Provider of in-depth & balanced analysis on hot issues around the world

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском I. Introduction  We are only two and a half months into the new Trump administration. However, President Donald Trump's long-threatened tariffs have plunged the country into a trade war abroad. On-again, off-again, new tariffs continue to escalate uncertainty around the world. Trump already launched a trade war during his first term in office, but he has more sweeping tariff plans right now. The second Trump administration has embarked on a new and more aggressive tariff policy, citing various economic and national security concerns. His administration has proposed, imposed, suspended, revoked, and then reimposed various new tariffs. It could be difficult for average citizens to keep up with all the proposals. As of March 19, 2025, there are ten proposed or active tariff initiatives. They range from broad-based tariffs that cover all goods from a certain country (China, Mexico, Canada) to tariffs that cover certain types of goods (aluminum & steel), promises of future tariffs (copper, lumber, automotive, semiconductor, and pharmaceutical), and promised retaliatory tariffs (European wine and other alcoholic beverages). Moreover, although we have seen more tariff announcements in the first two months of the second Trump administration than in the entire first Trump administration, "fair and reciprocal" tariff rollout will overpower the tariffs imposed until today. The ten tariff initiatives that are proposed or in play are as follows in Table 1.   This paper aims to evaluate economic impacts of tariffs imposed by the Trump administration. It first explains the effects of tariffs imposed by the first Trump administration and then forecasts the impacts of the second Trump administration's tariffs.  II. Literature on Tariff Effects A tariff is a type of tax that a government adds to imported goods. Companies importing goods pay the tariff to the government. If any part of a product arrives with a tariff, whether it is an imported avocado or a car built locally with imported steel, its cost is part of the price everyday consumers pay before sales tax.  Economists reject tariffs as an effective tool to improve the welfare of U.S. citizens or strengthen key industries. In a survey conducted during the first Trump administration, 93 % of economic experts did not agree that targeted tariffs on aluminium and steel would improve Americans' welfare. Recent research has strengthened economists' opposition to this policy instrument. Numerous studies demonstrate that American consumers entirely bear the burden of tariffs imposed during the first Trump administration, with disproportionately large impacts on lower-income U.S. households. A framework for analysing the impact of higher import tariffs on the economy is provided by Mundell and Fleming. Mundell (1961) claimed that the country that raised tariffs on imported products may benefit because more people choose domestically produced products over imported ones. Protection from foreign competition could also benefit domestic industries. Large countries can also benefit from improved terms of trade. However, increased tariffs on imported products are assumed to lead to an increase in the current account balance by increasing savings relative to investment. Higher savings dampen aggregate demand. The situation of households deteriorates because of rising consumer prices. Domestic industries are also negatively affected by lower household demand and the need to pay more for imported input products.  Over the years, Mundell and Fleming's model has been developed further by other scholars such as Eichengreen (1981), Krugman (1982), Obstfeld and Rogoff (1995) and Eichengreen (2018). Overall, the theoretical literature demonstrates that higher import tariffs could affect the economy through various channels. The impacts of tariffs on the economy differ between a nation imposing the tariffs and nations exporting to the nation raising the tariffs. However, nations that are not subject to the increased import duties are also affected. Main effects of higher tariffs are as follows: Higher inflation: Higher import tariffs lead to higher prices for imported products. Depending on which tariffs are increased, this could lead to higher prices for both consumers and companies. Domestic firms may also raise their prices because of reduced competition from foreign companies (Cavallo et al. (2021)).  Higher consumer prices lead to a decline in real disposable household income, which hampers private consumption. Higher business costs have impacts on companies' profits, which in turn dampen employment and companies' willingness to invest. Companies are also more likely to pass on some of their higher costs to consumers in the form of higher prices. The rise in imported prices might be smaller in large countries, as they are more able to influence the world price of products. Increased consumption of other products: Higher imported prices can lead companies and consumers to increasingly buy cheaper domestic products. But it can also lead to increased imports of products from countries not subject to higher import tariffs.  Domestic industries are protected: Higher import tariffs improve the competitive position of domestic companies. These benefits can lead to increased investment, production, and employment in protected industries. However, the longer-term effect of protecting some domestic industries from foreign competition can be negative, as it might reduce incentives to improve production efficiency, thereby dampening productivity and GDP.  Decreased trade: Increased tariffs usually lead to reduced trade. This can lead to reduced knowledge transfer between nations in the form of less direct investment, reduced technology transfer, and reduced access to skilled labour. These factors in turn can lead to companies moving further away from the technological frontier, thereby hampering productivity (Dornbusch (1992) and Frankel and Romer (1999)).  Stronger exchange rate: When demand changes from foreign to domestic production, the exchange rate tends to rise to balance it out. One reason is that higher inflation often leads to higher interest rates relative to other nations. The nominal exchange rate might appreciate if imports decline significantly and demand for foreign currency drops. An appreciation of the exchange rate hampers exports but keeps imports cheaper.  Global value chains: Higher tariffs can lead to disruptions in global value chains by making imported inputs from abroad pricier. If firms are part of global value chains, higher costs for firms facing higher import costs may also lead to higher costs for domestic firms further down the production chain.  Uncertainty and confidence: Higher import tariffs may increase uncertainty about future trade policy and lead to increased pessimism among households and companies. Such uncertainty may hamper household consumption and business investment (Boer and Rieth (2024)).  III. Tariffs under the first Trump administration The first Trump administration's tariffs involved protectionist trade initiatives against other nations, notably China.  In January 2018, the Trump administration-imposed tariffs on solar panels and washing machines of 30–50%. In March 2018, the administration-imposed tariffs on aluminium (10%) and steel (25%), which are imported from most countries. In June 2018, the Administration expanded these tariffs to include the EU, Mexico, and Canada. The Trump administration separately set and escalated tariffs on products imported from China, leading to a trade war between the U.S. and China.  In their responses, U.S. trading partners imposed retaliatory tariffs on U.S. products. Canada imposed matching retaliatory tariffs on July 1, 2018. China implemented retaliatory tariffs equivalent to the $34 billion tariff imposed on it by the U.S. In June 2019, India imposed retaliatory tariffs on $240 million worth of U.S. products.  However, tariff negotiations in North America were under way and successful, with the U.S. lifting steel and aluminium tariffs on Mexico and Canada on May 20, 2019. Mexico and Canada joined Argentina and Australia, which were the only countries exempted from the tariffs. But on May 30, Trump announced on his own that he would put a 5% tariff on all imports from Mexico starting on June 10, 2019. The tariffs would go up to 10% on July 1, and then by another 5% every month for three months, until illegal immigrants stopped coming through Mexico and into the U.S. Then the tariffs were averted on June 7 after negotiations between the U.S. and Mexico. U.S. tariffs on Chinese products had been applied as follows: On March 22, 2018, Trump signed a memorandum under Section 301 of the Trade Act of 1974 to apply tariffs of $50 billion on Chinese products. In response, China announced plans to implement its tariffs on 128 U.S. products. 120 of those products, such as fruit and wine, will be taxed at a 15% duty, while the remaining eight products, including pork, will receive a 25% tariff. China implemented their tariffs on April 2, 2018.  On April 3, 2018, the U.S. Trade Representative's office (the USTR) published an initial list of 1,300+ Chinese products to impose levies upon products like flat-screen televisions, medical devices, aircraft parts and batteries. On April 4, 2018, China's Customs Tariff Commission of the State Council decided to announce a plan to put 25% more tariffs on 106 U.S. goods, such as soybeans and cars.  In the response, On April 5, 2018, President Trump directed the USTR to consider $100 billion in additional tariffs. On May 9, 2018, China cancelled soybean orders exported from the United States to China. On June 15, 2018, President Trump released a list of Chinese products worth $34 billion that would face a 25% tariff, starting on July 6. Another list with $16 billion of Chinese products was released, with an implementation date of August 23.  On July 10, 2018, in reaction to China's retaliatory tariffs that took effect July 6, the USTR issued a proposed list of Chinese products amounting to an annual trade value of about $200 billion that would be subjected to an additional 10% in duties. During the G20 summit in Japan in June 2019, the U.S. and China agreed to resume stalled trade talks, with Trump announcing he would suspend an additional $300 billion in tariffs that had been under consideration. IV. Economic Effects of the Tariffs from the First Trump Administration Changes in tariffs affect economic activity directly by influencing the price of imported products and indirectly through changes in exchange rates and real incomes. The extent of the price change and its impact on trade flows, employment, and production in the United States and abroad depend on resource constraints and how various economic actors (producers of domestic substitutes, foreign producers of the goods subject to the tariffs, producers in downstream industries, and consumers) respond as the effects of the increased tariffs reverberate throughout the economy. According to the U.S. Congressional Research Service (CRS), the following six outcomes came out at the level of individual firms and consumers as well as at the level of the national economy. 1. Increased costs for U.S. consumers Higher tariff rates lead to price increases for consumers of products subject to the tariffs and for consumers of downstream products as input costs rise. Higher prices in turn lead to decreased consumption, depending on consumers' price sensitivity for a particular product. For example, consider the monthly price of U.S. laundry equipment, which includes washing machines subject to tariff increases as high as 50% since February 2018. The monthly price of this equipment increased by as much as 14% in 2018 compared to the average price level in 2017, before the tariffs took effect (see Figure 1).   Figure 1: U.S. laundry equipment prices According to Jin (2023), many companies passed the costs of the Trump tariffs on to consumers in the form of higher prices. Following impositions of the tariffs on Chinese products, the prices of U.S. intermediate goods rose by 10% to 30%, an amount equivalent to the size of the tariffs. An April 2019 working paper by Flaaen, Hortaçsu, and Tintel not found that the tariffs on washing machines caused the prices of washers to rise by approximately 12% in the United States. A Goldman Sachs analysis by Fitzgerald in May 2019 found that the consumer price index (CPI) for tariffed products had increased dramatically, compared to a declining CPI for all other core goods. According to the Guardian, the Budget Lab at Yale University found that American consumer prices could rise by 1.4% to 5.1% if Trump implemented his comprehensive tariff plan, which would amount to an additional $1,900 to $7,600 per household. 2. Decreased domestic demand for imported goods subject to the tariffs and less competition for U.S. producers of substitute goods: U.S. producers competing with the imported products subject to the tariffs (e.g., domestic aluminium and steel producers) may benefit to the degree they are able to charge higher prices for their domestic products and may expand production because of increased profitability. Since March 2018, U.S. imports of steel and aluminium have faced additional tariff charges of 25% and 10%, making foreign supplies of these products more expensive relative to domestic products. Because of these tariffs, U.S. imports of these goods went down in 2018 and 2019 compared to what they were usually like in 2017 before the tariffs, while U.S. production went up (see Figure 2 and Figure 3). By the first quarter of 2020, real U.S. imports of steel and aluminium (adjusted for price fluctuations) had decreased by more than 30% and 16%, respectively, from their average 2017 levels. The quarterly production of steel and aluminium in the U.S. during this period, however, increased by as much as 13.5% and 9.0%, respectively, above average 2017 levels.   Figure 2: Domestic production and imports: Steel  Figure 3: Domestic production and imports: Aluminium 3. Increased costs for U.S. producers in downstream industries, resulting in a decline in employment U.S. producers that use imported products subject to the additional tariffs as inputs ("downstream" industries, such as auto manufacturers in the case of the aluminium and steel tariffs) might be harmed as their costs of production increase. Higher input costs are more likely to lead to some combination of lower profits for producers, which in turn might dampen demand for these downstream products, leading to some contraction in these sectors.  