Faltering Multilateralism: Today, Let’s Start with Trade

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It would be hard to make this stuff up. When I was deep into trade policy issues in the late 80s and early 90’s before China’s accession to the WTO, I could not have imagined a President using these trade policies to enact such broad-based tariffs. And it seems like that is how the CIT – the Court of International Trade, sees Trump tariff efforts as well.

Now I was going to dive into a just recently released book by Brookings edited by my longstanding colleague, Lim Wonhyuk from South Korea (Korea) titled: “Unfinished Transformation: Domestic Politics and International Relations Since the Covid-19 Pandemic”. Wonhyuk is the editor and I have a chapter in the volume – “The possibilities for “Effective Multilateralism” in the Coming Global Order. There are a variety of pieces in the book from some rather notable folk including: Kent Calder, David Lampton, Zia Qureshi, Norman Ornstein and my good colleague, Homi Kharas. And I will return to the just released book though unfortunately there does not appear to be a current digital version at this time. But I cannot let this CIT decision pass without comment.

Yes, so, the CIT ruled just last evening (Wednesday) and according to the NYTimes and Tony Romm and Ana Swanson, this was the conclusion reached:

“The U.S. Court of International Trade said the president had overstepped his authority in imposing his “reciprocal” tariffs globally, as well as levies on Canada and Mexico.”

What the Court has declared as illegal then are the “worldwide and retaliatory tariffs,” in other words, the 10 percent tariffs on all trading partners and also the reciprocal tariffs that President Trump paused for 90 days in order to negotiate trade deals with a host of trade partners. What remains in place for the moment are tariffs on specific products, such as those that were placed on steel, aluminum and automobiles. As pointed out in the NYTimes piece:

“The ruling, by the U.S. Court of International Trade, delivered an early yet significant setback to Mr. Trump, undercutting his primary leverage as he looks to pressure other nations into striking trade deals more beneficial to the United States.”

Paul Krugman in his Substack today pointed out what many trade types had been thinking all along:

“The thing is, it has been obvious all along that Trump’s use of the 1977 International Economic Emergency Powers Act to justify Smoot-Hawley level tariffs was a massive abuse of power. I mean, since when are 4 percent unemployment and 2.5 percent inflation an emergency justifying the reversal of 90 years of policy? But I guess I just assumed that things like that didn’t matter anymore.”

How did it reach this point? Well, this is how the NYTimes reporters described it:

“But Mr. Trump adopted a novel interpretation of its powers as he announced, and then suspended, high levies on scores of countries in April. He also used the law to impose tariffs on products from Canada and Mexico in return for what he said was their role in sending fentanyl to the United States.”

 

“On Wednesday, the Court of International Trade, the primary federal legal body overseeing such matters, found that Mr. Trump’s tariffs “exceed any authority granted” to the president by the emergency powers law. Ruling in separate cases brought by states and businesses, a bipartisan panel of three judges essentially declared many, but not all, of Mr. Trump’s tariffs to have been issued illegally.”

 

“It was not clear precisely when and how the tariff collections would grind to a halt. The ruling gave the executive branch up to 10 days to complete the bureaucratic process of ending them. The Trump administration immediately filed its plans to appeal in the U.S. Court of Appeals for the Federal Circuit.”

At least for the moment the signature policy of this second Trump administration appears ‘cooked’. It will be interesting to see what Trump does next for it seems unlikely that Trump will give up on his most preferred policy – tariffs.

Image Credit: Wikipedia

This Post appeared originally at my Substack, Alan’s Newsletter: https://globalsummitryproject.substack.com/p/faltering-multilateralism-today-lets

 

Multilateralism: It is Just Largely Talk Now

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While you will see that the main focus of this Substack is on multilateralism, and its current failure, I couldn’t let Trump’s disrespect for the President of South Africa, Cyril Ramaphosa pass without some comment. Once again in the Oval Office, as described in the NYTimes,  Trump let his lack of understanding, his lack of facts rule the day. It showed the absolute worst of Trump. The American people should be ashamed that a leader is willing to so distort US relations with potentially friendly leaders:

“In an astonishing confrontation in the Oval Office on Wednesday, President Trump lectured President Cyril Ramaphosa of South Africa with false claims about a genocide against white Afrikaner farmers, even dimming the lights to show what he said was video evidence of their persecution.”

 

“The meeting had been expected to be tense, given that Mr. Trump has suspended all aid to the country and created an exception to his refugee ban for Afrikaners, fast-tracking their path to citizenship even as he keeps thousands of other people out.”

 

“But the meeting quickly became a stark demonstration of Mr. Trump’s belief that the world has aligned against white people, and that Black people and minorities have received preferential treatment. In the case of South Africa, that belief has ballooned into claims of genocide.”

One last point, a good point it appears, though still somewhat uncertain, Trump will attend, apparently,  the G20 Summit gathering in November in South Africa. As reported in the NYTimes: 

“South Africa presented a framework for a trade deal, the president said, and the two sides agreed to hold further discussions to iron out the specifics of an agreement. He said that Mr. Trump indicated that he would attend the Group of 20 summit in Johannesburg in November, despite suggestions by his administration that the United States might skip it.” 

 So now back to today’s main subject, multilateralism. Back in December 2024 in a Substack Post here at Alan’s Newsletter, “Focusing on the Future – Where are we on the Sustainable Development Goals (SDGs), and some other things?” I leaned on Homi Kharas, my good colleague at Brookings to give me some hope that states, many states, were turning to focus on the sustainable development goals (SDGs). And Homi and some of his colleagues did. As I wrote at the time: 

“Even more pointedly, Homi suggested that a vein of optimism was called for. The reason: technology could provide the necessary fillip to efforts to achieve the SDGs. Under the header, “ Technology is finally delivering on its promise to make major economic production and consumption structures more sustainable””  

While that may be the case for some it is clearly not the case for the second Trump administration. As Dashveenjit Kaurashveenjit Kaur wrote rather depressingly this last March in Sustainability News: 

“The US has officially rejected the UN Sustainable Development Goals, citing sovereignty concerns and claiming a mandate from voters to prioritise American interests over global frameworks.” 

 

“When world leaders gathered at the United Nations headquarters in New York in September 2015, they created what many called a “blueprint for a better future” – the UN Sustainable Development Goals. Then-president Obama pledged American commitment to the ambitious 15-year roadmap designed to transform our world by 2030.” 

 

“This week, and the United States has executed a stunning, although not unexpected about-face: the Trump administration has declared it now “rejects and denounces” these very same global objectives, becoming what appears to be the first nation to abandon the framework since its unanimous adoption.” 

 

“The consequential announcement arrived not through a high-profile press conference or presidential statement. Still, it nested in diplomatic remarks delivered by Edward Heartney, Minister Counselor to ECOSOC at the US Mission to the United Nations.” 

 

““Put simply, globalist endeavours like Agenda 2030 and the SDGs lost at the ballot box,” Heartney stated in the prepared remarks. “Therefore, the United States rejects and denounces the 2030 Agenda for Sustainable Development and the Sustainable Development Goals, and it will no longer reaffirm them as a matter of course.”” 

Now maybe this declaration from a mid-level bureaucrat can ultimately be swept away if the Trump administration changes its mind – as we’ve seen it wouldn’t be the first occasion for sure, still the statement is rather chilling and appears to meaningfully undermine the multilateral effort that to this point not very successfully, notwithstanding two recent UN summits that focused wholly or in part on on the SDGs. 

This episode is just a small part of the growing acknowledgement that the heart of multilateralism, the UN and its many specialized agencies are failing. Many of us concerned with global stability and order focus a fair amount on the numerous multilateral efforts. But there does seem to be a certain amount of denial going on. 

Now, in this context of faltering multilateralism, I was attracted by the recent piece penned by my colleague, Peter Singer. Peter among other things writes the Substack Global Health Insights.   Now Peter was special adviser to the director general of the World Health Organization from 2017 to 2023. He  is today emeritus professor of medicine at the University of Toronto and a former chief executive of Grand Challenges Canada. Peter understands the faltering UN effort. As he posted recently at his Substack, in a piece titled, “UN leadership: relentlessly focused on results?”: 

“Secretary-General Antonio Guterres has recently taken to tweeting, “The mission of the UN is more urgent than ever.” This is certainly true, but not in its current version — replete with process and plans. There is, of course, a reform initiative, called UN80; however, it seems more focused on managerial efficiency and restructuring than results. The UN needs a new mission: Get Stuff Done.” 

With the current round of new leadership appointments,  Peter turns to leadership, and its central importance: 

“Yet despite their importance, the UN system has often struggled to deliver timely, measurable outcomes—an issue exacerbated by dwindling trust and funding. With Sustainable Development Goals (SDGs) badly lagging and support for the UN increasingly under threat, the need for results-focused leadership [emphasis added] is more urgent than ever.” 

 

“The UN desperately needs leaders who are singularly focused on delivering measurable results. Without results, there is no trust; without trust, there is no funding. Results must be the cornerstone of any leadership candidacy.” 

If leadership is key, then, Peter points to critical upcoming opportunities for the UN system and what is necessary for the incoming leadership: 

“A key lever is leadership. Over the next three years, (at least) three major UN bodies will select (or elect) new leaders: the United Nations Development Programme (UNDP) in 2025, the UN Secretariat in 2026, and the World Health Organization (WHO) in 2027. The future of the UN may well hinge on whether these new leaders possess one crucial characteristic: a relentless focus on results.” 

 

“Results must be the cornerstone of any leadership candidacy.”

 

“This results focus is fully compatible with other perspectives that will drive these elections, such as gender and regional representation.” 

 

“Having had experience with a UN agency election and tried (and not fully succeeded) to help transform a UN agency into one that prioritizes results above all, I witnessed firsthand the barriers that make implementing a results-focused strategy difficult.” 

