme that negotiations have slowed to a crawl. More generally, the White House has signaled its disdain for the World Trade Organization (WTO), threatening to ignore any unwanted rulings by its dispute resolution mechanism. The president’s attacks on the rules-based system of international commerce has generated a backlash from members as diverse as the EU, China, and Argentina, who fear that Trump could spark a downward spiral into tit-for-tat protectionism.
FILLING THE VOID
As the United States steps back, other trading nations are stepping up. Global trade in goods and services actually grew 4.2 percent in 2017. At the Asia-Pacific Economic Cooperation summit in November, the remaining eleven members of the TPP revived the agreement, now rechristened the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). This sent a clear message that they prefer a multilateral scheme to bilaterally negotiated deals with a protectionist United States.
The EU, meanwhile, is overtaking the United States when it comes to setting trade rules. In December it concluded a major free trade agreement with Japan, which along with the EU accounts for over 30 percent of the world’s GDP. The Japan deal comes on the heels of previous EU agreements with Canada and Vietnam, and Brussels now has its eyes on another potential blockbuster deal, this time with Mercosur.
China is also filling the void—and attracting new partners. Last year began incongruously, with President Xi Jinping delivering a speech in Davos, in which the leader of the Chinese Communist Party depicted his nation as globalization’s savior. By the end of 2017, any irony had worn off. China has moved to cement its leadership in the Asia-Pacific economy through its Belt and Road Initiative, which will invest a staggering one trillion dollars in infrastructure to link Europe and Asia; its Regional Comprehensive Economic Partnership (RCEP), a China-focused free trade area; and its Asia Infrastructure Investment Bank, which now boasts eighty members. French President Emmanuel Macron and other European leaders have made pilgrimages to Beijing to close economic deals. Closer to the United States, the Chinese are also making inroads among Latin American nations frustrated by Trump’s hard-line trade stance.
In a unique form of hedging, Canada and Mexico are exploiting the U.S. federal system, reaching out to individual states to plead their case for NAFTA. In the first six months of the Trump administration alone, members of the Canadian cabinet and parliament met more than 170 times with senior U.S. officials from 23 states, such as New York, that are heavily reliant on cross-border trade.
A similar pattern is evident in the case of climate change. In June, President Trump renounced the Paris agreement on climate change as an affront to U.S. sovereignty and a threat to the U.S. economy. Contrary to my predictions a year ago, other countries have not (yet) hedged their commitments to the Paris accord. Indeed, after Trump renounced the agreement, China and the EU immediately issued a joint statement reaffirming their commitments. At the November conference of parties in Bonn, other signatories did the same. In December, Macron hosted a separate global climate conference with more than fifty world leaders in order to raise funds to meet their Paris targets. The near-unanimous international support for the Paris accord indicates that multilateral cooperation on climate change will continue without U.S. leadership, even if meeting the Paris emissions targets remains challenging. Indeed, U.S. cities and states—with California in the lead—have made their own climate pledges and allied with Paris signatories. In June, California Governor Jerry Brown traveled to China to discuss clean energy with Xi, and this September Brown will host world leaders at a Climate Action Summit in San Francisco.
THE FUTURE OF THE ORDER?
Uncertain about the future trajectory of the United States and the wisdom of its decisions, America’s friends are insuring themselves against the risks of alignment by diversifying their portfolios and strengthening their capacities for self-help. Their hedging has been incremental and selective rather than abrupt and wholesale. Some may be biding their time in the hope that sanity returns to Washington. But the more independent paths now being pursued by U.S. allies will make it harder for the United States to reclaim the mantle of global leadership in the future. After just one year in office, Gallup reports, President Trump has presided over a catastrophic decline in global confidence in U.S. leadership. The longer current trends continue, the harder it will be for any future U.S. administration to resuscitate an open, rule-bound international order.