A study (2019) by Federal Reserve Board economists Flaaen and Pierce, which examined effects on the manufacturing sector from all U.S. tariff actions in 2018, found that higher input costs from the tariffs were associated with higher prices, employment declines, and reductions in output for affected firms. Another study (2020) by Handley, Kamal, and Monarch found that the higher input costs associated with the tariffs might have led to a decrease in U.S. exports for firms reliant on imported intermediate inputs. Handley, Kamal, and Monarch suggested that export growth was approximately 2% lower for products made with products subject to higher U.S. tariffs, relative to unaffected products. Another study (2019) by Federal Reserve Board economists Flaaen and Pierce found that the steel tariffs led to 0.6% fewer jobs in the manufacturing sector than would have happened in the absence of the tariffs; this cut amounted to approximately 75,000 jobs. A study (2024) by Ma and David concluded that the United States lost 245,000 jobs because of the Trump tariffs.  4. Decreased demand for U.S. exports subject to retaliatory tariffs  Retaliatory tariffs place U.S. exporters at a price disadvantage in export markets relative to competitors from other countries, potentially decreasing demand for U.S. exports to those markets. Since Q3 2018, after Section 232 retaliatory tariffs took effect in China, the EU, Russia, and Türkiye, U.S. exports to these trading partners subject to the tariffs declined by as much as 44% below their 2017 average values (Figure 4). U.S. exports to China subject to retaliation during the same period declined even further from their 2017 levels, falling as much as 68% on a quarterly basis. By contrast, during this same period, overall U.S. exports were as much as 10% higher each quarter relative to 2017, suggesting the retaliatory tariffs played a role in the product-specific export declines.  Figure 4: Declines in U.S. exports subject to retaliation A study by Fajgelbaum, Goldberg, Kennedy, and Khandelwal published in the Quarterly Journal of Economics in October 2019 estimated that consumers and firms in the U.S. who buy imports lost $51 billion (0.27% of GDP) because of the 2018 tariffs. This study also found that retaliatory tariffs resulted in a 9.9% decline in U.S. exports. This study also found that workers in counties with a lot of Republicans were hurt the most by the trade war because agricultural products were hit the hardest by retaliatory tariffs.  5. U.S. National Economy In addition to industry- or consumer-level effects, tariffs also have the potential to affect the broader U.S. national economy. Quantitative estimates of the effects vary based on modelling assumptions and techniques, but most studies suggest a negative overall impact on U.S. GDP because of the tariffs.  The Congressional Budget Office (2020) estimated that the increased tariffs in effect as of December 2019 would reduce U.S. GDP by 0.5% in 2020, below a baseline without the tariffs, while raising consumer prices by 0.5%, thereby reducing average real household income by $1,277. From a global perspective, the International Monetary Fund estimated that the tariffs would reduce global GDP in 2020 by 0.8%. Dario Caldara et al. (2020) also found that in 2018, investment dropped by 1.5% because of the uncertainty caused by U.S. trade policy. Moreover, a study (2019) by Amiti, Redding, and David published in the Journal of Economic Perspectives found that by December 2018, Trump's tariffs resulted in a reduction in aggregate U.S. real income of $1.4 billion per month in deadweight losses and cost U.S. consumers an additional $3.2 billion per month in added tax. Furthermore, Russ (2019) found that tariffs, which Trump imposed through mid-2019, combined with the policy uncertainty they created, would reduce the 2020 real GDP growth rate by one percentage point.  6. Trade balance  The Trump administration repeatedly raised concerns over the size of the U.S. trade deficit, thereby making trade deficit reduction a stated objective in negotiations for new U.S. trade agreements. Broad-based tariff increases affecting a large share of imports may reduce imports initially, but they are unlikely to reduce the overall trade deficit over the longer period due to at least two indirect impacts that counteract the initial reduction in imports. One indirect effect is a potential change in the value of the U.S. dollar relative to foreign currencies. Another potential effect of U.S. import tariffs is retaliatory tariffs. Economists argue that while tariffs placed on imports from a limited number of trading partners may reduce the bilateral U.S. trade deficit with those specific nations, this is likely to be offset by an increase in the trade deficit or reduction in the trade surplus with other nations, leaving the total U.S. trade deficit largely unchanged.  Figure 5 shows the relative change in the U.S. goods trade deficit with the world as well as the bilateral U.S. deficits with three major partners, China, Mexico, and Vietnam, from 2017 to 2019. Since the U.S. tariffs took effect, the overall U.S. trade deficit has increased, rising 8% from 2017 to 2019. However, the U.S. trade deficit in goods with China declined by 8% from 2017 to 2019, while the U.S. trade deficit in goods with Vietnam and Mexico significantly increased by more than 40% during the same period.  Figure 5: Changes in the U.S. goods trade deficits with China, Mexico, and Vietnam According to Zarroli (2019), between the time Trump took office in 2017 and March 2019, the U.S. trade deficit increased by $119 billion, reaching $621 billion, the highest it had been since 2008. American Farm Bureau Federation data showed that agriculture exports from the U.S. to China decreased from $19.5 billion in 2017 to $9.1 billion in 2018, a 53% reduction.  V. What are the Potential Consequences of Trump's Tariff Plan? Last year, the Peterson Institute for International Economics examined the impact of President Trump's proposed tariffs based on his campaign promises, which would impose 10 % additional tariffs on US imports from all sources and 60 % additional tariffs on imports from China. The major outcomes were lower national income, lower employment, and higher inflation. McKibbin, Hogan, and Noland (2024) at the Peterson Institute for International Economics found that both of Trump's tariff plans—imposing 10% additional tariffs on U.S. imports from all sources and 60% additional tariffs on imports from China—would reduce both U.S. real GDP and employment by 2028. But the former proposal damages the U.S. economy more than the latter. If other nations retaliate with higher tariffs on their imports from the U.S., the damage intensifies.  Assuming other governments respond in kind, Trump's 10 % increase results in U.S. real GDP that is 0.9 % lower than otherwise by 2026, and U.S. inflation rises 1.3 % above the baseline in 2025.  The 10 % added tariffs hurt the economies of Canada, Mexico, China, Germany, and Japan—all major US trading partners that see a lower GDP relative to their baselines through 2040. Mexico and Canada take much larger GDP hits than the U.S. The 60 % added tariffs on imports from China reduce its GDP relative to its baseline, much more than that of other U.S. trading partners. Mexico, however, sees a higher GDP than otherwise as some production shifts to Mexico from China. This paper focuses on Trump's universal 10 % tariffs rather than 60 % tariffs on imports from China because extreme 60 % tariffs on Chinese imports are not expected. McKibbin, Hogan, and Noland (2024) assume the 10 % tariff increase is implemented in 2025 and remains in place through the forecast period. They also consider a second scenario in which U.S. trading partners retaliate with equivalent tariff increases on products they import from the U.S.  Figures 6–11 show the results for the uniform additional 10 % increase in the tariff on imports of goods and services from all trading partners.   Figure 6: Projected change in real GDP of selected economies from an additional 10 % increase in US tariffs on imports of goods and services from all trading partners, 2025-40 (Source: McKibbin, Hogan, and Noland, 2024) When tariffs go up by 10%, the U.S. real GDP goes down by 0.36 % by 2026, and it goes down even more in Mexico and Canada by 2027 (see Figure 6). Chinese GDP drops by 0.25 % below the baseline in 2025. After the initial demand-induced slowdown, U.S. GDP recovers as production shifts from foreign suppliers to U.S. suppliers, leading to a slightly lower long-term GDP of 0.1 % below baseline by 2030 in the U.S.   Figure 7: Projected change in employment (hours worked) in selected economies from an additional 10 % increase in US tariffs on imports of goods and services from all trading partners, 2025-40 (Source: McKibbin, Hogan, and Noland, 2024) The results for aggregate employment are like the GDP outcomes (see figure 7). Employment drops in the United States by 0.6 % by 2026 but recovers due to a supply relocation towards U.S. suppliers. U.S. employment returns to baseline eventually because real wages decline permanently to bring employment back to baseline by assumption.  Figure 8: Projected change in inflation in selected economies from an additional 10% increase in US tariffs on imports of goods and services from all trading partners, 2025-40 (Source: McKibbin, Hogan, and Noland, 2024) The imposition of higher tariffs increases prices of both consumer and intermediate goods, contributing to a rise in inflation of 0.6 % above baseline in 2025 (see figure 8).  The higher tariff is inflationary everywhere except in China due to the tightening of Chinese monetary policy to resist change in the exchange rate relative to the U.S. dollar.   Figure 9: Projected change in the trade balance in selected economies from an additional 10 % increase in US tariffs on imports of goods and services from all trading partners, 2025-40 (Source: McKibbin, Hogan, and Noland (2024)) Figure 9 shows the change in the trade balance as a share of GDP. In theory, the trade balance can worsen or improve due to changes in exports and imports. From 2025 to 2028, the U.S. trade deficit narrows slightly but then widens as capital flows into the U.S. economy, appreciating the U.S. real effective exchange rate. By 2030, the U.S. trade deficit will worsen by 0.1 % of GDP due to capital moving from Mexico and Canada into the U.S. Government savings rise due to additional tariff revenues.  VI. Conclusion  This paper showed that tariffs imposed by the first Trump administration had negative impacts on the U.S. economy, particularly inflation, incomes, and employment. It also demonstrated that tariffs which will be imposed by the second Trump administration are expected to have negative effects on the U.S. economy. Then a question arises: "Why does Trump attempt to impose tariffs on products from abroad?" Today, more people mention tariffs as tools to protect U.S. companies and farmers. They are discussed as a tool for bringing back manufacturing businesses into the U.S. as well as a bargaining tactic in negotiations over the flow of fentanyl and immigration. Trump has used and promised to increase tariffs for three purposes: to raise revenue, to bring trade into balance, and to bring rival countries to heel. It is unclear whether Trump will achieve his goals. However, President Donald Trump believes that tariffs are a panacea. Trump believes that his tariffs would bring hundreds of billions—trillions— into the US Treasury. Moreover, Trump is confident that he can force countries to give up something he believes is in America's best interest. For example, his tariffs on Canada and Mexico have led Mexico and Canada to agree to expand their border patrols. Reference  Amiti Mary, Redding Stephen, David E, “The Impact of the 2018 Tariffs on Prices and Welfare,” Journal of Economic Perspectives. 33 (Fall 2019): 187–210. Boer, L. and M. Rieth, “The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty,” IMF Working Paper 2024/013, International Monetary Fund. Cavallo, A., G. Gopinath, B. Neiman, and J. Tang (2021), “Tariff Pass-Through at the Border and at the Store: Evidence from US Trade Policy,” American Economic Review: Insights 3(1): 19-34.  Congressional Budget Office, The Budget and Economic Outlook: 2020 to 2030, January 28, 2020. https://www.cbo.gov/system/files/2020-01/56020-CBO-Outlook.pdf.  Dario Caldara et al., “The Economic Effects of Trade Policy Uncertainty,” Journal of Monetary Economics, vol. 109 (January 2020), pp. 38-59. Dornbusch, R. (1992), “The Case for Trade Liberalization in Developing Countries,” Journal of Economic perspectives 6 (1): 69-85.  De Loecker, J., P.K. Goldberg, A.K. Khandelwal and N. Pavcnik (2016), “prices, markups, and trade reform,” Econometrica 84(2): 445-510.  Eichengreen, B. (1981), “A Dynamic Model of Tariffs and Employment under Flexible Exchange Rates,” Journal of International Economics 11:341-359.  Eichengreen, B. (2018), “Trade Policy and the Macroeconomy,” Keynote address Mun dell-Fleming Lecture, International Monetary Fund, 13 March 2018.  Fajgelbaum, P.D., P.K. Goldberg, P.J. Kennedy and A.K. Khandelwal (2019), “The Return to Protectionism,” The Quarterly Journal of Economics 135(1): 1-55.  Fitzgerald, Maggie, “This Chart from the Goldman Sachs Shows Tariffs are Rasing Prices for Consumers and It could Get Worse.” CNBC. May 13, 2019. Flaaen, A. and J.R. Pierce (2019), “Disentangling the effects of the 2018-2019 tariffs on globally connected U.S. Manufacturing sector,” Working Paper, Finance Economic Discussion Series 2019-086, Board of Governors Federal Reserve System, Washington DC.  Flaaen, A., A. Hortacsu and F. Tintelnot (2020), “The production relocation and price effects of US trade policy: the Case of Washing Machines,” American Economic Review 110(7): 2103-2127.  Frankel, J.A. and D.H. Romer (1999), “Does Trade Cause Growth,” American Economic Review 89 (3): 379-399. Handley, K., F. Kamal, and R. Monarch (2020), “Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism,” NBER Working paper 26611. https://www.nber.org/papers/w26611. Handley, K. and N. Limao (2022), “Trade Policy Uncertainty,” NBER Working Paper 29672.  