So as Peter portrays it what is necessary for successful multilateralism is leadership dedicated to results that can be shown. Only with this will trust be built and with trust, according to Peter, funding will be forthcoming. With that in hand, he then targets the current effort to choose new leadership:

“This is the acid test. Leaders who have a proven track record of achieving tangible outcomes are more likely to replicate that success at the UN. The UN is awash with process. But there is a gap between planning and execution.” … 

 

“In addition to personal examples, candidates should be able to provide compelling analysis and tangible solutions for improving measurable results at the agency they wish to lead.” … 

 

“From my experience, two elements are essential to fast-tracking progress: innovation and data.” … 

 

“Effective governance is even more important than management. Leaders must work with governing bodies to improve the results focus of the organization. UN governance tends to focus more on planning and process than on execution and results.” … 

 

“Changing the culture of an organization is key to making results-focused strategy, management, or governance sustainable. UN organizations tend to be highly hierarchical, which means leadership has an outsized impact on culture.” … 

 

“As member states, civil society, and donors engage in these critical leadership selections, they must champion candidates who are relentlessly focused on results. The future of the UN depends on it.”

And with that Peter concludes: 

“Nevertheless, imagine a UN system where, in five years, every agency is led by someone relentlessly focussed on results and on getting things done. It would be a very different—and far more effective and sustainable —UN than the one we see today.” 

The ‘pitch’ for critical leadership is sensible and important especially in the context of upcoming leadership searches and appointments. But I remain hesitant to accept that this will ‘turn this ship around’.   It seems to me that in the end the critical element remains national effort and the determination for members to forge collective policy whether health policy, climate change whatever. As Gordon La Forge. 2025 in his piece,  “The U.N. Is Still the Best Forum to Tackle AI Governance”. Reminds us in his recent piece in WPR:

“The late Richard Holbrooke once quipped that blaming the U.N. for international dysfunction is like faulting Madison Square Garden when the Knicks lose. Put another way, the U.N. continues to struggle with what could be called the 193-body problem: Nation-states are the world’s dominant form of political organization, but they are neither well-equipped to solve planetary challenges nor designed to defend the best interests of humanity as a whole, which often conflict with national imperatives.” 

It may require ‘coalitions of the willing’ to press ahead with new leadership on advancing critical and necessary policy. We cannot let the 193-body problem of the UN, or the ‘big boys’ problem, US, China and Russia to torpedo critical policy efforts. It is time to end just the talk. Using a plurilateral approach to push forward is critical though possibly incomplete. More on that soon. 

Credit Image: UN Dispatch

This Post first appeared at Alan’s Newsletter: https://substack.com/home/post/p-164155148

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A Tribute to Joseph S. Nye Jr. and Multilateralism Threatened: The G20 in South Africa

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He passed on May 6th. He was a longstanding leader in international relations. So at 88 Joseph Nye, Joe to most in the international relations community, passed away.

Joe was notable for many things, but possibly most notably his leadership at Harvard and his determination to move from academia to policy making and back. Probably best known for his creation and application of ‘soft power’, especially with respect the United States, he represented the best of international relations thought and application. His career was close to singular. As described in the NYTimes by Trip Gabriel:

“Sometimes considered the dean of American political science, Mr. Nye led the John F. Kennedy School of Government at Harvard and held senior jobs in the Carter and Clinton administrations.”

He was appointed deputy under secretary of state from 1977 to 1979. He returned to office with President Clinton serving in 1993 as chair of the National Intelligence Council. In 1994, he was appointed assistant secretary for international security affairs at the Pentagon.

On the academic side Joe joined the Harvard faculty in 1964, and he became dean of the Kennedy School of Government from 1995 to 2004.

Joe was probably best known for the concept he proposed and advanced throughout much of his career – ‘soft power’. As Trip Gabriel pointed out:

“Mr. Nye developed the concept of soft power in the late 1980s to explain how America’s ability to get other nations to do what it wanted rested on more than the power of its military or economy; it also derived from American values.”

“Soft power tools include diplomacy, economic assistance and trustworthy information, such as that provided in Voice of America broadcasts. He laid out his thinking in a 2004 book, “Soft Power: The Means to Success in World Politics.””

““Joe’s seminal book on soft power is one of the very few books by a political scientist on international relations that had an impact on the real world beyond academia,” Derek Shearer, a professor of diplomacy at Occidental College in Los Angeles, said in an email.”

Joe also promoted – it is somewhat unclear who first described it, ‘smart power’. Smart power is identified as the combination of hard power and soft power strategies. According to the Center for Strategic and International Studies, smart power is an “an approach that underscores the necessity of a strong military, but also invests heavily in alliances, partnerships, and institutions of all levels to expand one’s influence and establish legitimacy of one’s action.”

Joe promoted, in other words, critical strategic diplomacy and policy making. I must say I was quite lucky to enjoy his thinking and analysis. I was invited a variety of times by my mentor Richard Rosecarnce to the The Belfer Center for Science and International Affairs at Harvard where later in his career he ‘hung his hat’. The Belfer Center is the hub of Harvard Kennedy School’s research, teaching, and training in international security and diplomacy, environment and natural resource issues, and science and technology policy. Rosecrance would include me in various US-China and US-Middle East gatherings. Joe Nye was almost always present and I was thoroughly impressed by his insights and his very congenial involvement in all the discussions we held. He will be sadly missed but one of his final thoughts on President Trump is worth repeating:

““I’m afraid President Trump doesn’t understand soft power,” Mr. Nye told CNN in an interview days before his death. “Think back on the Cold War — American nuclear deterrence and American troops in Europe were crucial. But when the Berlin Wall went down, it didn’t go down under a barrage of artillery. It went down under hammers and bulldozers wielded by people whose minds had been changed by the Voice of America and the BBC.””

I would also refer to the insight on Nye from colleagues at the The Wire China, Haitong Du, Margaret Siu, Brian Wong, Chengkai Xie, and Duo Yi:

“Nye’s influence was not merely conceptual; it was lived — and is lived. He reshaped how we study power, and how we reckon with the responsibility it entails. He also taught us that values endure beyond individual leaders, and can transcend institutions. He reminded us, time and time again, that the world needs morally sound and resonant universal tenets for effective global leadership.”

“He cautioned us — gently, firmly — against over-reliance on historical analogy. Determinism and fatalism, he warned, are no guides to the future. Truth is more complex than polarisation. And through it all, Nye showed that strategic thinking demands not just expertise, but prudent judgement of knowing when to act, when to hold back, and what principles must endure.”

And finally an opening statement from the PS and its editors:

“Just a few decades ago, the world understood power in one way: as the ability to secure one’s desired outcomes using coercion, intimidation, or payoffs. Joseph S. Nye, Jr., changed all that in the late 1980s, when he introduced the idea of “soft power” to describe the use of attraction to advance one’s interests and, later, when he devised the concept of “smart power” (which combines soft power with traditional “hard” power).”

Now I had planned to turn to the rather sad state of the UN as it approaches Year80. A focus on fading multilateralism. But I was called off that for the moment because of a serious back and forth between the Trump administration and the government of South Africa led by President Cyril Ramaphosa. Now South Africa holds the presidency of the G20 in this current year and President Trump has attacked the South African government for supposedly expropriating without compensation land from South African Afrikaners. Just this week Politico reported that the United States admitted a number of white South Africans to the United States:

“A group of 49 Afrikaners claiming to face discrimination and economic hardship in their home country arrived to the U.S. on Monday morning after being awarded an expedited pathway into the country by the Trump administration under a new program established earlier this year.”

As I noted in a previous Post here at Alan’s Newsletter, the Trump administration has ‘penalized’ South Africa with both Secretary of State Marco Rubio and Treasury Secretary Scott Bessent declining to attend the first G20 ministerial gatherings for foreign ministers and for finance ministers.

But it seems that is not where it has ended and there continue to be hints that Trump might not attend the Summit. As reported by Jeff Stein and John Hiudson at WAPO:

“The White House National Security Council has ordered U.S. agencies and departments to suspend work with the Group of 20 conference set to be hosted by South Africa this year, according to two people familiar with the matter, who spoke on the condition of anonymity to describe a government decision not yet made public.”

“The move follows President Donald Trump’s public threats to boycott the summit over claims that White South Africans are having their land taken away by the government under a new expropriation law.”

“How could we be expected to go to South Africa for the very important G-20 Meeting when Land Confiscation and Genocide is the primary topic of conversation?” Trump wrote on Truth Social in April. “They are taking the land of white Farmers, and then killing them and their families.”

While South Africa and its President, Cyril Ramaphosa, have rebutted Trump and his allegations, it would seem that the South African President has decided to try and ‘clear the air’ and set relations on a ‘better track’ – possibly getting Trump to agree to attend the Summit in November. As reported in AlJazeera:

“South African President Cyril Ramaphosa will meet United States President Donald Trump at the White House next week in an attempt to “reset” ties between the two countries, Pretoria has said.”

“The president’s visit to the US provides a platform, hopefully, to reset the strategic relationship between the two countries,” it added, saying the trip will take place from Monday to Thursday and the two leaders will meet on Wednesday.”

“The White House had no immediate comment on the meeting, which would be Trump’s first with the leader of an African nation since he returned to office in January.”

If we are right, Ramaphosa’s trip to the US is designed to secure assurances of Trump’s G20 South Africa Summit attendance and US involvement in the myriad of Ministerial gatherings, Working Group efforts and Task Force ones for the annual G20 Summit. If so, and his efforts succeed, a strong sigh of relief will be expressed I suspect by all G20 members. Success of US attendance will also help to secure US hosting for the 2026 G20 Summit. A further sigh of relief I anticipate.

Image Credit: Munk Debates

Is there Order? The Growing Confusion

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As we’ve already pointed out in a previous Substack Post from Alan’s Newsletter, focusing on Trump’s dramatic tariffs, reveals a growing global order confusion. Do we have a continuing ‘great power competition’ – the United States, Russia and China, key great powers butting heads whether in Ukraine, or Gaza or Taiwan and the South China Seas? Or, do we see with Trump 2.0 the emergence of a ‘great power collusion’? The ‘Big Boys’ establishing and maintaining ‘spheres of interest’. Or, just possibly are we enveloped currently in an international system where great power actions do little to constrain disorder. Indeed, their actions only add to the confusion and disorder in a highly conflict prone international system. The problem of course is that analysts are biased toward seeing some form of order where in fact it is just as likely none exists.

