By Jacob L. Shapiro
An already eventful week in geopolitics has ended with a flurry of activity. Washington, already unexpectedly slap-happy with tariffs this week, upped the ante again on May 31 when it announced it would no longer exempt Canada, Mexico and the European Union from steel and aluminum tariffs. The announcement, which rattled global markets, was met with widespread condemnation from the countries targeted. The move comes just one day after Japanese Prime Minister Shinzo Abe characterized a U.S. proposal to impose tariffs on U.S. imports of Japanese motor vehicles as “incomprehensible and unacceptable.” And it comes just two days after the White House made a surprise announcement that it would indeed place a 25 percent tariff on $50 billion worth of Chinese goods and impose restrictions on Chinese investments in U.S. high-tech industries.
The cheap and easy conclusion from this is to say the winds of a trade war are blowing strongly once more. The truth is less dramatic and more complicated. The European Commission, for example, talked up the severity of its response, but talk is cheap. The EU’s actual plan to retaliate is to levy tariffs on $7.5 billion worth of U.S. goods, or a paltry 0.5 percent of U.S. exports. In any case, there is no indication that U.S. President Donald Trump plans to levy tariffs on other goods, nor is there any evidence to suggest he has the power to do so currently. As for Canada and Mexico, these tariffs are more of a ploy in NAFTA negotiations than they are a prelude to a trade war.
Still, these countries have reason to be angry. The reason for the steel and aluminum tariffs isn’t Canada, Mexico or the EU. It’s China. Over the past few decades, Chinese production of steel and aluminum has soared, but China could neither consume what it produced nor afford to lay off the workers who produced it. Beijing dumped the leftover metals into foreign markets, depressing prices and driving U.S. producers out of business. Punishing Canada, Mexico and the EU doesn’t fix Chinese dumping, nor does it enhance national security, which is the legal basis of the tariffs. What it does is improve Trump’s image among his support base, to which he pledged to put “America First.” The merits of the policy are for others to debate. Suffice it to say, the policy will complicate relations with U.S. partners and raise prices for U.S. consumers.
Responsible though China may be, the hysteria surrounding the tariffs far exceeds the affect they will have. After all, $50 billion worth of Chinese exports is roughly 2 percent of China’s total exports to the world. More important yet often overlooked are the restrictions the U.S. has threatened to put on Chinese investments in U.S. high-tech industries. China’s need to move its exports up the value chain is matched only by its desperation to acquire the technology and expertise needed to do so. Because of the structural inconsistencies in the Chinese economy, Beijing doesn’t have time for that technical know-how to evolve organically: It has to cut to the front of the line. (U.S.-China trade relations have also become tied to the North Korea negotiations, so it’s no coincidence that when one is schizophrenic, so is the other.)
Despite its comparative advantage over China, the U.S. is doing its best to shoot itself in the foot. Last week, U.S. Treasury Secretary Steven Mnuchin said the U.S.-China trade war was “on hold.” A few days later, tariffs and restrictions on investment were back on the table, and on May 30, a White House trade adviser called the treasury secretary’s remarks an “unfortunate soundbite.” The U.S. commerce secretary is due in Beijing this weekend to discuss the matter – and yet the White House press secretary says all of this is up to Trump and no one else. Perhaps this mixed messaging is a tactic to keep Beijing off kilter. But if the White House’s public contradictions reflect an inability to clearly define U.S. interests, then the Chinese could use it to their advantage.
U.S.-China relations are not only about trade, of course. They are increasingly defined by competition at sea. According to a spokesman from the Chinese Defense Ministry, China now possesses a fully operational and combat-ready carrier battle group – a much bolder claim than Beijing is wont to issue. An aircraft carrier is just one ship. Its strategic value comes not from the ship itself but from the creation of a larger, coordinated battle group built around the carrier’s air power. China has no experience in carrier operations, but the fact that it has been undertaking drills on an antiquated (if refurbished) Soviet ship is a reminder that the Chinese navy is improving as quickly as it can.
The United States will not sit idly by as this happens. Hence why, just last week, a U.S. defense contractor announced it had successfully tested two long-range anti-ship missiles, striking a moving vessel from a B-1B strategic bomber. The missiles will be integrated into U.S. bombers and fighter aircraft over the next two years. The move is notable because of what it means for the future of war. Since World War II, U.S. naval power has been focused on its own carrier battle groups. But in an age of precision-guided munitions, carrier battle groups can make for better targets than assets. Whereas carriers are tremendously expensive – they cost billions of dollars to produce and millions to operate daily, not to mention all the vessels and aircraft that accompany them – a long-range anti-ship missile such as the one the U.S. tested costs roughly $3 million. And even the best missile defense systems cannot always ensure a carrier’s successful defense.
As U.S.-China relations become more complicated, it appears things are de-escalating in the Middle East for a change. The Syrian Observatory for Human Rights reported May 31 that Iran and Hezbollah would withdraw from their bases in Daraa and Quneitra, located in southern Syria near the Golan Heights. The report is unconfirmed, but on the same day, Israel’s defense minister was in Russia, where he issued a statement saluting Russia for its understanding of Israel’s security needs. Mere weeks ago, Israel and Iran were preparing for war. The situation suddenly seems calmer, a development aided in part by an Egyptian-brokered cease-fire between Israel and Hamas.
That Iran and Hezbollah would withdraw makes some sense. Hezbollah is exhausted from fighting in the Syrian civil war, hardly the ideal time to pick a fight with Israel. Iran needs to consolidate the gains it has made in Syria and Iraq, and it can’t do that if it’s fighting a war. Moreover, Russia, Iran’s sometimes-ally, having recently declared its mission in Syria accomplished, has no desire to implicate itself in another conflict in the Middle East. Since Iran’s list of reliable allies has grown even thinner than usual, Iran cannot keep advancing farther than Moscow wants it to.
It’ll be important to see if Iran can save face at home. President Hasan Rouhani already looks weak. He promised his voters that he would improve the economy and that Iran’s participation in the Joint Comprehensive Plan of Action would help him to honor that promise. He hasn’t, and it didn’t. Protests against economic conditions have plagued Iran since the beginning of the year, and a retreat from the Israeli border, however strategically sound, would likely embarrass Rouhani further.
If you’re expecting the United States to appreciate Russia’s help in allaying Israeli security concerns, guess again. Earlier this week, Polish news agency Onet acquired a copy of a Polish Defense Ministry proposal to offer the U.S. $2 billion if it established a permanent military base in the country. Moscow, on edge ahead of a NATO summit in Brussels and a general anti-Russian sentiment prevailing in the West, has already criticized the move. But the base could also create friction between the U.S. and Germany. Germany wants to keep the EU together and cooperate more with Russia – and Poland is an obstacle to both.
The base proposal is not even officially public, so it is premature to predict its precise fallout. Still, its very existence is telling of the EU and NATO’s future. For Poland, neither institution is enough to secure itself against a potential Russian (or German) threat. For the U.S., NATO has become a less reliable partner in a potential conflict, and as a result, the U.S. is seeking stronger bilateral ties with individual members. In the 20th century, NATO was primarily an anti-Soviet alliance structure, but that mission has not translated neatly into an anti-Russian alliance in the 21st century. It’s no wonder that Poland, too, is trying to shore up ties with like-minded countries.
You know it’s a strange week in geopolitics when the Middle East is the feel-good story. But then again, the week isn’t over.