Handley, Kyle, Fariha Kamal, and Ryan Monarch, “Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism,” National Bureau of Economic Research, NBER Working Paper No. 26611, January 2020. Jin, Keyu (2023). The New China Playbook: Beyond Socialism and Capitalism. New York: Viking. Kreuter, H. and M. Riccaboni (2023), “The Impact of Import Tariffs on GDP and Consumer Welfare: A Production Network Approach,” Journal of Economic Modelling 126.  Krugman, P. (1982), “The Macroeconomics of Protection with a Floating Exchange rate,” Carnegie-Rochester Conference Series on Public Policy 16: 141-182.  Ma, Xinru; Kang, David C. (2024). Beyond Power Transitions: The Lessons of East Asian History and the Future of U.S.-China Relations. Columbia Studies in International Order and Politics. New York: Columbia University Press.  McKibbin, W., M. Hogan, and M. Noland (2024), “The International Economic Implications of a Second Trump Presidency,” Peterson Institute for International Economics, Working Paper 24-20.  Mundell, R. (1961), “Flexible Exchange Rates and Employment Policy,” Canadian Journal of Economics and Political Science 27: 509-517.  Obstfeld, M., and K. Rogoff (1995), “Exchange Rate Dynamics Redux,” Journal of Political Economy, 103: 624-660.  Russ, Katheryn (December 16, 2019). “What Unilateralism Means for the Future of the U.S. Economy,” Harvard Business Review. January 2, 2020.  Zarroli, Jim. “Despite Trump’s Promises, The Trade Deficit is Only Getting Wider,” NPR. March 6, 2019.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском With Donald Trump seemingly determined to push the US economy on a path towards autarky, our major trading partners will need to make alternative arrangements. This is especially the case with Canada, since its economy is so closely tied to the US economy. At this point, Mark Carney, the country’s new Prime Minister, knows there is little possibility of dealing with Trump rationally. Trump has bizarre and totally imagined grievances against Canada. His main complaint seems to be that the United States runs a $200 billion trade deficit with Canada, which Trump describes as Canada ripping off the United States. It’s hard to believe that anyone would say that selling stuff to a willing and well-informed customer is ripping them off. Presumably we buy stuff from Canada because it’s cheaper than the stuff we either produce ourselves or could buy from other countries. Also, the deficit is entirely due to purchases of oil from Canada, something Trump sought to promote in his first term. We have mostly balanced trade if we exclude oil. In fact, the claims of unfairness are based on a treaty that Trump himself negotiated in his first term. Trump can’t even get his numbers straight. Rather than being $200 billion, our trade deficit is less than one-third this size, at just over $60 billion. Trump’s erratic craziness makes the prospect of a real and lasting deal very dim. Carney has to look to secure stronger trade deals with more stable partners. Europe and Latin America are clearly part of the that story, but China needs to be too, as the world’s largest economy. There are opportunities for major gains from trade with China, especially in the auto sector, which had been thoroughly intertwined with the United States and Mexico. Carney has to work from the assumption that these links could be severed for the indefinite future. Here China’s enormous progress in developing electric vehicles offers a great opportunity to Canada. China now sells high quality, low-cost EVs. It has also developed battery technology to the point where a battery can be fully charged in six minutes, not much different than the time it takes to fill a tank of gas. Canada can in principle negotiate trade deals with China where it partially opens its market to its EVs, in exchange for a commitment to technology transfer. The plan would be that in a few years Canadian manufacturers would adopt the latest Chinese technology and supply much of the market themselves. Since Canada has more union-friendly labor law than the United States, they can structure their deal so that the factory jobs would be largely good-paying union jobs. This would be good for the environment, good for Canadian workers and consumers, and good for Canada’s economy, since it means car buyers will have considerably more money to spend on other items or to save. It would also set up a great contrast with the United States, where Trump is determined to try to lock the country into building and buying cars that rely on old-fashioned internal combustion (IC) engines. While Canadians are buying high-quality EVs, people in the United States will be buying IC cars for two or even three times the price. Furthermore, while we are paying $40 to $60 to fill our tanks every couple of weeks, Canadians will be able to power their vehicles for ten or fifteen dollars a charge. The move to EVs will also mean that Trump will have imposed a permanent cost on the US car industry, even if he eventually learns a little economics and discovers his tariffs were not a good idea. If Canada develops a vibrant EV industry, it will not be going back to the integrated production structure with the United States that it had with IC vehicle producers before the trade war. Trump is not going to be able to get Canadians to buy more expensive IC vehicles. The only way for the United States auto industry to go forward, if we move back towards more normal trade with Canada, will be for it to double-down on developing EVs itself. There obviously will be many other problems that Canada will have to deal with as it attempts to cope with unwinding decades of economic integrations with the United States, but working with China on adopting EV technology should be a no-brainer. In this area, Trump may have done Canada a big favor.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Latin America has been a long-standing policy focus for the United States, aimed at keeping external influences out and maintaining stability in the region. This commitment began with the Monroe Doctrine and Roosevelt Corollary and continued through the Cold War. Under the current administration, there has been a renewed emphasis on Latin America due to rising Chinese influence, drug cartel activity, and immigration issues. The most recent National Security Strategy (NSS) states that no region impacts the United States more than the Western Hemisphere and emphasizes the need to “protect against external interference or coercion, including from the People’s Republic of China (PRC).” However, the United States has not had a coherent strategy or policy toward Latin America in decades, leading to outcomes contrary to its stated goals. The PRC has been rapidly expanding its influence in the region. Since 2010, China has nearly tripled its trade with Latin America, with several nations signing on to the Belt and Road Initiative (BRI). Additionally, Transnational Criminal Organizations (TCOs) continue to affect the United States through drug, weapon, and human trafficking, while also forcing migrants north due to unsafe living conditions in their home countries. Given this situation, the United States must develop a coherent two-pronged strategy toward Latin America. This strategy should involve expanding economic investments to counteract Chinese influence while also strengthening regional security to address the threats posed by TCOs. Recognizing that the PRC and TCOs are different from the Soviets and Marxist guerrillas, US policy during the Cold War provides valuable lessons on what this two-pronged approach could entail. US Cold War Policy in Latin America In the early days of the Cold War, the United States was concerned about the spread of communism in Latin America but initially failed to take meaningful action. It relied instead on outdated policies from the 1920s. This approach continued until the late 1950s, when significant changes occurred in the hemisphere. By then, ten of thirteen dictators had been replaced, economic challenges had intensified, and the prices of Latin American exports had plummeted. This social and political unrest carried over into the 1960s, as the region became “aflame” with Marxist revolutions. The CIA reported that twelve out of twenty-three nations in the southern hemisphere were at risk of falling to communism. This urgency prompted the United States to act, determined to prevent the region from succumbing to Soviet influence and instability. The Kennedy administration identified economic struggles and monetary insecurity as the principal vulnerabilities that could allow communism to take root. To address these issues, the administration launched the Alliance for Progress, a ten-year initiative where the United States would provide $20 billion in loans, grants, and investments, while Latin American governments aimed to generate $80 billion in funds and implement land reforms, tax systems, and other socio-political changes. In tandem with economic initiatives, the United States employed covert actions, counterinsurgency (COIN) tactics, and military support to suppress Marxist revolutions. For instance, in Guatemala, US-backed military forces fought against Marxist revolutionaries with American military assistance. Similar operations took place in El Salvador, Chile, Paraguay, and Brazil. Although not executed flawlessly, this two-pronged strategy ultimately succeeded in keeping Soviet and communist influences largely at bay in the region. Economic assistance and support helped stabilize democracy in Venezuela, while land redistribution and reforms from the Alliance for Progress undermined financial support for Marxist guerrilla groups in Peru, Bolivia, and Colombia. Despite being conducted with a certain level of negligence, US-backed COIN operations across the region weakened guerrilla movements, leading to factional splits and self-defeating behaviors. Notably, US-supported operations included the capture of Che Guevara by a US-trained Bolivian military unit in 1967. Applying a Cold War-like Policy Today Economic challenges are once again prevalent in Latin America, and China is seizing the opportunity. Through its Belt and Road Initiative (BRI), China has expanded its influence and bolstered regional ties. Twenty Latin American countries have signed onto the BRI, while Chile, Costa Rica, and Peru have established free trade agreements with the PRC. In 2010, trade between China and South America amounted to $180 billion, which surged to $450 billion by 2021. The United States needs to consider a strategy similar to the Alliance for Progress to effectively compete with the PRC and maintain its influence in the region, as it is currently falling short in this area. In 2023, China invested $9 billion in Latin America through its Outward Foreign Direct Investment (OFDI), while the United States contributed only $2 billion for the same year. As the new administration shapes its foreign policy, it is essential to allocate more economic investment to Latin America. This should involve a deliberate economic policy and investment plan that focuses on trade, port infrastructure, and technological development—all areas where the PRC is currently providing support. The bipartisan Americas Act of 2024 is a good starting point, but it is insufficient to counteract the PRC’s advances. While some might argue that boosting economic investment is too expensive, such efforts would enable the United States to compete with China while stabilizing the region and reducing northward immigration. In tandem with economic investment, the United States must advocate for stronger regional security to combat TCOs, thus fostering stability and improving living conditions. Specifically, the United States should collaborate with Latin American countries to enhance security institutions by expanding advisory and assistance operations with regional militaries, similar to COIN operations during the Cold War. In recent years, the United States military has maintained a significant presence in countries like Colombia, Panama, and Honduras to conduct Foreign Internal Defense (FID) operations, aimed at preparing partner forces to effectively combat TCOs. FID and Security Force Assistance (SFA) operations should include US military support for other nations in the region, such as El Salvador, Bolivia, and Mexico. Historically, countries like Mexico have been hesitant or resistant to accepting US military support; however, this trend has recently shifted. In a positive development, the Mexican Senate has approved a small contingent of US Special Operations Forces (SOF) to assist Mexican SOF personnel. In addition to expanding FID operations, the United States might explore granting broader authorities to allow US military forces to assist regional partners in targeting and operational planning against TCOs. While some may oppose this option, expanded authorities should not come as a surprise, given that the new administration has designated several TCOs as terrorist organizations. This designation opens the door for discussions on expanded authorities. Conclusion During the Cold War, Latin America was a primary focus of US policy. The United States worked diligently to maintain regional hegemony and prevent the spread of communist ideology in the Western Hemisphere. Today, Latin America and the southern border have again become focal points for the current US administration. With the rising influence of China in the region and the ongoing impact of TCOs on American life, the United States must develop deliberate policies and strategies to maintain its hegemonic influence while promoting stability. This strategy should consist of a two-pronged approach that emphasizes both economic investment and regional security. Such an approach could disrupt Chinese influence while fostering a safer and more stable region, ultimately reducing migration northward—a key objective for the current administration. Article, originally written by and published in Small Wars Journal under the title "Same But Different: Cold War Strategy in 21st Century Latin America." Consult here: https://smallwarsjournal.com/2025/03/06/same-but-different-cold-war-strategy-in-21st-century-latin-america/. This translation is shared under the same Creative Commons Attribution-Noncommercial-Share Alike 4.0 license.