In this earlier Post on global order we quoted Stacie Goddard who has raised the contending competition versus collusion order dynamic:

“Now look it won’t stop analysts – both those determined to extract a logic and those likely not to, to keep examining the Trump policy action. Indeed I was attracted to the piece prepared by Stacie Goddard in Foreign Affairs (FA), “The Rise and Fall of Great-Power Competition: Trump’s New Spheres of Influence”. Now Goddard in the piece tackled the view that Trump’s strategic actions were driven by great power competition – a view adopted by many realist thinkers who see this as Trump’s logic focusing on US ‘interests’ in contrast to other administrations that have focused on ‘values’ and ‘collective global governance action’. As Goddard writes:

 

“But in the mid-2010s, a new consensus took hold. The era of cooperation was over, and U.S. strategy had to focus on Washington’s contests with its major rivals, China and Russia. The main priority of American foreign policy was clear: stay ahead of them.”

 

“Some hailed this consensus on great-power competition; others lamented it. But as Russia amped up its aggression in Ukraine, China made clear its designs on Taiwan, and the two autocratic powers deepened their ties and collaborated more closely with other U.S. rivals, few predicted that Washington would abandon competition as its guiding light. As Trump returned to the White House in 2025,many analysts expected continuity: a “Trump-Biden-Trump foreign policy,” as the title of an essay in Foreign Affairs described it.”

 

“Then came the first two months of Trump’s second term. With astonishing speed, Trump has shattered the consensus he helped create. Rather than compete with China and Russia, Trump now wants to work with them, seeking deals that, during his first term, would have seemed antithetical to U.S. interests.”

 

“These interpretations might have been persuasive in January. But it should now be clear that Trump’s vision of the world is not one of great-power competition but of great-power collusion: a “concert” system akin to the one that shaped Europe during the nineteenth century.”

“In Trump’s vision of a new concert, Russia and China must be treated as kindred spirits in quelling rampant disorder and worrisome social change. The United States will continue to compete with its peers, especially with China on issues of trade, but not at the expense of aiding the forces that Trump and his vice president, JD Vance, have called “enemies within”: illegal immigrants, Islamist terrorists, “woke” progressives, European-style socialists, and sexual minorities.”

But to determine the dynamic of the current international system, notwithstanding these classic global order structures just described by Goddard, there is the continuing, indeed possibly the rising mayhem in the international system. Switch for a moment to South Asia where we have just seen India’s ‘retaliation’ for an attack on Indian tourists in Kashmir. As reported in the NYTimes:

“India said early Wednesday that it had conducted several airstrikes on Pakistan, hailing a victory in the name of vengeance for the terrorist attack that killed 26 civilians in Kashmir last month.”

 

“The Indian government said its forces had struck nine sites in Pakistan and on Pakistan’s side of the disputed Kashmir region, in what it described as retaliation for a terrorist attack that killed 26 civilians in Kashmir.”

“But in recent years, particularly after both built deterrence through nuclear weapons in the 1990s, their military confrontations had been limited to largely along their border regions. While India in recent years has struck Pakistan-administered Kashmir and areas close to it during periods of rising tensions, the attack on Wednesday included strikes on Punjab, in mainland Pakistan, for the first time in more than half a century.” …

 

““The terrorist attack was one of the worst against Indian civilians in decades, and India was quick to suggest that Pakistan, its neighbor and archenemy, had been involved. The two countries have fought several wars over Kashmir, a region that they have split but that each claims in whole.””

The dilemma in this conflict between the two South Asian rivals is the absence of strong efforts to tamp down the conflict:

“Still, a major factor in the de-escalation of past India-Pakistan crises was international pressure brought to bear on both sides. And with Washington distracted and few other mutually trusted “honest brokers” available, that means it could be up to the two parties themselves to find an off-ramp.”

To say the least, that is troubling and seems to signal, not surprisingly, that a global order framing is at best a stretch in the current global environment. Nathan Gardels of the Berggruen Institute underlines the contingencies that haunt the current order in a recent Noema piece:

“In short, history is open in all directions. There is no through line you can draw that will tell us where it will all go and where it will end up. There are a multitude of possibilities and arrays of conditions everywhere, all at once, that will only have looked inevitable in retrospect.”

 

“Coherence and equilibrium are “the momentary exception” in the random swirl of disequilibrium that is the rule.”

“This understanding of the indeterminate direction of history not only departs from the modern paradigm of historical progression rooted in Judeo-Christian eschatology, or theology of destiny, but embraces its opposite in the “principle of reverse movement.” History can go forward, backward or sideways.”

Yup, forward, backward or even sideways. There might be order but in the face of a quixotic Trump administration and pugilistic Putin regime we may be stretching the notion of ‘order’ framing. Meanwhile, efforts by the EU and many member states to gather their collective will to take on their own defense – build policies that generate ‘sovereign autonomy’ with significantly less reliance on the US starting with Ukraine but building an independent European deterrence has become a subject. Richard Youngs, a senior fellow in the Democracy, Conflict, and Governance Program, based at Carnegie Europe has described this potential turning point. In a CEIP article he describes this ‘moment of truth:

“Writers, analysts, think tankers, journalists, and commentators seem to agree. A standard narrative has emerged that Europe faces a “moment of truth” and that “innovative formulas” are needed to advance European interests. Some insist that the crisis moment “has reignited a dormant sense of European purpose” or that “a different kind of Europe” is emerging in 2025. Others feel that Trump has already unleashed a new era of deeper European cooperation. A common view is that as the EU moves to “transform the way we protect ourselves, “this will “force a radical rethinking . . . of the nature of the EU.” In other words, deeper integration across the board will be needed to sustain Europe’s military buildup. The Economist believes that a “radical rethinking of how European nations confederate” may be emerging.”

Richard Samans, who is a Nonresident Senior Fellow – Global Economy and Development, Center for Sustainable Development at Brookings in a piece titled, “Rebalancing the world economy: Right idea but wrong approach”, suggests that Europe can/should act with the US and China to fix what he sees as an unbalanced global economy:

“The Trump administration’s norm-busting actions are a wake-up call that the contradictions and tensions in the system are unsustainable, extending well beyond trade rules. A Plaza/Louvre Accord or Bretton Woods-like moment appears to be approaching one way or the other, most likely during this or the next U.S. administration and quite possibly later this year.”

 

“Yes, Europe currently has its hands full developing a new defense strategy and helping to reach a responsible and durable resolution of the Russia-Ukraine war. But its defense-related fiscal spending plans give it a strategic, first-mover advantage in an international macroeconomic coordination negotiation aimed at reducing economic imbalances. In particular, Germany’s long overdue relaxation of its debt brake has given Europe crucial new table stakes, reversing decades of history in which Germany’s fiscal posture prevented Europe from playing a leadership role in such settings.”

Europe seems to be a key actor, and more critically, Germany’s stepping up to a key organizing role in Europe is vital. Yet that is exactly what appears to be the problem. Yes, changing the debt brake and encouraging the new German coalition of CDU/CSU -SPD to take a more dramatic European leaders’ role is front and centre in Europe but the emergence of Friedrich Merz as the coalition’s new Chancellor posted an uninvited warning sign. As described in WPR:

“Instead, it became a nailbiter, in large part because the investiture vote is a secret ballot, allowing members of Merz’ coalition to vote against him or abstain in protest. And indeed, they did, with Merz falling six votes short of the 316 needed in the first vote despite his CDU-SPD coalition holding 328 seats. And in the second round, he still only reached 325 votes. Of course, because of the nature of the ballot, it remains unclear if the dissension to his leadership is coming from his own CDU—which is known to have rival factions—or from members of the SPD.”

 

“Regardless, it suggests that Merz’s coalition, already one of the slimmest majorities seen in postwar Germany, is even more fragile than previously assumed. That gives him less room to maneuver in implementing his party’s agenda, and considering that Merz had already shown signs of abrasiveness as a leader, the dissension bodes poorly for future votes. It also hands the far-right Alternative for Germany, or AfD, even more ammunition to throw at his leadership and the country’s mainstream parties.”

 

“More broadly, the turmoil today came after months in which Merz had signaled he was prepared to return Germany to its historically strong leadership position in Europe, even scheduling trips to Paris and Warsaw for tomorrow before even securing the chancellorship. At a time of heightened global uncertainty and a power vacuum in EU affairs, Merz’s proactive and muscular moves to reestablish German influence even prior to taking office had been more than welcomed in Brussels and other European capitals. The events of today, though, suggest that those expectations may have been too high and the enthusiasm premature—not the first time that has been the case for Berlin in recent years”

Still Merz seemed to have gathered himself and set off for meetings with European colleagues. As described by by Roger Cohen in the NYTimes:

“Taking office as Germany’s new chancellor, Friedrich Merz headed straight for Paris on Wednesday to meet with Mr. Macron. The two leaders are united in seeking what Mr. Merz has called “independence” and what Mr. Macron calls “strategic autonomy” from Washington, a dramatic shift. Writing in the French daily Le Figaro, they said they “will never accept an imposed peace and will continue to support Ukraine against Russian aggression.””

Still the path forward for Europe and others is not clear. Roger Cohen makes that clear:

“But Europe is scarcely united, whatever the resolve in Paris and Berlin. The nationalist, anti-immigrant, anti-climate-science, anti-transgender wave that swept Mr. Trump into office last year is also potent across a continent where it has empowered Viktor Orban in Hungary and Giorgia Meloni in Italy, among others.”

With Trump 2.0 in play the global order dynamics are confused and incomplete. Europe still needs to show its unity and purpose if strategic autonomy is to become a thing. For now, the global order dynamic may just be wishful thinking.

Image Credit” DW News

This Post first appeared at my Substack as a Post there –

Is there Order? The Growing Confusion – https://globalsummitryproject.substack.com/p/is-there-order-the-growing-confusion

What is This? Trump and His Tariffs

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With the 100 days now reached, and just passed by Trump and his second administration, there is a desperate search to uncover a logic and goal or goals in Trump’s return to the White House and his most pointed policy action – the imposition of tariffs for all. I must say, it is not easy.

 

Now where to begin. I must say I am partial to David Brooks and his insights into Trump and his actions.  And sure enough he gave us a view recently in the NYTimes in a piece entitled, ‘Trump’s Single Stroke of Brilliance”: 

“Some of this is inherent in President Trump’s nature. He is not a learned man, but he is a spirited man, an assertive man. The ancient Greeks would say he possesses a torrential thumos, [passion]  a burning core of anger, a lust for recognition. All his life, he has moved forward with new projects and attempted new conquests, despite repeated failures and bankruptcies that would have humbled a nonnarcissist.”

