The recent escalation of US trade tensions with China, through an international optic, is about defending Atlanticism.
Atlanticism is a belief that the world’s stability and prosperity come between a close-knit relationship between Western Europe and the US through economic and military cooperation, hence NATO.
Atlanticism is also about defending USD hegemony and keeping the seat of the Empire in Washington
US President Trump’s decision to escalate trade tensions with China will ultimately benefit US’s national interests and in so doing bolster Atlanticism.
Here are the two two-tweet updates from President Trump, May 5 which confirmed an escalation in US-China trade tensions.
“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. 10% will go up to 25% on Friday. 325 Billion Dollars… “
“.of additional goods sent to us by China remain untaxed but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”
China’s imperial ambition is obvious. China’s aerospace companies are booming, China is building an AI research park.
China’s new Silk Road outside the dollar-denominated race track is making Atlanticism look jaded
The greatest geopolitical shift of the century, the pivot East is already underway. Germany, the industrial heart of Europe, has formed a strategic energy alliance with Russia and Iran, part of the new Silk Road. The EU’s ambition to form an army, independent of NATO is also known.
The past few decades of globalism, free trade has contributed to the rapid rise of China but it has been to the detriment of America and Atlanticism
China is a threat to the old world order of US hegemony. The rapid militarization of China military underscores China’s Imperial ambitions. China’s military spending reached an all-time high of 239223 USD Million in 2018. Empires and superpowers tend to have large militaries.
A US-inspired trade war with China is likely to alter the centric shift back to the West, thereby reinvigorating Atlanticism, albeit through coercion
The US Trump administration is likely to win political capital domestically with a US-inspired trade war with China. The Trump administration will be seen as spearheading a policy that supports the American middle class, US jobs, US manufacturing and not China’s military expansionism.
The US imported $296.8 billion of Chinese goods in 2018. How many of those dollars went to indirectly finance China’s military, which could then be used against US troops if a shooting war were to ever break-out?
So Trump’s trade war with China is an easy sell to the American electorate.
Moreover, if the US is encouraged through tariffs to make what it consumes, in other words, finance consumption through production, wages rather than unsustainable debt. It doesn’t take a Nobel prize-winning economist to figure out that a US-China trade war is in the US long term economic strategic interests.
Put another way, Atlanticism is making a comeback, it is a geopolitical macro trend which could have long term implications on investment portfolios
Strategic industries are likely to do well from the latest trade skirmish.
Investing in strategic industries is likely to provide investors with higher returns
Strategic industries are defined as one that a country considers vital for its economic development. Strategic industries cover a wide spectrum, they include the steel industry, important commodities and the techno-driven sector, particularly those active in next-generation technology.
Chip makers play a central role in strategic industries of the 21 century.
The energizing of Atlanticism and protectionism could also mean that global stocks, particularly exposed to the new Silk Road could underperform
US sanctions on Iran has implications on European businesses and it is at odds with the European Union (EU).
The auto industry illustrates the particular dilemma that EU companies face in deciding whether to continue doing business in Iran.
The EU has set out a plan to keep Iran in the 2015 nuclear deal and has set up a “Special Purpose Vehicle” (SPV) – a non-US dollar dominated payment system – that will facilitate a transaction between Iran and EU companies.
Put simply, the EU is not aligning to Atlanticism, it increasingly sees its future along the new Silk Road and is pivoting East which is in against US strategic economic interests
So I would not be surprised if the Trump administration started taking aim at the EU.
US has proposed tariffs on $11bn of EU products. Aircraft and cheese are among the products that could be hit by tariffs, the US Trade Representative (USTR) said.
Moreover, import duties are being considered on some goods if they are produced in France, Germany, Spain or the UK. These goods include helicopters, Undercarriages for use in new civil aircraft, Fuselages for use in new civil airplanes.
Think of what would happen if the EU goes full speed ahead with an EU army?
Would the German auto industry then be targeted?
So the US’s attempt to reinvigorate Atlanticism through arm twisting sanctions, tariffs and quotas is the hard power of an Empire at work
It says do it our way, or you jeopardize your economy. Invest accordingly.