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Trump escalates his trade war rhetoric and has just begun his second term. In response to the Colombian government's protest over the conditions of its citizens' deportation, the 47th U.S. president retaliated with a furious announcement of a 25% tariff hike, forcing Petro to withdraw his demands. Against Canada and Mexico, his neighbors and trade partners, he has just signed another 25% tariff increase. The reasons? According to Trump, their borders are a sieve for drugs and illegal immigrants. As for China, he has so far imposed a 10% tariff, though his campaign promise was 60%. In the 21st century, trade wars are one of the most controversial strategic tools in international relations. The Economy: A Geostrategic Factor Tariffs have historically been used to protect local industries and balance trade deficits. However, their current use goes beyond their original purpose. These policies have transformed global economic dynamics, reshaping supply chains and markets, and profoundly impacting geopolitical, social, and financial structures. Competitiveness and Technological Strength The contemporary use of trade wars follows a more complex and multifaceted logic. In the case of the United States, for example, the tariffs imposed by recent administrations have aimed both to limit China’s competitiveness and to preserve U.S. technological and economic supremacy. This strategy, however, is not limited to a bilateral confrontation. The United States has also imposed trade barriers on traditional partners such as the European Union and Canada. As a result, traditional alliances have become secondary to the unilateral goal of maximizing profits. This policy has been justified under national security arguments, a legal tool that has generated tensions within the World Trade Organization (WTO) and challenges the principles of non-discrimination and multilateralism that have underpinned the global trade system since the mid-20th century. The impact of these policies affects both intergovernmental relations and, directly, consumers and producers. Tariffs and the Domestic Economy The implementation of tariffs on products from China, such as technological goods and manufactured equipment, has driven up their prices in markets like the United States. As always happens when goods become more expensive, this has especially harmed the most vulnerable sectors of the population by exacerbating economic inequalities and reducing their purchasing power. To maintain competitiveness, many companies have opted to relocate their operations to countries like Vietnam, Malaysia, or Mexico, which entails transition and adaptation costs. Regionalization against Protectionism At a global level, trade wars have triggered a phenomenon of regionalization, leading to the creation of agreements such as the Regional Comprehensive Economic Partnership (RCEP), led by China and signed by countries in Asia and Oceania, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes nations from the Pacific coasts of Asia and Latin America. Through these agreements, the signatory countries seek to counteract the effects of U.S. protectionist policies. Since 2019, the United States has blocked the appointment of new members to the WTO Appellate Body, weakening its ability to resolve disputes and increasing uncertainty, as well as the likelihood of escalating trade tensions. While regionalization forces a reassessment of the sustainability of the multilateral trade system, in this climate of instability and uncertainty, countries are searching for alternatives that ensure economic stability — though these solutions ultimately reinforce the fragmentation of global trade. Trade War and Geopolitics The impact of trade wars is also evident in the geopolitical sphere. The rivalry between the United States and China, driven in part by tariffs and technological restrictions, is redefining international alliances. On one hand, countries like Japan and South Korea have strengthened ties with the United States to counter China’s influence. On the other hand, emerging economies in Latin America, such as Mexico and Brazil, face pressure to align with one of these blocs, limiting their maneuverability and autonomy on the global stage. In Europe, tensions with the United States have led the European Union to prepare new tariffs and strengthen regulations to protect its strategic industries, such as the automotive and technology sectors. Uncertainty and Volatility While the imposition of tariffs can provide immediate benefits to the countries that implement them — whether in terms of tax revenue or political influence — their social and economic costs can be significant. Trade wars impact the flow of goods and services but also financial stability. Trade tensions increase stock market volatility, influence investment decisions, and weaken global economic growth prospects. The uncertainty generated by protectionism forces companies to adapt to an ever-changing and unpredictable environment. Trade wars have exposed the fragility of global supply chains, underscored the importance of diversifying production sources, and highlighted the need to strengthen multilateral institutions that promote fair and equitable trade. What to Do? The solution goes beyond simply removing tariffs or reversing protectionist policies; a more strategic and resilient approach is needed. This involves fostering international cooperation to address trade tensions, reforming the WTO’s dispute resolution mechanisms, and promoting the relocation of supply chains to more stable regions. Countries that impose tariffs must also consider the impact of these measures on households. Rising prices should prompt policies to mitigate growing social inequalities and protect the most vulnerable sectors. The trade wars of the 21st century reflect a complex balance between protecting national interests and preserving global stability. The key to progress lies in adopting a cooperative and sustainable approach that, beyond immediate economic benefits, also considers collective well-being and international cohesion in the medium and long term.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском In response to its recent retaliatory tariffs on US energy imports, a delegation of major Chinese energy firms visited Kazakhstan in February 2025 to explore new trade opportunities. It was led by the China Council for the Promotion of International Trade (CCPIT), which focused on diversifying supply chains and reducing dependence on western markets. The visit highlights Beijing’s commitment to deepening economic ties in Central Asia through trade, infrastructure investment, and energy cooperation amidst the escalating tensions between China and the West. Traditionally, Russia exerted a dominant influence in Central Asian countries due to its Soviet-era legacy and security ties. However, China’s Belt and Road Initiative (BRI) and expanding economic partnerships with Central Asian nations have established Beijing as a key player in the region. As US presence has diminished, and Russia remains preoccupied with its conflict in Ukraine, China has leveraged economic partnerships, infrastructure projects, and strategic diplomacy. China has emerged as Central Asia’s primary trade partner, even surpassing Russia in economic influence. In 2023, trade between China and Central Asia reached $89.4 billion, reflecting a 27% increase from the previous year. This surge highlights China’s efforts to solidify its economic presence through investments, trade agreements, and infrastructure projects. Kazakhstan remains Beijing’s most significant economic ally in the region, with trade reaching $43.8 billion by the end of 2024, a 9% rise from 2023. Likewise, Uzbekistan has upgraded its ties with China to an “all-weather” comprehensive strategic partnership, aiming to boost trade from $14 billion to $20 billion. Chinese investments in Uzbekistan’s renewable energy sector have grown fivefold, underscoring Beijing’s focus on sustainable development. Infrastructure development is a cornerstone of China’s engagement in Central Asia. The China-Kyrgyzstan-Uzbekistan (CKU) railway is a flagship project designed to provide China with a direct access route into the region, reducing dependence on Russian transit networks. China, Kyrgyzstan, and Uzbekistan signed a trilateral agreement that will carry out the project in June 2024. This aligns with Beijing’s broader goal of diversifying trade routes, particularly amid global disruptions such as Houthi attacks in the Red Sea. China has expanded its influence and investments in the energy industry, extending its reach beyond transportation infrastructure. The China-Central Asia Gas Pipeline, spanning Turkmenistan, Uzbekistan, Kazakhstan, and China, is crucial to Beijing’s energy security strategy. This infrastructure ensures a steady supply of natural gas while providing Central Asian states with an alternative to Russian-controlled routes. In October 2023, KazMunayGas (KMG) and China National Chemical Engineering Group Corporation (CNCEC) agreed to construct a gas turbine power plant at the Atyrau oil refinery. This facility aims to enhance power supply reliability and support the energy needs of the Atyrau region.Similarly QazaqGaz and Geo-Jade Petroleum Corporation are set to develop the Pridorozhnoye gas field in Turkistan Region. China National Petroleum Corporation (CNPC) is implementing four oil and gas projects in collaboration with Kazakhstan’s Samruk-Kazyna. On a regional scale, PetroChina plans to resume construction of Line D of the Central Asia–China Gas Pipeline in 2025, pending the finalization of a gas supply contract with Turkmenistan, further strengthening China’s energy ties with the region. In Kyrgyzstan and Tajikistan, Beijing plays a dominant role in the extraction of essential minerals, while its economic ties with Kazakhstan continue to strengthen. China’s molybdenum imports from Kazakhstan increased to around $19.6 million in 2022, demonstrating the country’s reliance on Kazakh resources. Meanwhile, 1.5% of Tajikistan’s total exports to China were zinc, and 17.5% were copper, demonstrating China’s rising influence over Central Asia’s minerals and the potential for raw material exploitation in Central Asian countries. Despite China’s growing economic footprint, Central Asian states remain cautious about excessive dependence and actively seek to diversify their partnerships, including engagement with the United States. Beijing has heavily invested in Kyrgyzstan and Tajikistan, financing essential infrastructure projects such as roads, bridges, hospitals, and government buildings. These investments reflect China’s broader strategy of fostering economic development as a means to ensure regional stability. By funding key projects, Beijing not only stimulates economic growth but also deepens its political influence by cultivating relationships with local elites. Chinese direct investments in Kyrgyzstan reached $220.8 million in 2023. Specifically, China has been involved in the construction of roads and infrastructure, and Bishkek, China provides grants for the construction of interchanges to solve traffic jams. China and Kyrgyzstan have extended their Belt and Road Initiative (BRI) cooperation until 2026, aligning the infrastructure project with Kyrgyzstan’s national development strategy. China has been the largest national contributor to Tajikistan’s expanding transport infrastructure, accounting for 26 percent of the total value, or $570.2 million. Of this, $37 million has been provided in grants, while the remaining $533.2 million were loans. China has committed $230 million in funding to Tajikistan for the construction of a new parliament  building. The 2023 China-Central Asia summit in Xi’an marked a turning point in Beijing’s regional strategy. Historically, China engaged with Central Asian states through the Shanghai Cooperation Organization (SCO), where Russia played a significant role. However, the establishment of an independent China-Central Asia summit signals Beijing’s growing assertiveness in the region and a strategic shift toward reducing Russia’s traditional influence. In May 2023, President Xi Jinping hosted leaders from Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan for the inaugural  China Central Asia summit, which took place in Xi’an, Shaanxi Province. China announced during the summit that it would upgrade bilateral investment agreements, introduce more trade facilitation initiatives, speed up the construction of the D-line of the China-Central Asia gas pipeline, and give Central Asian countries 26 billion in financing support and non-reimbursable assistance. Kazakhstan will host the next summit in 2025–2026. At the summit, China pledged substantial development aid, expanded energy partnerships, and strengthened security cooperation, reflecting its broader commitment to regional stability and economic integration. Although China’s engagement in Central Asia remains primarily economic, it is increasingly asserting itself on political matters as well. Beijing has taken diplomatic stances that occasionally diverge from Moscow’s interests. For instance, China has openly supported Kazakhstan’s territorial integrity in response to Russian nationalist rhetoric, Chinese President Xi Jinping declared during his September 14, 2022 visit to Kazakhstan that his country backs Kazakhstan’s independence and territorial integrity and is against any meddling in its domestic affairs. However, despite these political maneuvers, China remains cautious about direct security involvement in the region. While Beijing maintains a military presence in Tajikistan and deploys private security firms to protect its investments, it continues to operate within Russia’s established security framework rather than attempting to supplant it. This cautious approach was particularly evident in China’s limited response to border clashes between Kyrgyzstan and Tajikistan, signalling its reluctance to assume a direct security guarantor role in the region. Meanwhile, Russia’s traditional dominance in Central Asia has weakened due to its ongoing war in Ukraine. Central Asian governments are distancing themselves from Moscow, with Kazakhstan’s President Tokayev openly rejecting Russia’s territorial claims in Ukraine. Moreover , the Eurasian Economic Union (EAEU), Moscow’s regional economic bloc, has struggled