 

“Initiative depends on motivation. The Trump administration is driven by some of the most atavistic and powerful of all human desires: resentment, the desire for power, the desire for retribution.”

Well, I must say, the resentment is pretty evident. But it still leaves rather unclear the possible, if it can be found, a Trump strategic logic. Many opinion folk are trying. Though there are so many initial policy actions by way of Trump’s ‘Executive Orders’ – indeed it seems to be a record for an incoming President – actions against immigrants, especially deportation actions, universities, research initiatives, development assistance, and much much more. Still nothing seems to be more dramatic than Trump tariffs. And the search is on, just as it is elsewhere, for a logic for the dramatic global imposition of wide-ranging tariffs.

Peter Warr prepared a piece for the East Asia Forum (EAF)  that attempts to crystallize, if possible, a Trump tariff policy logic. Warr is the John Crawford Professor of Agricultural Economics Emeritus at the Crawford School of Public Policy, The Australian National University (ANU) and Visiting Professor of Development Economics at the National Institute for Development Administration, Bangkok. Here is his first statement on the logic of Trump tariffs: 

“He is imposing huge tariffs on the countries most vulnerable to them, then waiting to exploit the new position of strength to make demands. The uncertainty and fear they generate are not byproducts — they are the point, establishing the leverage Trump needs for the predatory negotiations that follow.” 

So, it is about gaining leverage over allies and adversaries alike. As Warr suggests:   

“The tariffs are surely harmful, even from a US perspective, but they are not ‘crazy’. Given the way Trump sees the world and himself, they almost make sense.” 

But then it becomes clear that the actual tariff levels imposed are not particularly sensible: 

“In his Rose Garden speech, Trump revealed supposed figures for ‘tariffs charged to the USA including currency manipulation and trade barriers’ and ‘USA discounted reciprocal tariffs’. The numbers mystified observers until analysts including James Surowiecki worked out that they reflected each country’s goods trade surplus with the United States as a percentage of their goods exports to the United States — with a minimum 10 per cent tariff imposed on all countries, even those with trade deficits.”

Now Warr, accepts that many analysts think the calculations from the administration are not sensible: 

“As an estimate of protection rates against US goods, this calculation is absurd. Surowiecki called the formula ‘surprisingly silly’, and economist Paul Krugman called it ‘completely crazy’. But is it?”

So, Warr suggests there may in fact be a certain logic. The tariffs are designed, according to Warr to target those most vulnerable to Trump leverage: 

“The critics missed the point that the formula attempts a rudimentary indication of countries’ vulnerability to US tariffs. Countries receiving the highest tariffs have the highest ratio of exports relative to imports from the United States, even if they have no restrictions against US goods, tariffs or otherwise.” 

Though he attempts to highlight a certain logic – targeting what he sees as those with significant vulnerability to the US, in the end Warr has to concede that the approach is not exactly optimal: 

“A better, but still approximate, measure of that vulnerability would have been gross exports to the United States divided by a country’s GDP, but that would produce much smaller tariffs, which presumably is why it was not used. This may also explain why services were excluded from the formula. The United States is a net importer of goods but a net exporter of services and it is much harder to levy tariffs on services than goods. Placing a country’s trade surplus with the United States in the numerator falsely suggests that the tariffs reduce the US trade deficit.” 

 

“All these simplistic formulae still overlook the fact that countries have differing alternative, non-US export opportunities. They also ignore the effect of global value chains, with products crossing international borders multiple times during production. Reported trade balances misleadingly record the final assembly point as the source of US imports.” 

Recognizing that the formula for tariffs is ‘simplistic’ Warr is left a bottom line that acknowledges only that Trump is a ‘protectionist’: 

“Trump is a protectionist. He sees the decline of US manufacturing as foreigners stealing US jobs — grievance politics gone global. He thinks tariffs might reverse that.”

 

“Trump is a dealmaker. By ‘deal’ he means a zero-sum transaction in which one party wins at the expense of the other. Trump is obsessed with winning and believes tariffs can create coercive bargaining power for the United States as a major importer.” 

 

“Trump’s deal-making strategy is now transparent. First, enact huge tariffs on the countries most vulnerable to the US. Then wait for their desperate leaders to call, pleading for special treatment. Then exploit the new position of strength to demand something he wants.” 

It is not much of a strategic logic as Warr accepts in the end:

“This is the outlook Trump brings to trade policy. To respond most effectively to the tariffs, their function must first be recognised. The uncertainty and fear they produce is their essential purpose, establishing the bargaining power he requires for the predatory negotiations that follow.” 

In fact I am more inclined to see Trump’s tariffs in the way described by Alan Beattie of the FT. Beattie was previously the FT’s international economy editor and world trade editor and these days he writes ‘Trade Secrets’.The title of his opinion says a lot: “Vision of a Trump master plan is fading in a storm of incoherence. As Beattie writes: 

“The weeks and months since Donald Trump took office — in fact since he was elected — have seen companies, foreign governments, commentators and the media play the somewhat frustrating game of Hunt The Rationale.”

 

“They have watched a dizzying carousel of tariffs being threatened and then delayed, or imposed and then lifted, or imposed only to be shot through with loopholes.” 

 

“Over time, the ranks of those claiming there’s a master plan have thinned — and their arguments have grown less persuasive. Increasingly it has become obvious that there is no plan, or at least no coherent plan with a single target and a way of hitting it. Instead, Trump’s tariff policy reflects a mixture of competing and often flat-out contradictory aims and a misunderstanding of the power of the crude instruments he is using.” 

 

“All at once, he appears to be trying to cut trade deficits, protect US manufacturing, boost federal revenues, bring down other countries’ tariffs by offering deals, coerce them into a variety of actions (including allowing the US to annex Greenland or Canada), extract favours for granting exceptions to US companies, and keep the spotlight squarely on himself. The chaos surrounding his tariff policy is not just ineptitude — it is the result of huge contradictions.” 

Now look it won’t stop analysts – both those determined to extract a logic and those likely not to, to keep examining the Trump policy action. Indeed I was attracted to the piece prepared by Stacie Goddard in Foreign Affairs  (FA), “The Rise and Fall of Great-Power Competition: Trump’s New Spheres of Influence”. Now Goddard in the piece tackled the view that Trump’s strategic actions were driven by great power competition – a view adopted by many realist thinkers who see this as Trump’s logic focusing on US ‘interests’ in contrast to other administrations that have focused on ‘values’ and ‘collective global governance action’. As Goddard writes: 

“But in the mid-2010s, a new consensus took hold. The era of cooperation was over, and U.S. strategy had to focus on Washington’s contests with its major rivals, China and Russia. The main priority of American foreign policy was clear: stay ahead of them.” 

 

“Some hailed this consensus on great-power competition; others lamented it. But as Russia amped up its aggression in Ukraine, China made clear its designs on Taiwan, and the two autocratic powers deepened their ties and collaborated more closely with other U.S. rivals, few predicted that Washington would abandon competition as its guiding light. As Trump returned to the White House in 2025,many analysts expected continuity: a “Trump-Biden-Trump foreign policy,” as the title of an essay in Foreign Affairs described it.” 

 

“Then came the first two months of Trump’s second term. With astonishing speed, Trump has shattered the consensus he helped create. Rather than compete with China and Russia, Trump now wants to work with them, seeking deals that, during his first term, would have seemed antithetical to U.S. interests.” 

 

“These interpretations might have been persuasive in January. But it should now be clear that Trump’s vision of the world is not one of great-power competition but of great-power collusion: a “concert” system akin to the one that shaped Europe during the nineteenth century.”

 

“In Trump’s vision of a new concert, Russia and China must be treated as kindred spirits in quelling rampant disorder and worrisome social change. The United States will continue to compete with its peers, especially with China on issues of trade, but not at the expense of aiding the forces that Trump and his vice president, JD Vance, have called “enemies within”: illegal immigrants, Islamist terrorists, “woke” progressives, European-style socialists, and sexual minorities.”

Now digging back 200 years to describe a political order that might raise similarities to the actions of today’s Trump actions and others is intriguing but not strongly convincing. Leave aside the dangers of historical comparison, and there are many, the problem here  is imposing strategic logic to a not very strategic actor. We’ve already seen it with his major initiative, tariffs. And, moreover, there is little to suggest that the other major actors accept and act in a concert-like manner. There is too much unilateral unconcert-like action.

But let’s keep our eye on Trump’s collaborative initiatives, if they are in fact there and determine whether great power collusion is in fact an operative framing for Trump 2.0 global order actions. Paint me skeptical.

Image Credit: NBC News

This Post first appeared at my Substack Alan’s Newsletter – https://globalsummitryproject.substack.com/publish/posts/detail/162614458/share-center

G20 Collaborative Actions: With or Without the US

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The common refrain by those examining the multilateral  institutions and organizations seeking greater collaboration at the global level are: ‘legitimacy’ and ‘effectiveness’. Now the fact is these characteristics apply to the national and subnational levels as well, but they are a consistent refrain at the international level, especially in light of the geopolitical tensions in the international system. 

A number of my colleagues have recently focused on what I consider the key global informal governance institution, the G20. These colleagues focus on both critical characteristics with somewhat different views. First there is Danny Bradlow and Robert Wade. Danny Bradlow is a Senior Research Fellow, Centre for Advancement of Scholarship, University of Pretoria and Senior G20 Advisor to South African Institute of International Affairs. Robert H. Wade, is co-author on this piece, and is a Professor of Global Political Economy, London School of Economics. Both have participated in various CWD events. In a piece in Global Policy entitled, “How to Fix the Representation Problem of the G20” the co-authors described briefly the G20. Some of that is worth repeating: 

“The G20 is an informal gathering, which claims to be “the premier forum for international economic cooperation”. It was established at finance minister’s level in the wake of the East Asian financial crisis of the late 1990s, and upgraded to summit level, with the same membership,  in the wake of the global financial crisis of 2008-2009. The summit is held annually, under the leadership of a rotating presidency.”

