Sunday

3rd Jul 2022

Column

US economic nationalism will be subtler - but it will persist

The electoral defeat of Donald Trump makes many Europeans hope for close cooperation with his successor. Europe should not expect too much.

And if Europe could blame some difficulties on Donald Trump's rudeness, its only option now is to learn to survive in an increasingly rude world.

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  • 'Refined' offensive economic nationalism under Joe Biden could challenge Europe perhaps more than the rude policies of Donald Trump

Commercial relations, for instance, will remain complex. The administration of Joe Biden could relax some of the curbs on steel and aluminium. It could also highlight the need for dialogue on matters such as standards.

Yet, the next government will also take an interest in the access of large technology companies to the European market. It will likely challenge European automotive exporters more with an ambitious policy for the electric car industry.

American economic nationalism will be subtler; still, it will persist.

Washington will also reach out to Europe about international trade governance. Yet, chances of reviving the WTO are small.

As China's remains reluctant to adopt advanced trade liberalisation, in services, investment, and government procurement; the United States continue to think that the institution is unbalanced.

The idea of border carbon-adjustment could bring the American Democrats and the EU closer together. Yet, the Republicans, which would have to support tariffs in Senate, are divided on the matter.

This leads us to climate change.

One of Biden's bold promises has been to take his country back to the Paris Agreement. Even if he would sidestep the Senate, most likely to remain dominated by Republicans, the US will not forfeit its competitive advantage in fossil fuels.

The Energy Administration expect shale gas production in the US to increase by another 40 percent in the next ten years. Today, American industrial energy costs already less than half of European industrial energy.

The more the US comes to face economic headwinds, because of the corona pandemic, but also because of the stagnating productivity, growing external debt, and an increasingly unbalanced growth model, the more the tendency of economic nationalism will become manifest.

And economic nationalism does not necessarily have to be Trumpian protectionism. Economic nationalism can also be more offensive and entail robust government support to conquer markets overseas. 'Refined' offensive economic nationalism could challenge Europe perhaps more than the rude policies of Trump.

In terms of security policy, coordination will be difficult.

The Biden administration will be reluctant to endorse attempts by Berlin and Paris to mend fences with Russia. Like Trump, Biden is opposed to the Nord Stream II pipeline.

Military matters

He will be forward-leaning in organising military exercises and beefing up deterrence in eastern Europe. Likewise, the new government will be cautious towards Iran. While interested to restore the nuclear deal (the JCPOA), Washington will continue to demand additional checks on missile development and support for terrorist groups.

Washington will oppose any multilateral constraint that prevents it from regaining the military upper hand on its rivals.

Strategic arms limitations, the New-START, could be extended with Russia, but this puts no curbs on ongoing efforts to modernise nuclear weapons, by means of hypersonics and multiple manoeuvrable warheads, the blurring between tactical and strategic weapons, as well as advanced missile defences and space-based missile defence assets.

Neither should we expect new international frameworks for military activities in space, cyber, and so forth.

While Russia remains in the back of the mind of American strategic planners, China is in the forefront.

Even if Biden puts more emphasis on Indo-Pacific partnerships and outrivalling China technologically, he will go on to shift military assets to Asia.

And even with the current large defence budget, the US can no longer afford its current global posture.

The steady shift to the Indo-Pacific has important consequences. The Biden administration too will ask European countries to pick a side in the contest between the US and China.

In the past years, European capitals could still defend their opportunistic hedging behaviour by explaining that Trump was unreliable. This will be no longer the case with president Biden.

Moreover, the US will relocate more resources from Europe's neighbourhood to Asia. It will aim at stable deterrence towards Russia, minimal engagement elsewhere, and a military build-up in the Pacific.

This means that the power vacuum around Europe will become larger, that the burden of combating terrorism will fall more on Europe's shoulders, and that other regional powers will be more emboldened to project military power themselves.

We already observed this in Ukraine, the Middle East, and Northern Africa.

The presidency of Biden will come with some opportunities to coordinate. Yet, it will mostly be a challenge for Europe to guard its own interests and to critically distinguish pleasantries in diplomatic style from the real difficulties on the diplomatic agenda.

Author bio

Jonathan Holslag teaches international politics at the Free University of Brussels.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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