to compete with China’s Belt and Road Initiative (BRI), which provides more substantial investments and infrastructure development. As a result, China’s influence in Central Asia continues to expand, filling the gaps left by Russia’s declining geopolitical leverage. While China’s engagement in Central Asia has traditionally focused on economic investments, its security presence is steadily expanding. Beijing has increased arms sales, military cooperation, and counterterrorism efforts. Chinese military exports accounted for only 1.5% of Central Asia’s total arms imports, between 2010 and 2014,  but by 2019, this figure had surged to 18%. In a significant development, in 2021, Tajikistan approved the construction of a new base after an agreement between the country’s Interior Ministry and China’s Public Security Ministry or police force. The fact that the Public Security Ministry, not the Chinese military, signed the agreement indicates that counterterrorism is a priority in the face of growing concerns about instability in neighbouring Afghanistan. This facility enhances Beijing’s security footprint near Afghanistan, a region of strategic concern due to potential instability affecting Xinjiang. Unlike Russia, which maintains a direct military presence, China takes a different approach to security cooperation. Rather than deploying conventional troops, Beijing relies on Private Military and Security Contractors (PMSCs) to safeguard its economic interests and infrastructure projects. These contractors, often led by former Chinese military personnel, protect Chinese investments across Central Asia. While negotiating its non-interference policy’s limitations, these PMSCs handle security concerns ranging from terrorism to local unrest impacting Chinese workers and projects by offering a variety of services such as armed protection, intelligence collection, and military training. In line with its security diplomacy and larger Global Security Initiative, China uses PMSCs to strengthen security cooperation and increase its influence in the region. Companies such as Zhongjun Junhong Group and China Security and Protection Group have established branches in nations like Kyrgyzstan and Tajikistan. China launched the Global Security Initiative (GSI) in 2022, reinforcing its commitment to regional security. The GSI prioritizes sovereignty, noninterference, and counterterrorism collaboration, aligning with the security priorities of Uzbekistan and Tajikistan, which face domestic stability challenges. Beyond military engagement, China has intensified law enforcement cooperation with Central Asian states. Beijing has established intelligence-sharing agreements, police training programs, and cybersecurity initiatives aimed at combating organized crime and terrorism. These efforts serve China’s broader goal of maintaining regional stability while protecting its economic interests. Despite China’s growing economic and security ties with Central Asia, local resistance poses a significant challenge. Public opposition to Chinese investments has been fuelled by concerns over debt dependency, land acquisitions, job displacement, and environmental impact. In 2016, proposed land reforms in Kazakhstan sparked widespread protests across the country, as many citizens feared that the changes would allow Chinese investors to buy large tracts of Kazakh land. The government had introduced amendments to the Land Code, which included provisions for leasing agricultural land to foreign investors for up to 25 years. This led to public concerns about the potential for Chinese ownership of Kazakh land, given China’s increasing economic influence in the region. Demonstrations took place in major cities like Almaty, Atyrau, and Aktobe, drawing thousands of people. The scale of the protests forced the Kazakh government to suspend the reforms and impose a moratorium on land sales to foreigners, highlighting the deep-seated anxieties over national sovereignty and economic dependency on China. Protests occurred in several cities in 2019 including Astana, Almaty, and Zhanaozen in Kazakhstan. Demonstrators opposed Chinese industrial projects, fearing environmental harm and long-term economic dependence on China. There was also widespread suspicion that Chinese investments would lead to land leases or permanent settlements by Chinese workers, further fueling public discontent. In Naryn, Kyrgyzstan, violent protests erupted against a planned $280 million Chinese logistics and industrial project. Protesters were concerned about potential environmental damage, the loss of land to foreign companies, and a perceived lack of economic benefits for local communities. The unrest led to the cancellation of some Chinese-backed projects. China’s treatment of ethnic minorities of Uyghurs, Kazakhs, and Kyrgyz in Xinjiang has further complicated its relations with Central Asian populations. Protests against the mass detentions have mainly occurred in Kazakhstan and Kyrgyzstan. From 2018 to 2019, the activist group Atajurt Eriktileri organized frequent demonstrations in Almaty and Nur-Sultan (Astana), demanding the release of detained ethnic Kazakhs. Since January 2021, relatives of detainees have held weekly protests outside the Chinese Consulate in Almaty. In Kyrgyzstan, smaller protests took place in Bishkek in February and December 2019, where activists urged the government to act against China’s repression. China’s growing trade, security, and political influence in Central Asia is a key testing ground for its broader geopolitical ambitions. The future of this engagement will depend on China’s ability to balance its economic interests with local concerns, ensuring that its expanding role contributes to stability rather than fostering tensions. Beijing’s influence in Central Asia is steadily increasing, making it a dominant economic and security partner. Through initiatives like the Global Security Initiative (GSI), the Belt and Road Initiative (BRI), and the China-Central Asia (C+C5) mechanism, China has deepened its presence by offering financial investments, security cooperation, and diplomatic engagement. This approach has been well-received by Central Asian governments, which seek economic growth and stability. Although Russia remains a major geopolitical actor in the region, its influence is diminishing as China’s economic power continues to rise. Beijing’s emphasis on respecting sovereignty and promoting development has helped solidify its relationships with Central Asian states. However, challenges such as local resistance to Chinese investments and potential geopolitical tensions with Russia persist. The long-term success of China’s regional strategy will depend on its ability to manage these complexities while maintaining its strategic foothold. The text of this work is licensed under a Creative Commons CC BY-NC 4.0 license.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском The commitment to free trade is based on the competitive advantage that nations gain from possessing certain material and human resources that are scarce in other countries. The exchange of goods under the umbrella of free trade results in a global benefit, as it fosters economic growth, improves the quality of goods, and diversifies supply. The free trade doctrine, which has governed international trade in recent decades, is opposed by protectionism, which seeks to favor domestic producers over foreign competition. Above All, Protectionism Trump's campaign to win votes from the U.S. automotive and agricultural sectors was based on extreme protectionism – which we could call the ‘Trump Doctrine’ – centered on the promise of raising tariffs on products from competing countries. The increase in tariffs to boost domestic production in non-competitive sectors clashes with the rules of the World Trade Organization and the already established trade relations with exporting countries. On the other hand, those who silently suffer from Trump's protectionist measures are American consumers, who will have to pay higher prices for imported products that are currently cheaper. The need to reorganize international trade flows had already been raised due to the existence of ecological, social, or economic dumping. In response to violations of competition rules and the presence of discriminatory situations, agricultural groups have demanded mirror clauses to ensure that imported products comply with the same regulations as domestic ones. However, all these proposals have been made within a negotiating framework and not in a disruptive and unilateral manner, as the Trump Doctrine does. Tariff Increases Specifically, the U.S. has formalized a 25% tariff on steel and aluminum from other countries, set to take effect on March 4. This impacts the Spanish industrial sector, which exports aluminum worth 500 million to the U.S. market. There are still no details on which Spanish agri-food products (such as wine, olive oil, meat, and dairy) may be affected and to what extent by the Trump Doctrine. Latin American countries are also at risk: in 2021, 86% of their agri-food exports were destined for three regions — the U.S. (23%), the EU (18%), and China (13%). The EU and Latin American countries belonging to Mercosur have the advantage of having signed an agreement in December 2024, which will allow them to strengthen their trade relations and potentially offset losses in the U.S. market. In response to these tariff attacks, countries have reacted by attempting to reach agreements among the affected nations. The European Union and Canada have met to design a joint strategy against the Trump Doctrine, and China is also considering reorganizing its trade flows, which could provide some relief for its exports. However, the damage caused by tariffs is global and does not only affect exporting countries. In the United States, there will be negative impacts on consumers and businesses in the form of higher prices and even shortages or the disappearance of some imported products. United States-Europe Trade Relations There is no free trade agreement between Europe and the United States, although an attempt was made, without success, to establish the Transatlantic Trade and Investment Partnership (TTIP). However, progress has been made in harmonizing food safety regulations, quality standards, and data privacy rules. Nevertheless, Trump accuses Europe of "treating the United States very badly" and has warned that they must balance the "$350 billion" trade deficit. In Europe, the most exposed sectors to the threat of U.S. protectionism are aerospace, automotive, and agri-food. The countries at the highest risk include Germany (automotive), France (aerospace), the Netherlands (petrochemical), Italy (pharmaceutical), Ireland (technology), and Spain (agri-food), as they have the most open economies to foreign trade. On the other hand, the United States exports high-tech products, machinery, chemicals, and agricultural goods (corn, soy, meat) to Europe. In the digital sector, major U.S. companies (Amazon, Google, Apple, Meta) are well-positioned in the Old Continent, often engaging in market dominance abuses that the EU has attempted to curb through fines and legislative changes. Spanish exports to the United States focus on automobiles, machinery, and pharmaceutical and agri-food products (wine, olive oil, meat, dairy, and horticultural products). U.S. imports into the Spanish market primarily consist of machinery, electronic products, pharmaceuticals, financial services, and agricultural goods. The U.S. has invested in Spain in the automotive, technology, energy, distribution, and finance sectors. In turn, Spain has a presence in the North American market in the distribution sector (Inditex, Mango), renewable energy (Iberdrola, Acciona, Naturgy), communications, and infrastructure (Ferrovial, ACS, Sacyr). The Technological Battle A fierce competition is emerging in the development of space travel, military technology, and integrated artificial intelligence. In the geopolitical landscape, development cooperation, armed conflicts, climate change, and environmental sustainability are key issues to consider. We have just witnessed how restrictions on the supply of microprocessors stimulated China's creativity in the tech sector. China welcomed the new year with DeepSeek, its own AI model — with similar capabilities to ChatGPT but significantly lower costs — which has shaken the U.S. tech industry and triggered a stock market upheaval. Meanwhile, the EU is now trying to shake off its role as a mere spectator in the development of these new technologies and has just announced a €200 billion investment in the development of European AI. It is important to remember that Europe has been a pioneer in AI legislation, with the Artificial Intelligence Act approved by its Parliament at the end of 2023.  Outlook and Solutions The impact of trade wars depends, on one hand, on the measures imposed (tariff, fiscal, or regulatory) and the volume of existing trade flows. However, the characteristics of the regions, economic sectors, and affected social groups also play a crucial role. In the final countdown, before the implementation of the new tariffs, the United States reached a preliminary agreement with Mexico and Canada, granting a one-month pause before enforcing the announced tariffs. In the case of China, its response to the U.S. threat was to announce similar tariff increases on American products. Among European countries, there are different strategic approaches to the Trump Doctrine. The positions of the Paris-Berlin axis — ready to respond to U.S. tariff threats — and the Rome-Budapest axis are opposed. It remains to be seen whether Italian Prime Minister Giorgia Meloni, who attended Trump's inauguration on January 20, will act as a mediator between the EU and the U.S. or if she will focus solely on securing a favorable position for Italy. Volatility, Uncertainty, Fluctuations A trade war affects foreign investments and creates volatility in financial markets due to the uncertainty it generates. Additionally, it reduces trade exchanges (imports-exports) and causes fluctuations in currency markets. The dilemma of “restructuring or rejection” posed by the Trump Doctrine involves the option of readjusting the existing order or entering into direct competition. For now, tensions remain high, and The Wall Street Journal, one of the major U.S. media outlets, describes the trade war as “absurd,” “unnecessary,” and “stupid.” The reality is that an atmosphere of international insecurity has been created regarding future investments, and stock markets have suffered losses. Meanwhile, the threatened countries insist they will enforce countermeasures, to which Trump responds by threatening to raise tariffs even further.