 

“The membership comprises 19 of the “weightiest” national economies plus the European Union and the African Union. The 19 national economies include  the G7 (US, Japan, Germany, UK, France, Italy, Canada), Australia, plus China, India,  Indonesia, Republic of Korea,  Russia, Turkey, Saudi Arabia, South Africa, Mexico, Brazil, Argentina.   The group, which includes about 10% of the states in the world, accounts for 67% of the world’s population, 85% of global GDP, and 75% of global trade.” 

 

It is in size and the weight of membership the most formidable of what I call the Informals which includes at least  the G7, the BRICS+ and the G20. When it then comes to an evaluation of this key Informal the authors suggest: 

“The G20 has had a mixed record.  It has an intense work programme  focused on addressing many of the most significant international economic, financial, environmental and social challenges. The consistency in G20 membership has proven to be an advantage because it helps foster a sense of familiarity and understanding at the technical level among the permanent members, which is helpful in times of crisis and in dealing with complex problems.”

 

“But its exclusivity and informal status has limited its ability to address these challenges. This is particularly  because in many cases an effective response requires agreement and action by all states.” 

 

“Over time, as tensions in international relations have grown, the shortcomings in the structure of the G20 have become more evident. Despite its economic weight, the G20 has a basic legitimacy problem.  It is a self-selected group whose members, except for the African Union and the European Union, represent only themselves. 

What these authors then suggest, in light of their view that legitimacy is lacking is to adopt a model being used, in this case, at the Financial Stability Board, the FSB: 

“It has established six Regional Consultative Groups (RCGs), one each for the Americas, Asia, Commonwealth of Independent States, Europe, Middle East and North Africa, and Sub-Saharan region. The objective is to expand and formalize the FSB’s outreach activities beyond the G20 membership and better reflect the global character of the financial system.”

They conclude their examination with this perspective: 

“Applying the FSB model to the G20 would allow the current members of the G20 membership to continue, while obliging them to establish a consultation process with regional neighbours, thereby creating a limited form of representation for all the world’s states. It would also establish a limited form of G20 accountability towards the international community.”

It is evident that these authors believe the problem for the G20 is a lack of wide representation and apparently the need to enlarge G20 representation. Yet it is somewhat surprising that these two colleagues target representation. I’ve always been of the view that you go with the members you have and seek to move ‘the policy dials’. Whether it is multilateral or minilateral or plurilateral, in an ideal world we would probably enlarge representation but we have learned all too unhappily that universal representation is not necessarily a solution to effective policy action. 

Two other colleagues seem less inclined to see representation as the most serious impediment to advancing G20 policymaking. Indeed these co-authors underscore the critical value of the G20. So, my CWD colleague and lead co-leader, Colin Bradfrord, a Nonresident Senior Fellow of the Global Economy and Development Program at Brookings and his colleague, Brahima Sangafowa Coulibaly who is vice president and director of the Global Economy and Development program at Brookings have joined together to examine the G20 role in, “Strengthening Cooperation for a Changing World:  The Evolving Role of the G20 in Global Economic Governance”, a special brief for Brookings and in fact Brookings held a session with a number of esteemed panelists in Washington at the margins of the ‘Spring Meetings’ to examine the G20. As they argue in their Executive Summary:

“While there are areas for improvement, a review of the G20’s evolution highlights a remarkable transformation. From an ad hoc response to the GFC [GlobalFinancial Crisis], it has evolved into a central pillar of international cooperation—shaping global trajectories across finance, economics, technology, health, climate, and society. After 18 years of experience, involving tens of thousands of politicians, policymakers, and societal leaders throughout each year, the G20 has demonstrated that it is indeed “fit for purpose” at this crucial moment of competing perspectives on the global future.

 

“Indeed, the world is undergoing one of the most profound transformations in global economic relations and facing the greatest test of international governance since World War II. In this context, the G20 has proven to be an indispensable platform—not only through its annual leaders’ summits but also through its multilayered, yearlong process involving ministers, sherpas, senior officials, and civil society leaders across a wide range of sectors. Its ability to convene nations with vastly different cultures, interests, and perspectives—and to keep them at the table despite tensions, rivalries, or even war—is one of its greatest strengths. The G20 serves as a vital arena where global governance plays out in real time amid deep uncertainty and geopolitical strain.”

Are matters perfect, of course not. And the authors are alert to point to the limitations: 

“Despite its past success, there is room to enhance the G20’s effectiveness and impact. Key areas for improvement include strengthening personal dynamics among leaders; enhancing continuity and sustained engagement; improving public communication and domestic outreach; and restoring public confidence in leadership and markets. To bolster its credibility, the G20 should also revisit practices from its most effective years—particularly the use of action-oriented communiqués with clear timelines.”

Critically on the plus side the G20 has a significant element of inclusiveness – at least politically. Not only do you have all the members of the G7 but you also have all the original BRICS members, Brazil, Russia, India, China and South Africa. Critical in my mind, and it seems to be as well for the co-authors, the G20 includes many key actors from the Global South:

“Third, around the same time, the rise of large, dynamic emerging market economies (EMEs) dramatically altered the global economic landscape, reducing the long-standing dominance of the West—namely the United States and Europe—and ushering in a more pluralistic world. This shift integrated key non-Western powers, such as China and Russia along with influential voices from the Global South, into global economic decisionmaking, injecting realism along with tensions into the global governance system.”

In addition, and to aid continuity from year-to-year for the G20 in the face of  passing of the presidency to the next G20 member, the co-authors point to the Troika: 

“Each annual summit marks a formal transition between presidencies, but continuity is ensured through a “troika” system, comprising the past, current, and incoming hosts. At the outset of a presidency, the host country announces its priorities, which are then integrated with ongoing legacy issues. Together, these form the foundation of the annual work plan, which is refined during the first sherpa and deputies’ meetings— typically held in December and January—and officially endorsed at the first finance ministers’ meeting. This process sets the structure for and establishes working groups and ministerial responsibilities.” 

Is it perfect, no. Indeed in the recommendations section the co-authors suggest adding more members to enhance continuity. But the co-authors pay attention to the structure, what I’ve referred to as the ‘Iceberg Theory’ of the G20. The Iceberg is the significant structure of political and administrative actors carrying on the year to year work, maintaining a critical element of continuity,  to move policy actions forward: 

“This expansive framework highlights the G20’s evolution into a dynamic platform for global governance with broad consultations that extend well beyond its core membership. G20 summits are not simply a two-day gathering of world leaders; they are the culmination of a yearlong process involving a wide array of ministerial meetings, working groups, and civil society dialogues aimed at steering the global economy and addressing 21st century challenges.[In fact the significant structure of Ministerials, Working Groups and Task Forces can be reviewed here at the Global Summitry Project (GSP) website].  

Is it  enough? Well, here you have to be a bit cautious. Overall, the representation and structure of today’s G20 seems adequate but with respect to ‘effectiveness’ – collective concerted collaboration – there is still a distance to go. Very much so. The co-authors in fact also urge the following: 

  • “Strengthen personal dynamics among leaders
  •  Enhance continuity and sustain engagement
  • Improve public communication and domestic engagement
  • Restore public confidence in leadership and markets”

All of that would be useful but collective determined policymaking – advancing action on climate change and climate financing, debt management and relief, global development and many more subjects – remain seemingly unreachable at the moment. 

And now, with the completion of the South Africa year we come to the end of the first cycle of G20 countries. That means that the United States is scheduled to return to hosting in 2026. The Trump administration’s distaste for multilateral actions including debt support, climate change, global development are all too evident. While there was talk in fact of the Trump administration deciding not to take up leadership for 2026, that may not be what the Trump administration is deciding to do at the moment. I wonder which is better however: with, or without, the US? I’m not sure. Some see the Summit collapsing without US involvement. But US hosting, with a Trump administration, may collapse forward movement in key global governance policies. There is at the moment no definitive answer. But there will be more to come on this.  

Credit Image: Bahrain

This Post originally appeared asa Substack Post at Alan’s Newsletter: https://globalsummitryproject.substack.com/p/g20-collaborative-actions-with-or

Taming the ‘Bully and the Dragon’

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It is hard to deal with a ‘Bully’. Usually efforts, even reasonable ones of accommodation only lead generally to further demands – just ask Columbia University. That was why I was pleased to see Harvard University ‘dig in’ rather than try to accommodate the Trump administration. As Philip Stephens, contributing editor of the FT wrote in a recent piece on various allied responses to Trump’s tariff actions titled, ‘Placate or retaliate? Starmer and Carney are both right on Trump’:

“Canada’s Mark Carney has picked up the gauntlet. Britain’s Keir Starmer prefers to look the other way. Japan and South Korea lead the queue to strike a bilateral deal. … Kudos generally goes to those willing to stand up to “the bully”. Carney has transformed his Liberal party’s electoral prospects by relishing the fight. In Europe, Gaullism has gone mainstream. Emmanuel Macron’s call for Europe to break free of the Americans is echoed by chancellor-in-waiting Friedrich Merz in Berlin.”

 

“None of this makes pandering to Trump look heroic, particularly when, with characteristic vulgarity, the president publicly mocks the softly spoken. Opinion polls suggest Europeans would prefer their leaders to join Carney in the ring. Appeasing Trump may simply encourage him. He clearly enjoys humiliating America’s old friends. The answer surely is to show him that Trumpism has costs. Didn’t we learn at school that the way to beat bullies is to fight back?”

So a round of applause for the Harvard folk. But there will continue to be hard times – note the request by Trump to the IRS to end Harvard’s tax-free status. What additionally is needed then to blunt Trump’s actions? What is needed is: collaboration and group support from other universities and then collective action in the courts. Bending the knee to Trump will not work. Nobody said it would be easy.

David Wallace-Wells has pointed out in the NYT what the actions of the Trump administration have led to the following actions by US partners:

“Last week Spain’s democratic-socialist government proudly announced plans to intensify relations with China, after Treasury Secretary Scott Bessent warned that doing so would amount to “cutting your own throat.” President Emmanuel Macron of France urged European companies to stop investing in the United States, and the European Union as a whole, which is developing a retaliatory tariff response and plotting potential tax increases on American tech companies, announced it is sending a delegation to Beijing in July.

