Unfortunately, however, geoeconomics is not the only game in town. There is also geopolitics, a game Trump does not understand — as his naive dealings with North Korean dictator Kim Jong Un show. And so, while Trump’s economic hardball may get us some jobs and money, it could also get us into trouble for which we are neither psychologically nor materially prepared.
The modern liberal mind draws a distinction between economics and geopolitics. It’s guns vs. butter; global power vs. “nation-building at home.” Europeans once thought they could shape the world with their economic clout, even as they weakened themselves militarily. When Americans think about trade today, they think only about how it affects their jobs and their pocketbooks.
Historically, however, economics and trade have always been an adjunct to geopolitics. Trade wars and economic competition were often precursors to real wars — Germany and Britain before World War I, for example, or the mercantilist competition among England, Spain and France in the 17th and 18th centuries. “Rich nation, strong army” was the motto of Imperial Japan and of modernizing China.
The founders of the liberal world order after World War II were acutely aware of this connection: The breakup of the world into competing economic blocs in the 1920s and 1930s, they believed, had played a big part in the breakdown of global peace. That was one main reason they tried to establish a global economic system characterized by freer trade. A more open global economy lent cohesion to the liberal world, even when some countries were doing better than others. Japan boomed in the 1970s while the United States stagnated. During the 1990s the roles were reversed, and the two countries constantly wrangled over trade. But their economic competition was contained by the common perception that, for their own and the world’s well-being, they had to work things out. Nor was there ever the slightest danger that economic competition would spill over into geopolitical competition. That has been one of the great historical anomalies of the present order.
But it doesn’t have to last, and Trump’s “winning” trade strategy these days is undermining it. Canada and Mexico may have fared better than they originally feared when Trump was brandishing threats of tariffs, but they both come away from the latest deal knowing the United States is now less concerned about common interests than it is in squeezing the best deal it can out of friend and foe alike. Trump’s openly declared economic nationalism can only stimulate similar attitudes elsewhere — it is already having that effect in Europe. The sense of common interest that has held the liberal world together will begin to collapse as allied publics around the globe come to share the Trumpian view that global economics is a struggle of all against all, where the strong get what they can and the weak suffer what they must.
China has always seen things that way, of course. For it, as for the great powers of the past, geoeconomics and geopolitics are one and the same. Trade, finance, diplomacy and military power are all aspects of comprehensive national power. Rich nation, strong army. If a competing power tries to reduce China’s ability to produce wealth, no matter the reason or the means, it is no different from any other type of geopolitical challenge. And if the U.S. advantage on the economic side is too great to overcome, China has other means of responding. Beijing could challenge the United States in a way it doesn’t want to be challenged — in the military sphere.
It’s not clear Trump administration officials quite see that their tough trade policies could lead down a path toward conflict. They are treating the trade dispute as a matter of punishing China for unfair trade practices and correcting imbalances. Trump’s top trade adviser, Robert E. Lighthizer, is apparently seeking a replay of the Reagan administration’s success in the 1980s of forcing Japan to reduce barriers.
The analogy is dangerously inapt. Japan was a dependent ally with no recourse other than to bargain for the best deal it could. China has other options. Its military power is growing rapidly, and the balance in East Asia is gradually tilting away from the United States. If the price of winning the trade war is an aggressive Chinese military move in the South China Sea or against Taiwan, the costs to the United States, in terms of instability in the region, frayed alliances, and its own standing as a guarantor of security, would be much higher than the economic benefits of a new trade arrangement.
It would be one thing if Trump’s trade policy were part of an overall geopolitical strategy to deal with a rising China, but it isn’t. On the contrary, Trump and Congress are weakening our tools for dealing with the Chinese challenge. Strategists such as Robert Blackwill and Ashley Tellis have been calling for a combined economic, political and military approach that would include preferential trading agreements with Asian partners — excluding China — such as the Trans-Pacific Partnership agreement that Trump jettisoned , or an international technology-control regime — which requires the kind of international solidarity that Trump’s policies are undermining. Also needed is a substantial strengthening of U.S. power-projection capabilities in the Asia-Pacific region, which requires Congress to spend more on defense at a time when Trump’s tax cuts are blowing up the deficit.
The Democrats are just as irresponsible. They want to play hardball on trade while cutting the defense budget and reducing forces overseas. They would squeeze China economically while failing to deter them militarily.
In our current inward-looking myopia, we think about jobs and votes. The Chinese, as always, think about power. In case you didn’t recognize it, this is what sleepwalking into war looks like.