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Security dialog among like-minded countries in the Indo-Pacific The Quadrilateral Security Dialogue (QUAD) was founded in 2007 by the USA, Japan, Australia, and India to promote a rules-based order in the Indo-Pacific, secure freedom of navigation and balance the growing influence of China. After a temporary dissolution, QUAD was revived in 2017. Since then, there have been regular meetings of heads of state and government and foreign ministers, which have led to concrete working groups in areas such as maritime security, modern technologies, infrastructure, climate change, health, space, and cyber security. QUAD has made considerable progress, including the provision of COVID-19 vaccines, decarbonization initiatives, the promotion of renewable energy and programs to improve maritime surveillance and digital infrastructure. QUAD is not a formal alliance, but an informal forum without a mutual defense commitment. Germany and the EU should strengthen bilateral partnerships with the QUAD states to promote common goals such as maritime security, infrastructure development and climate protection and offer a sustainable alternative to the Chinese Belt and Road Initiative. Will QUAD change the security architecture in the Indo-Pacific? Founded in 2007 as an informal alliance by the USA, Japan, Australia and India, the Quadrilateral Security Dialogue (QUAD) has proven its worth as a platform for regional security cooperation in the Indo-Pacific, despite difficulties and interim dissolution. The original motivation for QUAD was the increasing concern about China's growing influence in the Indo-Pacific and the challenges to the rules-based order in the region. In recent years, cooperation in the QUAD has deepened and includes issues such as maritime security, maintaining free shipping lanes, the fight against terrorism and the promotion of sustainable economic development. Securing a free and open Indo-Pacific - in which all countries can act sovereignly and free from coercion - is a central concern of QUAD. The beginnings of cooperation between the four countries can be traced back to 20041. In response to the devastating Boxing Day tsunami in 2004, which killed over 230,000 people2, the USA, Australia, India, and Japan spontaneously formed an ad hoc grouping to pool and coordinate their resources and capacities for emergency relief in the disaster areas. The grouping disbanded after the end of the reconstruction aid in January 2005, but the positive outcome of the cooperation proved to be viable for the future and opened the way for further initiatives towards closer cooperation between the four Indo-Pacific states.3 First foundation and dissolution of QUAD It was the then Japanese Prime Minister Shinzo Abe who, as part of his new foreign and defense policy, called for a value-based dialogue between Japan, India, Australia, the USA, and other like-minded countries on common interests in the Indo-Pacific at the end of 2006. On May 25, 2007, representatives of the four countries met officially for the first time at an informal Quadrilateral Security Dialogue (QUAD) on the sidelines of the ASEAN summit in Manila.4 In September 2007, the maritime military exercise "Malabar" in the Indian Ocean, which had previously only been held bilaterally between the USA and India, was expanded to include participants from Japan, Australia and Singapore. This led to strong reactions from China, which sent official protest notes to the governments of the participating countries. Beijing portrayed QUAD as an anti-China initiative, while critics described the grouping as the nucleus of a future "Asian NATO "5. China's harsh criticism of the QUAD initiative and political changes in some of the four participating countries led to the Quadrilateral Security Dialogue being dissolved after a brief time. Australia, where there was a change of government in December 2007, wanted to avoid a confrontation with its most important trading partner China and therefore announced its withdrawal from QUAD in February 2008. In Japan, the most important promoter of QUAD, Shinzo Abe, was forced to resign as Prime Minister at the end of 2007 after losing the elections. There was also increasing criticism of the purpose of QUAD in India and the USA, so that in 2008 the four countries ceased their activities in the direction of quadrilateral security cooperation.6 However, taking China into consideration did not lead to the hoped-for easing of tensions. On the contrary: China's massive military build-up, its territorial claims in the South China Sea and East China Sea, its threatening gestures towards Taiwan and the use of economic pressure to achieve foreign policy goals7 have further increased geopolitical tensions in the region. In the meantime, contacts and cooperation between the four QUAD states have continued and intensified at bilateral and minilateral level. In 2011, the first meeting at the level of state secretaries took place between the governments of Japan, India, and the USA. A similar trilateral cooperation meeting was established in 2015 between Japan, India, and Australia. India and the United States signed a Communications Compatibility and Security Agreement (COMCASA) in 2015 and a Logistics Exchange Memorandum of Agreement (LEMOA) in 2016.8 These agreements are a prerequisite for the interoperability of the armed forces of both countries. Since October 2015, Japan has been a regular participant in the annual naval exercise "Malabar" alongside India and the USA. And in 2017, Indian armed forces took part in the Australian naval exercise AUSINDEX for the first time, and two years later also in the air force exercise Pitch Black. Australia has been involved in the Malabar exercises again since 2020.9 Revival of the QUAD Shinzo Abe, who returned to the office of Japanese Prime Minister in 2012, put the concept of a quadrilateral security alliance (Democratic Security Diamond) in the Indo-Pacific back on the political agenda. He succeeded in convincing the new US President Donald Trump of the idea, leading to the first meeting of high-ranking representatives from the USA, Japan, India, and Australia on the sidelines of the ASEAN summit in Manila in the Philippines in November 2017. The QUAD was revived.10 In June 2018, representatives of the four countries met on the sidelines of an ASEAN meeting in Singapore and again in November of the same year at the East Asia Summit, also in Singapore. On May 31, 2018, the first official meeting of the foreign ministers of the four QUAD states finally took place on the sidelines of the UN General Assembly in New York. Since then, the four foreign ministers have met once a year to discuss regional strategic challenges and priorities.11 The Biden administration has upgraded the Quadrilateral Dialogue to an important instrument for the implementation of its Indo-Pacific policy. On March 12, 2021, the first summit of QUAD heads of state and government took place, still in virtual form due to the Covid-19 pandemic. As a result of the summit, a joint final declaration, The Spirit of the QUAD,12 was published, which lists the key objectives and principles of the quadripartite dialog. On September 24, 2021, the QUAD heads of government met in person for the first time in Washington. Six permanent working groups were formed to deal with the policy areas of health, climate change and clean energy, critical and modern technologies, infrastructure, space, and cybersecurity.13 On March 4, 2022, the four heads of government of the QUAD states convened for a virtual summit to discuss the impact of Russia's war of aggression on Ukraine and to reaffirm the commitment of the four dialog partners to the Indo-Pacific region. The fourth QUAD Leaders’ Summit took place in Tokyo on May 24, 2022. The follow-up meeting planned for May 2023 in Sydney was canceled as US President Biden had to remain in Washington due to the domestic budget crisis. Instead, the heads of state and government met on May 20, 2023, on the sidelines of the G7 summit in Hiroshima. Prior to this, the foreign ministers of the QUAD met in India in March, where it was decided to establish a working group on combating terrorism.14 In 2024, there was one meeting at foreign minister level (July 29 in Tokyo, Japan) and one summit meeting of QUAD leaders (September 21, 2024, in Wilmington, USA). On September 20, 2024, one day before the summit in Wilmington, a bipartisan group of representatives and senators, the QUAD Caucus, was formed in the US Congress to promote cooperation between the USA and the other QUAD members (Japan, India, and Australia). In doing so, Congress is underlining the bipartisan recognition of the strategic importance of the Indo-Pacific for the USA and strengthening the institutional anchoring of the QUAD partnership in the US political system.15 What concrete results has QUAD achieved since its revival in 2017? The six QUAD working groups established in 2021 cover the most important policy areas of quadrilateral cooperation: 1. Health Security Following the outbreak of the COVID-19 pandemic, the QUAD Group committed to producing one billion vaccine doses by the end of 2022 and making them available to countries in the Indo-Pacific. The USA, Japan and Australia supported the expansion of production capacities for coronavirus vaccines in India. Together, the four QUAD members donated over 400 million vaccine doses to Indo-Pacific countries in 2021 and 2022 and almost 800 million worldwide. In addition, the group of four supported the COVAX initiative with 5.6 billion US dollars. In September 2024, the "QUAD Cancer Moonshot" initiative was announced, which aims to reduce the number of cancer deaths in the Indo-Pacific, particularly through measures to prevent and treat uterine cancer16. 2. Climate Change The countries of the Indo-Pacific are particularly affected by climate change. The QUAD agenda aims to accelerate decarbonization, promote renewable energy and protect the maritime environment in the Indo-Pacific. This includes the expansion of clean hydrogen technologies, climate information services and early warning systems as well as the diversification of supply chains. 3 Critical and Emerging Technologies The QUAD countries are committed to the responsible and safe use of technologies such as artificial intelligence, quantum computing and 5G. Specifically, for example, the establishment of an Open Radio Access Network (RAN) in Palau, Micronesia, is being promoted, which will later be extended to other Pacific island states. 4. Space All four QUAD nations have their own space programs, which are linked by a large number of bilateral and minilateral cooperation projects. The Indo-Pacific Partnership for Maritime Domain Awareness (IPMDA) initiative, launched in 2022, aims to strengthen maritime security and transparency in the Indo-Pacific. It will provide countries in the region with real-time maritime surveillance information, primarily data from satellites, sensors, and other surveillance technologies. This will enable small and medium-sized coastal states in the Indo-Pacific to gain a better overview of maritime activities in their exclusive economic zones, such as illegal fishing, smuggling and piracy. 5. Cyber Security In 2022, the QUAD Cybersecurity Partnership was established to combat threats from cybercrime and state-sponsored attacks. The partnership is divided into four sectors, with each member of QUAD taking the lead in one sector to address cyber vulnerabilities. The sectors include critical infrastructure protection, supply chain resilience, skills training, and software security standards.17 6. Infrastructure QUAD countries are promoting the development of sustainable port infrastructure and announcing major investments in submarine cable projects to improve digital connectivity in the Indo-Pacific. In 2022, the goal was set to invest up to USD 50 billion in infrastructure projects in the region within five years. Launched in 2023, the QUAD Infrastructure Fellowship will provide over 1,800 fellowships, exchanges and other program opportunities for government officials and infrastructure professionals in the region to share best practices in infrastructure management. Outside of these six main themes, the QUAD group also collaborates in other areas: The QUAD Fellowship Program provides scholarships for master's and doctoral students in the fields of mathematics, computer science, natural sciences and technology (STEM) in the US, and since 2024, applicants from the ten ASEAN countries have also been admitted18. The Counterterrorism Working Group was founded in 2023. Other areas of cooperation mentioned in the QUAD plans are sustainable, transparent, and fair lending and financing practices, nuclear stability, and critical minerals. Conclusion The Quadrilateral Security Dialogue QUAD has proven to be a stable and effective security policy dialog platform in recent years. QUAD has the potential to transform the security architecture in the Indo-Pacific by creating a strategic balance in the face of challenges such as China's rising power and territorial expansion. The QUAD promotes cooperation between the US, India, Japan, and Australia, the four most influential democracies in the region. Cooperation is based on shared values such as freedom of navigation, territorial integrity, and adherence to international rules. QUAD is not a formal security alliance, there is no mutual defense commitment. It is a flexible, informal coalition forum that focuses on a wide range of issues, including broader security, the economy, infrastructure, technology, and climate change. QUAD has no institutional structures. There are annual summits of heads of state and government and foreign ministers, and the decisions of the summits are implemented by the state apparatuses of the member countries. The naval exercise "Malabar" is not an official part of QUAD but serves as a platform to strengthen military interoperability and is seen as an operational extension of QUAD's security objectives, particularly in the