 

What comes next? Perhaps it shouldn’t be so hard to imagine, given the drift of what’s now called geoeconomics. Already, China commands global trade, and modeling from Bloomberg shows that, as constituted today, the tariffs will only add to the lead — pushing many more countries to work more with China and less with America. According to one model, 30 percent of American trading partners would fully recover from even total cessation of U.S. trade within one year; within five years, more than half would. This is why chaos is rarely the chosen strategy for a hegemon: Barring what Trump calls a “beautiful deal,” the biggest single beneficiary of the whole crusade may well end up being its intended target.”

So how do we deal with the dragon? Clearly there is ‘fire’ and a certain amount of ‘huffing and puffing’. But beyond the aggressiveness, think Taiwan, and even aggression – talk to the Philippines – about that, is there the prospect of securing a deal? And in the more immediate circumstances, is there the prospect of securing a bilateral trade arrangement, or even an enlarged one with China.

Let’s start with an assessment of what the Trump administration is up to. This is not an easy determination. What is the goal of the Trump administration? Kyla Scanlon, author of, the author of “In This Economy? How Money & Markets Really Work” wrote recently in the NYT:

“What is an overarching goal of these actions? Or, what is the purpose of Trumponomics?

In a word, reindustrialization.”

It is hard to see at times what is the end point for Trump and his minions: is it revenues, China decoupling, reshoring of manufacturing – all or none of the above. But for Scanlon it is evident – reindustrialization in the US and she goes on to say:

“To reindustrialize will require investment in people and machines — and a coherent strategy. Given the Trump administration’s aversion to collaboration and the internal contradictions of the factions within the administration, its reindustrialization drive appears disconnected from reality and destined to fail.”

She concludes that a successful strategy in the 21st century today, in her opinion, require the following from the US and its partners ultimately:

“Modern manufacturing is high-tech and requires different skills from those of the 20th century. The focus should be on advanced manufacturing sectors where America can lead through innovation, not just protectionism: pharmaceuticals, clean-energy technology, robotics and semiconductors.

 

Second, it would invest substantially in the foundations for industrial competitiveness like education, infrastructure, research and development (like the CHIPS Act) and work force training.

 

Third, a serious strategy would recognize that alliances matter. Rather than needlessly alienate partners like Canada, Mexico, Japan and the European Union, a sound approach would build cooperative frameworks that reduce dependence on geopolitical rivals while strengthening ties with allies. Selective decoupling would better serve America’s long-term interests.”

But what appears to be evident is that the Trump administration seems dramatically unwilling to work with partners and allies to enhance trade with them and to press China on what remains today a damaging economic policy from Beijing that increases production and exports as opposed to a more determined effort to improve domestic consumption. Yes, Xi Jinping and his associates have once again targeted energizing domestic consumption, but seeing is believing. We shall see.

What then is possible? Tom Friedman describes why it is highly unlikely that Trump will, or can, act in concert. As Friedman put in a recent NYT piece:

“So much crazy happens with the Trump administration every day that some downright weird but incredibly telling stuff gets lost in the noise. A recent example was the scene on April 8 at the White House where, in the middle of his raging trade war, our president decided it was the perfect time to sign an executive order to bolster coal mining.”

 

“It’s commendable that the president honors men and women who work with their hands. But when he singles out coal miners for praise while he tries to zero out development of clean-tech jobs from his budget — in 2023, the U.S. wind energy industry employed approximately 130,000 workers, while the solar industry employed 280,000 — it suggests that Trump is trapped in a right-wing woke ideology that doesn’t recognize green manufacturing jobs as “real” jobs. How is that going to make us stronger?”

 

“This whole Trump II administration is a cruel farce. Trump ran for another term not because he had any clue how to transform America for the 21st century. He ran in order to stay out of jail and to get revenge on those who, with real evidence, had tried to hold him accountable to the law. I doubt he has ever spent five minutes studying the work force of the future.”

 

“But this farce is about to touch every American. By attacking our closest allies — Canada, Mexico, Japan, South Korea and the European Union — and our biggest rival, China, at the same time he makes clear he favors Russia over Ukraine and prefers climate-destroying energy industries over future-oriented ones, the planet be damned, Trump is triggering a serious loss of global confidence in America.”

 

“The world is now seeing Trump’s America for exactly what it is becoming: a rogue state led by an impulsive strongman disconnected from the rule of law and other constitutional American principles and values.”

If indeed the US under a Trump administration is a rogue actor, and on too many days it does indeed look exactly like that. Put simply what is required and the answer may well be: coordination without the United States. And I’d add it begins with the Informals, most notably the G20.

There has been on and off talk that Trump will not attend the G20 Leaders’ Summit which will be held in Johannesburg, South Africa, on November 22-23rd. And senior US officials including Secretary of State Marco Rubio and Treasury Secretary Scott Bessent have failed to show up for at least early meetings. On the other hand, apparently, the United States has been active in the Troika – the gathering of the G20 members – the past host, the present one and future host – in assisting in carrying out a successful G20 Summit. As it turns out the United States is scheduled to take hosting in 2026. But the point is whether the US participates – if it doesn’t the UK would likely take the hosting in 2026 – and indeed possibly US absence might benefit the working of the G20 at the moment – a serious gathering like this may be critical in advancing needed global governance action.

Coordination without US participation – at least during Trump 2.0 – may be the necessary ingredient for advancing critical multilateral action. I will return to this soon.

Image Credit: FT and Neil Hall/EPA

This Post first appeared at Alan’s Newsletter: https://globalsummitryproject.substack.com/p/taming-the-bully-and-the-dragon

The Latest Post from Alan’s Newsletter – ‘The Spiral of Disorder’ – Building then Destroying Trust – Let’s Continue

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President Donald Trump speaks to supporters at a rally Saturday, Oct. 17, 2020, in Janesville. Angela Major/WPR

“At 9:37 a.m. Wednesday, the president was still bullish on his policy, posting on Truth Social: “THIS IS A GREAT TIME TO BUY!!!” “But in the end, it was the markets that got him to reverse course.” 

And what brought it about, notwithstanding Trump’s assertion he knows what he’s doing: 

 

“The economic turmoil, particularly a rapid rise in government bond yields, caused Mr. Trump to blink on Wednesday afternoon and pause his “reciprocal” tariffs for most countries for the next 90 days, according to four people with direct knowledge of the president’s decision.”

It is turmoil and it accompanies Trump as we’ve seen both in his first four years and now, I think, in a ramped up version in his second. 

The behavior does not change. Now what is this all about? I think David Brooks, a contributor for the PBS NewsHour and an opinion columnist for the NYTimes pinpointed Trump’s underlying motivation and his behavior. As Brooks recently suggested in a piece in The Atlantic, titled, “I Should have Seen this Coming”: 

“If there is an underlying philosophy driving Trump, it is this: Morality is for suckers.The strong do what they want and the weak suffer what they must. This is the logic of bullies everywhere. And if there is a consistent strategy, it is this: Day after day, the administration works to create a world where ruthless people can thrive. That means destroying any institution or arrangement that might check the strongman’s power. The rule of law, domestic or international, restrains power, so it must be eviscerated. Inspectors general, judge advocate general officers, oversight mechanisms, and watchdog agencies are a potential restraint on power, so they must be fired or neutered. The truth itself is a restraint on power, so it must be abandoned. Lying becomes the language of the state.” 

 

“Trump’s first term was a precondition for his second. His first term gradually eroded norms and acclimatized America to a new sort of regime. This laid the groundwork for his second term, in which he’s making the globe a playground for gangsters.”

 

“We used to live in a world where ideologies clashed, but ideologies don’t seem to matter anymore. The strongman understanding of power is on the march. Power is like money: the more the better. Trump, Russian President Vladimir Putin, and the rest of the world’s authoritarians are forming an axis of ruthlessness before our eyes. Trumpism has become a form of nihilism that is devouring everything in its path.” 

An axis of ruthlessness. Wow! The impact on trade – with the tariff madness is all too apparent. But it is an attack as well  on the alliances and partnerships in the global order that likely brings the most long term damage to the stability of the global  order and these attacks have been ongoing since the first Trump administration. 

This weakening to multilateralism is not just to be laid at the feet of President Trump, however. Some time ago Stewart Patrick, now of the Carnegie Endowment (CEIP) pointed out the faltering of multilateralism. As he wrote in the Oxford journal, Global Summitry, [ a reveal, I was editor at the time] in 2015, he cast back to Obama as he then was, a junior US Senator prior to his first term as President. Obama wrote in 2007 criticizing Bush at that time for the failure to promote greater multilateral action:

“This vision of a multilateral renaissance was premised on the conviction that a new global age had dawned. The core purpose of statecraft was no longer restraining geopolitical rivalry but managing shared dilemmas of interdependence.” 

 

“This broad congruence of interest created unprecedented opportunities for cooperation. But success was not preordained. It required a new international bargain: established powers would grant emerging ones a place at the global head table, and rising powers would accept greater responsibilities for advancing the common good. The administration assumed the United States could engineer global institutional reform on this basis.” 

 

“That confidence proved unfounded. The Obama years show just how resistant formal international organizations are to fundamental change. Two of the most obvious cases are the UN Security Council, whose permanent membership still reflects the world of 1945, and the International Monetary Fund (IMF), which has failed to implement governance reforms that members painstakingly negotiated in 2010. The sources of these logjams are legion. Three of the most important are clashing big power preferences, generic institutional inertia, and inconsistent U.S. leadership (Stein 2008).”

 The weakening of multilateralism accelerated, it seems to me, with Trump, that erosion only slowed somewhat with the Biden years, but now seemingly has returned with a vengeance under Trump 2.0. As Ivo Daalder has pointed to in his recent piece on NATO in FA , titled, “NATO Without America: How Europe Can Run an Alliance Designed for U.S. Control”: 

“Given Trump’s low regard for the alliance and its collective defense commitment, it would be no surprise if his administration decided to withdraw from NATO . In late 2023, Congress passed a law prohibiting the president from doing this without congressional assent—a bill that, ironically, was cosponsored by then Senator Marco Rubio, who is now Trump’s secretary of state.”

 

“Even if he doesn’t withdraw from the alliance, Trump has already seriously undermined it. NATO’s Article 5 collective-defense provision—which says that an attack on any alliance member will be considered an attack on all—derives its credibility less from the formal treaty than from a belief among the members that they are all prepared to come to one another’s defense. In practice, this has meant that the United States, with its vast military, would step up to protect any NATO ally that is attacked. Trump’s words and actions since retaking office—including his direct threats against Canada and Greenland, both of which are part of NATO—have eroded these assumptions.” 

The challenge to NATO’s collective defence with Trump’s uncertainty toward collective action is evident. And many of what I call the Formals, the UN, in particular the UN Security Council and its specialized agencies, the International Financial Institutions, or IFIs, and more are hobbled by the rising geopolitical tensions – the US, Russia and China and the decline in willingness of these and more powers to collaborate. 

Yet as noted above, the weakening in multilateral collaboration has been evident for some time. My colleague, Stewart, reflected on this, and noted the rise of informal institutions. As he then wrote:

“If one focuses solely on formal international organizations, these blockages are grounds for despair. But that pessimistic view obscures a more complicated and promising picture of multilateral cooperation. For what sets the current global era apart is not the absence of international institutions but their astonishing diversity. Faced with resistance to sweeping, transformational change within more encompassing global bodies, U.S. and foreign policy-makers have generated and then exploited a messier form of multilateralism (Haass 2010).” 

 

“Formal organizations persist, but governments increasingly participate in a bewildering array of flexible networks whose membership varies based on situational interests, shared values, or relevant capabilities. States may continue to negotiate and collaborate within conventional bodies like the United Nations or the Bretton Woods institutions. But extensive policy coordination also occurs within parallel frameworks that are ad hoc and temporary rather than formal and permanent.” 

And Stewart noted that another colleague, Miles Kahler had even earlier, much earlier, identified the emergence of what he referred to as ‘minilateralism’ in an article in International Organization ( IO) , titled : “Multilateralism with Small and Large Numbers” As Stewart wrote: 

“These institutions are often “minilateral” (Kahler 1992) rather than universal; voluntary rather than legally binding; disaggregated rather than comprehensive; trans-governmental rather than just intergovernmental; regional rather than global; multi-level and multi-stakeholder rather than state-centric; and “bottom-up” rather than “top-down.”” 

And as I and others have noted, a number of what I call Informals have arisen since the 1970s. First there was the G7 and then in 1999 the G20 as a finance and central bank gathering becoming a G20 leaders-led annual gathering in 2008. Finally, there was the creation of the BRICs in 2006 – Brazil, Russia, India, China with a leader-led gathering in 2009 and the addition of South Africa in 2011. I mention these separately since these Informals are more institutionalized and far less ad hoc than many minilaterals. They are hybrids between the formal and the informal institutions.

The real question though is whether these leader-led informals can counter the destructive geopolitical tensions that now dominate global order relations? These tensions are brought home by the current difficulties between the G20 host, South Africa and the Trump administration. Two senior officials, namely Secretary of State Rubio and Treasury Secretary Scott Bessent have failed recently to join their first ministerial gatherings during South Africa hosting. And questions have arisen as to whether Trump will join the G20 leaders summit gathering this year in South Africa. 

The question raised is: can this Informal work to advance the current global governance agenda, without the US? Or, in fact is this the only way possible for this key Informal to move forward. And, if it is the only way, will leaders minus the US be willing to press forward on critical global governance issues? Which then is the more fruitful path for global collaboration?

All of this is critical and bears close attention, now, and going forward. We will follow closely and report frequently. 

Image Credit: WPR 

This Post originally appeared at Alan’s Newsletter https://globalsummitryproject.substack.com/p/the-spiral-of-disorder-building-then-aed

 

‘The Spiral of Disorder’ – Building then Destroying Trust – Let’s Start with Tariffs

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It is mind-boggling to watch this second term of Trump, or Trump 2.0. First the flood of ‘executive orders’, though apparently they are technically not really  ‘orders’. And now the long awaited ‘Liberation Day’ announcement of tariffs including Trump’s incoherent ‘reciprocal tariffs’, though, in fact, it is no liberation. As The Economist described the Rose Garden event: 

Speaking in the Rose Garden of the White House, the president announced new “reciprocal” tariffs on almost all America’s trading partners. There will be levies of 34% on China, 27% on India, 24% on Japan and 20% on the European Union. Many small economies face swingeing rates; all targets face a tariff of at least 10%. Including existing duties, the total levy on China will now be 65%. Canada and Mexico were spared additional tariffs, and the new levies will not be added to industry-specific measures, such as a 25% tariff on cars, or a promised tariff on semiconductors. But America’s overall tariff rate will soar above its Depression-era level back to the 19th century.”

As Glenn Kessler in WAPO describes these Trump Liberation Day tariffs: 

Trump’s speech announcing a huge increase in tariffs on American trading partners was riddled with falsehoods and misleading statements on trade that he has made for years. But now they are determining policy that will increase the costs of goods for many Americans.

But as The Economist pointed out about this tariff announcement: 

Almost everything Mr Trump said this week—on history, economics and the technicalities of trade—was utterly deluded. His reading of history is upside down. He has long glorified the high-tariff, low-income-tax era of the late-19th century. In fact, the best scholarship shows that tariffs impeded the economy back then. He has now added the bizarre claim that lifting tariffs caused the Depression of the 1930s and that the Smoot-Hawley tariffs were too late to rescue the situation. The reality is that tariffs made the Depression much worse, just as they will harm all economies today. It was the painstaking rounds of trade talks in the subsequent 80 years that lowered tariffs and helped increase prosperity.

Take a look at the tariffs imposed by Trump as described in Upshot at the NYTimes: 

New tariffs for select trading partners

Country New

tariff

 Share of

U.S. imports

 Goods trade

balance
E.U. +20% 18.5% –$241 bil.
China +34% 13.4% –$292 bil.
Japan +24% 4.5% –$69 bil.
Vietnam +46% 4.2% –$123 bil.
South Korea +26% 4.0% –$66 bil.
Taiwan +32% 3.6% –$74 bil.
India +27% 2.7% –$46 bil.
Switzerland +32% 1.9% –$39 bil.
Thailand +37% 1.9% –$46 bil.
Malaysia +24% 1.6% –$25 bil.

Show 50 more rows +

Sources: White House, Observatory of Economic Complexity Notes: Trade balance and import share figures based on 2024 trade data.” 

And Mr Trump’s grasp of the technicalities was pathetic. He suggested that the new tariffs were based on an assessment of a country’s tariffs against America, plus currency manipulation and other supposed distortions, such as value-added tax. But it looks as if officials set the tariffs using a formula that takes America’s bilateral trade deficit as a share of goods imported from each country and halves it—which is almost as random as taxing you on the number of vowels in your name.

Anthony DeBarros, the data news manager at the WSJ, describes it this way: 

The White House’s new tariffs were pegged to amounts it said other countries impose on the U.S. In many cases, those amounts appear to match a basic formula: the size of a country’s goods-trade imbalance with the U.S., divided by how much America imports from that nation.

 

The chart President Trump read from in the Rose Garden [image above] listed tariffs charged on imports from the U.S. as “including currency manipulation and trade barriers.” The numbers don’t necessarily match what foreign countries charge against imports from the U.S.

 

For example, Chinese tariffs against the U.S. were about 23% overall as of last month, according to the Peterson Institute for International Economics.

 

But dividing the U.S.’s  2024 goods-trade deficit with China, of about $295 billion, by the amount the U.S. imported from China results in the 67% tariff value presented by the White House.

 

$295bn ÷ $439bn=67%

 

The math works out that way for at least 71 of the 184 nations, plus the European Union, included in Wednesday’s announcement. In most of those cases, the U.S. is charging a new tariff of roughly half the rate it calculated.

 

And indeed Trump’s chart that he showed with applied tariffs, identifies China with 34% tariffs being applied. 

As for many others, DeBarros points out: 

For the remaining nations, including all those where the U.S. has a trade surplus, the tariff charged on imports from the U.S. was listed as 10%. In these instances, the U.S. set a 10% reciprocal tariff.

And The Economist even offers a solution starting with constraining the desire to hit back. Instead it offers the following alternative response: 

Instead, governments should focus on increasing trade flows among themselves, especially in the services that power the 21st-century economy. With a share of final demand for imports of only 15%, America does not dominate global trade the way it does global finance or military spending. Even if it halted imports entirely, on current trends 100 of its trading partners would have recovered all their lost exports within just five years, calculates Global Trade Alert, a think-tank. The EU, the 12 members of the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), South Korea and small open economies like Norway account for 34% of global demand for imports.

As many point out, however, China’s distorted trade policy needs to be addressed. China has committed too many harmful trade policies as identified by  The Economist: 

Building a trading system with China is desirable, but will be viable only if it rebalances its economy towards domestic demand to ease worries about dumping. Also, China could be required to transfer technology and invest in production in Europe in exchange for lower tariffs.

As Alan Beattie writes in his FT column: 

There can be no logic-washing of Donald Trump’s tariffs. This isn’t part of a carefully-designed industrial policy or a cunning strategy to induce compliance among trading partners or a choreographed appearance of chaos to scare other governments into obedience. It’s wildly destructive stupidity, and the generations of American, and particularly Republican politicians, who allowed things to slide to this point are collectively to blame.

The message is: on those facing the  Trump craziness, don’t commit the errors of Trump 2.0. Act smarter. Maintaining and deepening global integration should remain the goal and endpoint, notwithstanding Trump. 

As The Economist  concludes: 

If this seems gruelling and slow, that is because integration always is. Throwing up barriers is easier and faster. There is no avoiding the havoc Mr Trump has wrought, but that does not mean his foolishness is destined to triumph.

The message is clear – don’t do what Trump has done. Hopefully, in the longer term major trading partners, friends and foes, will grasp the logic of greater trade with each other and leave the Trump trade strategy by the wayside.  

In the short term, however, it is not likely. I can’t say that is very surprising. Retaliating in the short term is just too attractive  – standing up to the bully.  And, indeed, China has already responded with trade retaliation. As Keith Bradsher and David Pierson report in the NYTimes, the day after Trump Liberation Day:

China has struck back at President Trump.

 

In a rapid fire series of policy announcements from Beijing on Friday evening, including 34 percent across-the-board tariffs, China showed that it has no intention of backing down in the trade war that Mr. Trump began this week with his own steep tariffs on imports from around the world.