maritime domain. India plays a special role in the Quadrilateral Security Dialogue. It contributes not only its geographical and geopolitical importance in the Indo-Pacific, but also a perspective characterized by strategic autonomy and multipolar diplomacy. India is regarded as an important representative of the so-called Global South and is seen as a counterweight to China in this group of states.19 On the other hand, India avoids presenting QUAD as an explicitly anti-Chinese alliance in order to avoid putting too much strain on its own sensitive relationship with China. The EU and Germany should adopt a strategically balanced position towards QUAD that considers both the geopolitical realities in the Indo-Pacific and their own economic and security interests. The EU and Germany share with the QUAD states the goal of preserving a rules-based order, particularly regarding international maritime law (UNCLOS). To exert greater influence on the region, Germany and the EU should strengthen bilateral partnerships with the QUAD states to promote common interests such as infrastructure development, new and critical technologies, climate protection and maritime security. Joint infrastructure development projects in the Indo-Pacific could offer a sustainable alternative to the Chinese Belt and Road Initiative (BRI). Information This publication of the Konrad-Adenauer-Stiftung e. V. is for information purposes only. It may not be used by political parties or by campaigners or campaign helpers for the purpose of election advertising. This applies to federal, state, and local elections as well as elections to the European Parliament. The text of this work is licensed under the terms of "Creative Commons Attribution-ShareAlike 4.0 international", CC BY-SA 4.0 (available at: https://creativecommons.org/licenses/by-sa/4.0/legalcode.de) References 1 Madan, Tanvi, „The Rise, the Fall and the Rebirth of QUAD”, War on the Rocks, 16. November 2017, https://warontherocks.com/2017/11/rise-fall-rebirth-quad/2 Earthquake in the Indian Ocean 2004, https://de.wikipedia.org/wiki/Erdbeben_im_Indischen_Ozean_2004  3 Madan, Tanvi, „The Rise, the Fall and the Rebirth of QUAD”, War on the Rocks, 16. November 2017, https://warontherocks.com/2017/11/rise-fall-rebirth-quad/ 4 Buchan, Patrick Gerard, and Rimland, Benjamin, „Defining the Diamond: The Past, Present, and Future of the Quadrilateral Dialogue”, CSIS Briefs, 16. March 2020, https://www.csis.org/analysis/defining-diamond-past-presentand-future-quadrilateral-security-dialogue5 Madan, Tanvi, „The Rise, the Fall and the Rebirth of QUAD”, War on the Rocks, 16. November 2017, https://warontherocks.com/2017/11/rise-fall-rebirth-quad/  6 Buchan, Patrick Gerard, and Rimland, Benjamin, „Defining the Diamond: The Past, Present, and Future of the Quadrilateral Dialogue”, CSIS Briefs, 16. March 2020, https://www.csis.org/analysis/defining-diamond-past-presentand-future-quadrilateral-security-dialogue 7 Feigenbaum, Eva A., „Is Coercion the New Normal in China’s Economic Statecraft?”, MarcoPolo, Paulson Institute, 25. Juli 2017, https://macropolo.org/analysis/is-coercion-the-new-normal-in-chinas-economic-statecraft/?rp=m  8 Panda, Jagannath, „India and the ‘Quad Plus’ Dialogue”, 12. June 2020, RUSI, https://www.rusi.org/explore-our-research/publications/commentary/india-and-quad-plus-dialogue 9 Parker, Jennifer, „Not just another naval exercise: Malabar’s vital messaging”, 10. August 2023, The Strategist, ASPI, https://www.aspistrategist.org.au/not-just-another-naval-exercise-malabars-vital-messaging/ 10 Buchan, Patrick Gerard, and Rimland, Benjamin, „Defining the Diamond: The Past, Present, and Future of the Quadrilateral Dialogue”, CSIS Briefs, 16. March 2020, https://www.csis.org/analysis/defining-diamond-past-presentand-future-quadrilateral-security-dialogue 11 Samir Saran, Satu Limaye, Vivek Mishra, Lilah Connell, Amy Namur, Robin McCoy, and Aryan D’Rozario, East-West Center, „Two Decades of the QUAD: Diplomacy & Cooperation in the Indopacific”, 14. June 2024,  https://www.eastwestcenter.org/publications/two-decades-quad-diplomacy-cooperation-indo-pacific/  12 The White House, 12. March 2021, Quad Leaders’ Joint Statement: „The Spirit of the QUAD”, https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/12/quad-leaders-joint-statement-the-spirit-of-the-quad/ 13 Department of Foreign Affairs and Trade, Australian Government, „The QUAD”, last visit 02.12.2024, in https://www.dfat.gov.au/international-relations/regional-architecture/quad 14 Ebd. 15 U.S. Representative Ami Bera, M.D. (D-CA), Press Release, 20. September 2024, https://bera.house.gov/news/documentsingle.aspx?DocumentID=400409 16 Samir Saran, Satu Limaye, Vivek Mishra, Lilah Connell, Amy Namur, Robin McCoy, and Aryan D’Rozario, East-West Center, „Two Decades of the QUAD: Diplomacy & Cooperation in the Indopacific”, 14. June 2024, https://www.eastwestcenter.org/publications/two-decades-quad-diplomacy-cooperation-indo-pacific/ 17 Ebd. 18 Bundesministerium für Bildung und Forschung, Kooperation international, „QUAD-Fellowship-Programm auf ASEAN-Staaten ausgeweitet“, zuletzt gelesen am 02.12.2024 in https://www.kooperation-international.de/aktuelles/nachrichten/detail/info/quad-fellowship-programm-auf-asean-staaten-ausgeweitet  19 Heiduk, Felix; Wirth, Christian: „The Quadrilateral Security Dialogue (QUAD) between Australia, India, Japan and the USA “, SWP-Aktuell, Nr. 35, June 2023, https://www.swp-berlin.org/10.18449/2023A35/ 

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Donald Trump seems to be turning tariffs, which can serve as a legitimate tool to achieve the goals of fair trade and the protection of key national security interests, into an illegitimate tool of coercive statecraft. It is likely to undermine the global economic order and US soft-power influence across the world Since re-entering the Oval Office Donald Trump has already threatened dozens of nations with economic tariffs in relation to a vast array of issues, many of which are non-economic in nature. What, if any, is the legal basis for these tariffs in domestic and international law, and how are they different from or similar to the type of economic measures China applies to influence other sovereign nations’ choices in ways that benefit Beijing? In this article we address these questions. Trumps weaponisation of trade tariffs Trump 2.0 seems set on following China’s leadership in the practice of using trade relations for economic coercion against other states, in breach of international and bilateral trade agreements. This practice decouples tariffs from their legitimate World Trade Organization (WTO) purpose of offering protection against unfair trade practices. WTO rules allow protective tariffs in cases of anti-dumping—for instance where foreign firms sell exports below their cost of production—or as countervailing measures against subsidised imports that would otherwise unfairly undercut and thus harm domestic producers. Such tariffs are a lawful tool for economic defence. Furthermore, in a geo-economic world there may be other limited situations where a reasonable argument can be made for using tariffs in a national security context not covered by WTO rules, or against economies that do not play by WTO rules. Moving beyond this delimited use of tariffs inevitably results in the tool becoming an economic cudgel for achieving non-economic political objectives. Where these are based on highly questionable claims regarding the relationship to US national security, and without basis in WTO or bilateral free trade agreement rules, the likelihood that tariffs are naked coercion rather than a legitimate defensive measure grows. Making a wide array of economic and non-economic demands of countries—including Canada, Colombia, Mexico, Denmark, Panama, Taiwan, and the EU—President Trump clearly views tariffs as the medicine for every international ailment, real or imagined, impacting the United States. This is a radical break from the US-led post-war order of rules-based trade, and sends a message that the US is no longer a trusted partner. This shift was most vividly highlighted on 1 February 2025, when Trump’s administration threatened 25 percent tariffs on Canada and Mexico, and imposed a 10 percent tariff on China, citing a national emergency due to illegal migration and drugs, and claiming the target states had failed to assist the US in countering this emergency. While the Canada and Mexico tariffs were suspended after both countries made concessions to Trump, their situation is most indicative of Trump’s radical approach to international relations. Both countries renegotiated the North American free trade agreement directly with Trump during his first term—an agreement Trump lavished with praise, while Canada is also one of America’s closest military allies, and has supported many US military operations since WWII. If Canada can be coerced, it is reasonable to believe any country can be coerced by Trump, including Australia. From a foreign policy perspective, Trump’s radical tariff coercion is likely to be one of the greatest acts of diplomatic self-harm, particularly as friends are forced to start looking at ways to mitigate American dependence. Who pays the price of tariffs?    If the foreign policy results of tariffs are to undermine US soft power, it is also true that tariffs will undermine the US economy. For example, Trump incorrectly believes that exporters will absorb the additional cost of tariffs—for instance, taxes on imports—by dropping their prices. Factors such as price elasticity (are goods necessary or discretionary), pricing power (i.e. brand power), and the size of profit margins influence who pays additional tariff costs. The latter is important when considering globally competitive traded goods. In competitive industries where profit margins are low, at or near the minimum rate of profit at which businesses will invest and operate, then, by definition, all additional costs must be passed on to the consumer to protect the business’s margin. Beyond that, protecting margins is the first choice of all businesses. Hence only where goods are highly discretionary and existing profit margins are high might one expect the exporter to incur the costs of tariffs. All things being equal, the American consumer will pay if Trump levies general tariff taxes on a vast array of goods coming from Mexico, Canada, and China, just as studies show that consumers paid for Trump’s 2018 tariffs. Job losses can also arise as a consequence of tariffs impacting supply chains by increasing the costs of inputs. Economists argue that, while the first Trump administration’s 25 percent steel import tariff created around 1,000 new jobs in steel production, the higher cost of steel hit downstream steel users, resulting in a loss of 75,000 manufacturing jobs. A tariff policy that is targeted and in response to breaches of WTO trade rules has their rightful place in the repertoire of a state’s national economic policies. But there are likely to be few long-term benefits to attacking allies and longstanding rule-abiding trade partners with universal tariffs per Trump’s Make America Great Again agenda. On the contrary Trump’s policies will lead to a Make America Expensive Again outcome, as ABC’s Matt Bevan put it. A Corrosion of US soft power? The weaponisation of everything has in recent times been attributed to China’s unrestricted warfare paradigm. Trump 2.0 seems to follow Beijing’s playbook without further consideration for alliances and partnerships—pivotal to US foreign policy. Working with allies and partners has been a key element of how the Biden administration countered the challenges posed by Russia, China, and Iran in the wider context of great power competition. Donald Trump’s threats of a trade war against Denmark, a NATO ally, over the status of Greenland; threats against Taiwan’s steel, pharmaceutical, and semiconductor industries; tariff threats against more NATO allies in the European Union; and tariff threats against the BRICS bloc resemble the unrestricted weaponising of trade by Beijing and mark a departure from Trump 1.0’s more targeted tariffs. The US is facing the clear and present danger of losing its soft-power acumen, and losing trust from its partners, with tragic consequences for the global rules-based order. In that respect, Trump might be playing directly into the Moscow–Beijing ambition to undermine the US and its allies across the military, economic, and diplomatic domains. The ambiguity of Trump’s “negotiation” strategy, which contains both national security and economic objections as raison d’être, adds to the challenge of maintaining trust and confidence among partners and allies, which would be both tragic and fatal for the US and its alliances.This article was published under a Creative Commons Licence. For proper attribution, please refer to the original source