 

China’s Finance Ministry said it will match Mr. Trump’s plan for 34 percent tariffs on goods from China with its own 34 percent tariff on imports from the United States.

 

Separately, China’s Ministry of Commerce said it was adding 11 American companies to its list of “unreliable entities,” essentially barring them from doing business in China or with Chinese companies. The ministry imposed a licensing system to restrict exports of seven rare earth elements that are mined and processed almost exclusively in China and are used in everything from electric cars to smart bombs.”

Hurtful and ‘Trump-like’. 

I had hoped not only to examine the impact of Trump 2.0 tariff policy on the global economy but also focus on policy actions that have enhanced, or possibly sustained the multilateral institutions or, alternately, weakened the multilateral institutions. And to that we will move to.

Image Credit: BBC 

This Post originally appeared at my Substack Post, Alan’s Newsletter – https://globalsummitryproject.substack.com/p/the-spiral-of-disorder-building-then

‘Killing the Golden Goose’ – Integration in the Global Economy

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Originally, I started this piece lamenting the ‘failed’ effort to bring China into the global economy following the failure by the CCP – the Party, and the Chinese government to continue early encouraging domestic economic reform efforts in the Chinese economy. That failure has given rise to very negative consequences for the global economy and the central economic players – the United States and the other North American economies, Europe and various players in the Indo-Pacific including Japan, South Korea and others.  I was preparing this week’s Post, reviewing in part a very good piece by Michael Froman, former USTR. And, in fact, I’ll get to that tale in just a moment. But it is impossible right now to overlook the destructiveness that President Trump is now bringing to the global economy, especially to America’s economic allies and partners with his thoughtless tariffs on steel and aluminum, now automobiles and very soon apparently reciprocal tariffs against seemingly all goods on what he, Trump, has come to call ‘Liberation Day’. Some liberation!

It is hard to look at Trump’s most recent tariff actions vis a vis cars and not reflect on the long – decades long effort – to integrate the three North American economies – Canada, US and Mexico – and despair over Trump’s sudden unprovoked effort to tear down the integrated economies of North America.   At least in Trump 1.0 he had the decency to renegotiate NAFTA and agree on USMCA terms of trade raising the percentage of North American content. But who cares about such negotiated free trade  agreements under Trump 2.0? As described by Damien Cave and Steven Erlanger in their NYTimes piece, these are Trump’s current tariff actions:  

“Many of the countries most affected by the new levies, such as South Korea, Japan, Germany, Mexico and Canada, are already reeling from the Trump team’s disregard for free trade deals already signed and his threats to long-established security relationships.” 

 

“Prime Minister Mark Carney of Canada said on Wednesday that Trump’s move on tariffs was “a direct attack.” Ursula von der Leyen, president of the European Commission, said the result would be “bad for businesses” and “worse for consumers.” Robert Habeck, Germany’s acting economics minister, said, “It is now important for the E.U. to respond decisively to the tariffs — it must be clear that we will not back down in the face of the U.S.”” 

As these reporters pointed out, the Trump actions and allied responses could end in the following very negative way: 

“The tariffs, which threaten both American and foreign carmakers, increase the likelihood of a global trade war. A chain reaction of economic nationalism with tariffs and other measures — perhaps adding costs for finance and services — could suppress economic growth globally, spread inflation and add rancor to already testy negotiations with Washington about security.” 

Ugh, a global trade war. Just what the globe doesn’t need. But Trump policy marches on and there is the real prospect for cranking up the drama: 

“The Trump White House has sought to use every tool of American power, including its military support and consumer market, to extract what Mr. Trump sees as a better deal for Americans. But for countries that have spent decades trusting America and tying their economies and defense plans to Washington’s promises, this feels like a moment of reversal.”

 

“American influence, long built on pronouncements about values and the shared riches of free trade, has hardened into what many analysts describe as “all stick, no carrot.” In the Trump team’s thinking, critics argue, American gains require pain for others — friends included.” 

So that’s the immediate dismaying state of the global economy largely brought to you by Trump 2.0. But there is still reason to dwell a bit on the impact to the global economy of China’s dramatic global economic emergence. This dramatic and in part negative influence on the US, and Trump for sure, but others as well, has added to the downbeat actions from the US and others.  

We’ve never quite recovered from it – that is China’s incorporation into the global economy. Even today strong echoes of a now rather distant debate still can be heard. That debate was, and is, a hard discussion by both experts and former officials. That debate was, and is, over China’s incorporation into the global economy and the decision to provide China with membership in the WTO. I was reminded of this in a strong review piece of China’s integration into the global economy by Michael Froman. Froman is today President of the Council on Foreign Relations. He served, however, as U.S. Trade Representative (USTR) from 2013 to 2017 and before that he was Deputy National Security Adviser for International Economic Affairs from 2009 to 2013. In an article in Foreign Affairs entitled,  “China Has Already Remade the International System: How the World Adopted Beijing’s Economic Playbook” he reviews China’s integration and its consequences for the condition of the global economy. While there are outstanding questions on whether more should have been insisted on by WTO members especially in terms of reform of China’s economy before permitting its entry to the global economy, it is largely in the rearview mirror today. There was a long discussion and back and forth at the time of discussions for China’s accession to the WTO, especially between the  United States and China. Much of it concerned whether China was a market enough economy to enable it to integrate into the global economy and to gain membership to the WTO. As Froman notes: 

“Jiang [Zemin] and Zhu [Rongji] declared repeatedly that China would inevitably continue to open up. Many in the West went so far as to believe that this economic liberalization would lead to China’s political liberalization, that a capitalist society would become a more democratic one over time.” 

 

“That assumption proved false. China’s leaders never seriously contemplated political reform, but China’s economic advancement was impressive nonetheless. The country’s GDP grew from $347.77 billion in 1989 to $1.66 trillion by 2003 to $17.79 trillion in 2023, according to the World Bank. Hopes were high that integrating China into the rules-based trading system could lead to a more peaceful and more prosperous world.” 

 

“Then President Hu Jintao entered the picture, followed by President Xi Jinping. China’s economic trajectory turned out to be less linear and less inevitable than initially expected. Under Hu, China leaned more heavily into state intervention in the economy by aiming to create “national champions” in strategic sectors through massive subsidies. In other words, the government expanded its role rather than pursuing further market liberalization.” 

 

“In 2004, China made up nine percent of the world’s manufacturing value added, leapfrogging to a massive 29 percent in 2023, according to the World Bank.” 

I am particularly reminded of all of this because of a very small role I played in the lengthy effort to secure China’s accession to the WTO. I worked with a former trade official in trying to address various questions over China’s economy and its reform trajectory following the many Working Party meetings on China’s accession at the WTO in Geneva. It was a several years process. As a successful conclusion approached I remember, vividly, the comment by that official after all those many gatherings and discussions over several years  that it was a mistake to permit China’s accession at that time. That official had reached the conclusion that China was not ready for economic integration in the global trading system.

But China’s accession did occur. And it became clear that the market reform process in China had slowed and then died. And the US actions are now in part as a result. Again here is Michael Froman:   

“In 2009, the Obama administration led an effort to terminate the Doha Round—a multilateral trade negotiation under the WTO launched in 2001. It did so in large part because the resulting agreement would have enshrined China permanently as a “developing country” under WTO rules. This would have allowed China to enjoy “special and differential treatment,” which meant that China would have been able to avoid assuming the same level of obligations and disciplines—on market access, intellectual property rights protection, and other issues—as the United States and other industrial countries.”

 

“Similar concerns motivated the Obama administration to pursue the Trans-Pacific Partnership (TPP), a high-standard trade agreement negotiated among 12 countries around the Pacific Rim. This initiative was designed to give countries in the Asia-Pacific region an attractive alternative to the model China offered.” 

 

“By the time TPP negotiations were completed in 2015, however, trade agreements—even those designed to counterbalance China—had become politically toxic at home, and the United States ended up pulling out of the agreement.” 

As Froman then summarizes his trade role and his warnings to China: 

“From 2009 to 2017, I served first as deputy national security adviser for international economic affairs and then as U.S. trade representative. During that time, I consistently warned my Chinese counterparts that the benign international environment that had enabled China’s success would disappear unless Beijing modified its predatory economic policies. Instead, China largely maintained its course of action. If anything, it doubled down on its approach. When Xi came to power in 2012, he effectively ended the era of “reform and opening” that had already stalled under Hu, set China on a course to dominate critical technologies, increased production to the point of overcapacity, and committed to export-led growth.”

And he concludes: 

“Today, as the economist Brad Setser has noted, China’s export volume is growing at a rate three times as fast as global trade. In the automotive sector, it is on a trajectory to have the capacity to produce two-thirds of the world’s automotive demand. And its dominance extends beyond cars; China also produces more than half the global supply of steel, aluminum, and ships.”

 

“Eventually, even American businesses, which had always been the ballast in the bilateral relationship, soured on China as their intellectual property was stolen or forcibly licensed, their market access to China was severely restricted or delayed, and China’s subsidies and preferences for domestic firms ate into their opportunity. Without any semblance of reciprocity, the relationship deteriorated. Politicians of both parties and the American public hardened their stance on China. European and major emerging economies grew hostile to Beijing’s policies, as well. In short, the benign international environment disappeared.” 

So that then is in part how we got to the difficult situation we are now in in global trade and why Froman concludes that Trump global economic policymaking mirrors today China economic policy: “The United States and others are imitating China in large part because China succeeded in a way that was unexpected. Its success in electric vehicles and clean technology did not come from liberalizing economic policies but from state interventions in the market in the name of nationalist objectives. Whether or not the United States can compete with China on China’s playing field, it is important to recognize a fundamental truth: the United States is now operating largely in accordance with Beijing’s standards, with a new economic model characterized by protectionism, constraints on foreign investment, subsidies, and industrial policy—essentially nationalist state capitalism.” 

Where we are today is certainly not where advanced economies at least believed we should be. The Trump aping of state nationalist efforts through repeated rounds of tariffs and other protectionist measures has the feel and smell of defeat and bad, very bad Washington global economic policy making.  

Image Credit: it.china-office.gov.cn

This Post first appeared at my Substack, Alan’s Newsletter. https://globalsummitryproject.substack.com/p/killing-the-golden-goose-integration