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском China has been gaining ground in the technological and trade war against the United States through strategic planning, massive investment in innovation, and control over supply chains. It has developed significant infrastructure and policies that have allowed it to advance in key sectors such as artificial intelligence, telecommunications, and semiconductor manufacturing. The bans imposed by the United States on China, far from slowing its technological progress, have acted as a catalyst for self-sufficiency and the accelerated growth of China's tech sector. Although the sanctions aimed to limit China's access to key technologies, in practice, they have driven investment in domestic development and strengthened the Asian country's determination to reduce its dependence on the West. The launch of DeepSeek represents a crucial step in China’s technological independence, particularly in the fields of artificial intelligence and advanced computing. Its design competes with processors from Nvidia and AMD, enhancing China’s capabilities in AI, big data, and supercomputing. Its development demonstrates that U.S. sanctions have not halted Chinese innovation; rather, they have accelerated self-sufficiency. DeepSeek could reduce China’s reliance on foreign technologies for advanced applications, strengthening its tech industry. Additionally, it boosts the ecosystem of startups and AI companies in the country, providing local alternatives to high-performance computing models. Its global impact could lead to a reconfiguration of the semiconductor market, challenging the dominance of Western companies. It also strengthens China’s position in the AI race, giving it advantages in strategic sectors. DeepSeek marks a turning point in the tech war and could change the dynamics of the global industry. Perhaps the clearest sign of DeepSeek’s impact on the West, beyond the stock market turmoil of American tech companies, is the news from El País, which biasedly headlines: “DeepSeek is no game: the threat to privacy from China's new AI. The massive downloads of the Asian country’s application expand the potential to control, disinform, and erode democratic principles.” This strategy is nothing new, just what the West has accustomed us to: “let’s cover up the defeat by smearing and defaming China to divert the debate”. The United States' Technological War Against China The United States' measures against China in the technological war have included sanctions and trade restrictions to halt its progress in strategic sectors. One of the main actions was the ban on exporting advanced chips and semiconductor manufacturing equipment to Chinese companies such as Huawei and SMIC. Additionally, the U.S. has pressured countries like the Netherlands and Japan to limit the sale of advanced lithography machines, essential for producing cutting-edge chips. The U.S. has also blacklisted several Chinese companies, restricting their access to American technology. In telecommunications, it prohibited Huawei's involvement in the U.S. 5G infrastructure and encouraged its allies to do the same. In artificial intelligence, it imposed restrictions on the export of chips from Nvidia and AMD, which are essential for training advanced AI models. Washington has also restricted American investments in high-tech Chinese companies. Furthermore, it has pushed for the relocation of chip factories from Taiwan and South Korea to the U.S. to reduce dependence on China. Despite these measures, China has accelerated its self-sufficiency in key sectors, showcasing its ability to overcome these restrictions. The Background of China's Technological Breakthroughs Prior to DeepSeek Before the launch of DeepSeek, China's major technological breakthrough in the mobile device semiconductor industry was Huawei's Kirin 9000S chip. This processor surprised the world in 2023 when it was included in the Huawei Mate 60 Pro, marking a milestone in China's technological self-sufficiency. The Kirin 9000S, manufactured by SMIC (Semiconductor Manufacturing International Corporation), became a symbol of resistance against the sanctions imposed by the United States. Huawei had been severely affected by restrictions on access to advanced chips from manufacturers like TSMC and Qualcomm, which seemed to limit its ability to compete in the high-end smartphone sector. However, the launch of the Mate 60 Pro demonstrated that China could produce advanced chips without relying on Western technology. This processor was manufactured using a 5-nanometer process, an impressive feat given that the United States had prohibited the export of advanced lithography equipment, such as those from the Dutch company ASML, which are essential to produce next-generation chips. The success of the Kirin 9000S alarmed the United States, as it showed that sanctions had not stopped China’s technological development. Washington began to tighten its restrictions even further, pressuring allied countries like the Netherlands and Japan to limit the export of semiconductor manufacturing technology to China. However, it has not succeeded in halting the progress of Huawei and SMIC, who continue to develop new versions of their chips. DeepSeek is just the tip of the iceberg DeepSeek is just the tip of the iceberg in the technological war between China and the United States, marking the beginning of a new era of self-sufficiency and innovation in semiconductors and artificial intelligence. Although it represents a significant advancement in advanced computing and AI models, it is just one piece of a much broader picture. China has been investing billions in the development of its own semiconductor industry, driving projects in advanced chips, supercomputers, and AI software that compete with giants like Nvidia, AMD, and Intel. The progress in semiconductors, reflected in the manufacturing of the Kirin 9000S and other high-performance chips, proves that China is becoming independent from Western technology. Additionally, the country is betting on quantum computing, advanced robotics, and the expansion of 6G networks, which could redefine global connectivity in the next decade. U.S. sanctions have accelerated this transformation, forcing China to develop domestic alternatives in key sectors such as software, operating systems, and AI infrastructure. Meanwhile, the Chinese government continues to drive the growth of local companies, strengthening its innovation ecosystem and reducing its reliance on foreign technology. On this path, China has developed a solid and rapidly expanding artificial intelligence ecosystem, with multiple companies competing globally. In addition to DeepSeek, several Chinese companies are leading the development of AI models, specialized chips, and advanced applications. Here are some of the most important ones: BaiduBaidu is one of China's tech giants with a strong focus on artificial intelligence. Its ERNIE Bot 4.0 model is China's response to ChatGPT and has been integrated into multiple applications, from search engines to virtual assistants. Baidu also leads in autonomous vehicles and in the development of AI chips like the Kunlun AI chip. Alibaba Cloud (DAMO Academy)Alibaba, through its DAMO Academy division, has developed the Qwen 2.5-Max model, its own generative AI that competes with OpenAI. Alibaba has also created AI hardware and provides cloud services that support the development of Chinese AI startups. Tencent AI LabTencent, the giant in video games and social networks, is investing in AI for gaming, chatbots, and language models. Its AI is used in platforms like WeChat and in data analysis for entertainment and advertising. ByteDanceThe Doubao 1.5 Pro model from TikTok's parent company competes with ChatGPT-4 in knowledge retention, programming, reasoning, and processing. IFLYTEK, SenseTime, Megvii, 4Paradigm, Cambricon, Horizon Robotics, Zhipu AI, and others are leading companies competing in the Chinese AI market. In summary, U.S. sanctions against China in the tech war have failed to stop the country's progress. Instead of weakening its companies, the restrictions have accelerated China's self-sufficiency in semiconductors, artificial intelligence, and telecommunications. Huawei shocked the world with the launch of the Kirin 9000S, while companies like DeepSeek, Baidu, Alibaba, and SenseTime have created competitive AI models. Manufacturers like Cambricon and Horizon Robotics have grown rapidly, all driving China's global influence in 5G, AI, and electric vehicles. China's Key: It Seeks Only the Progress of Humanity, Not Political Dominance China's success in technology and the global economy has been built on a strategy of sustainable development, innovation, and self-sufficiency, focusing on the progress of humanity rather than the pursuit of absolute dominance. Unlike the sanctions and restrictions policy that has characterized the U.S. strategy, China has chosen to invest in infrastructure, education, and technology to drive the growth of its country and contribute to global advancement. DeepSeek's open-source code is an example of China's commitment to collaborative development in artificial intelligence, allowing global researchers and companies to access its technology. By making its architecture public, China fosters innovation and reduces reliance on closed models like those of OpenAI and Google. This strategy strengthens the AI ecosystem and promotes more equitable development worldwide. While some powers seek to maintain their leadership through sanctions and restrictions, China has demonstrated that development based on investment, innovation, and international cooperation is more effective. Its success is not the result of a race for dominance, but a strategy focused on work, research, and development, which in the long-term benefits both its own population and the global community.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском It’s official. On February 1, US President Donald Trump will introduce a sweeping set of new 25% tariffs on imports from Canada and Mexico. China will also face new tariffs of 10%. During the presidential campaign, Trump threatened tariffs against all three countries, claiming they weren’t doing enough to prevent an influx of “drugs, in particular fentanyl” into the US, while also accusing Canada and Mexico of not doing enough to stop “illegal aliens”. There will be some nuance. On Friday, Trump said tariffs on oil and gas would come into effect later, on February 18, and that Canadian oil would likely face a lower tariff of 10%. This may only be the first move against China. Trump has previously threatened the country with 60% tariffs, asserting this will bring jobs back to America. But the US’ move against its neighbours will have an almost immediate impact on the three countries involved and the landscape of North American trade. It marks the beginning of what could be a radical reshaping of international trade and political governance around the world. What Trump wants from Canada and Mexico While border security and drug trade concerns are the official rationale for this move, Trump’s tariffs have broader motivations. The first one is protectionist. In all his presidential campaigning, Trump portrayed himself as a champion of US workers. Back in October, he said tariff was “the most beautiful word in the dictionary”. This reflects the ongoing scepticism toward international trade that Trump – and politicians more generally on both ends of the political spectrum in the US – have held for some time. It’s a significant shift in the close trade links between these neighbours. The US, Mexico and Canada are parties to the successor of the North American Free Trade Agreement (NAFTA): the United States-Mexico-Canada Agreement (USMCA). Trump has not hidden his willingness to use tariffs as a weapon to pressure other countries to achieve unrelated geopolitical goals. This is the epitome of what a research project team I co-lead calls “Weaponised Trade”. This was on full display in late January. When the president of Colombia prohibited US military airplanes carrying Colombian nationals deported from the US to land, Trump successfully used the threat of tariffs to force Colombia to reverse course. The economic stakes The volume of trade between the US, Canada, and Mexico is enormous, encompassing a wide range of goods and services. Some of the biggest sectors are automotive manufacturing, energy, agriculture, and consumer goods. In 2022, the value of all goods and services traded between the US and Canada came to about US$909 billion (A$1.46 trillion). Between the US and Mexico that same year, it came to more than US$855 billion (A$1.37 trillion). One of the hardest hit industries will be the automotive industry, which depends on cross-border trade. A car assembled in Canada, Mexico or the US relies heavily on a supply of parts from throughout North America. Tariffs will raise costs throughout this supply chain, which could lead to higher prices for consumers and make US-based manufacturers less competitive. There could also be ripple effects for agriculture. The US exports billions of dollars in corn, soybeans, and meat to Canada and Mexico, while importing fresh produce such as avocados and tomatoes from Mexico. Tariffs may provoke retaliatory measures, putting farmers and food suppliers in all three countries at risk. Trump’s decision to delay and reduce tariffs on oil was somewhat predictable. US imports of Canadian oil have increased steadily over recent decades, meaning tariffs would immediately bite US consumers at the fuel pump. We’ve been here before This isn’t the first time the world has dealt with Trump’s tariff-heavy approach to trade policy. Looking back to his first term may provide some clues about what we might expect. In 2018, the US levied duties on steel and aluminium. Both Canada and Mexico are major exporters of steel to the US. Canada and Mexico imposed retaliatory tariffs. Ultimately, all countries removed tariffs on steel and aluminium in the process of finalising the United States-Mexico-Canada Agreement. Notably, though, many of Trump’s trade policies remained in place even after President Joe Biden took office. This signalled a bipartisan scepticism of unfettered trade and a shift toward on-shoring or re-shoring in US policy circles. The options for Canada and Mexico This time, Canada and Mexico’s have again responded with threats of retaliatory tariffs. But they’ve also made attempts to mollify Trump – such as Canada launching a “crackdown” on fentanyl trade. Generally speaking, responses to these tariffs could range from measured diplomacy to aggressive retaliation. Canada and Mexico may target politically sensitive industries such as agriculture or gasoline, where Trump’s base could feel the pinch. There are legal options, too. Canada and Mexico could pursue legal action through the United States-Mexico-Canada Agreement’s dispute resolution mechanisms or the World Trade Organization (WTO). Both venues provide pathways for challenging unfair trade practices. But these practices can be slow-moving, uncertain in their outcomes and are susceptible to being ignored. A more long-term option for businesses in Canada and Mexico is to diversify their trade relationships to reduce reliance on the US market. However, the facts of geography, and the large base of consumers in the US mean that’s easier said than done. The looming threat of a global trade war Trump’s latest tariffs underscore a broader trend: the widening of the so-called “Overton window” to achieve unrelated geopolitical goals. The Overton Window refers to the range of policy options politicians have because they are accepted among the general public. Arguments for bringing critical industries back to the US, protecting domestic jobs, and reducing reliance on foreign supply chains gained traction after the ascent of China as a geopolitical and geoeconomic rival. These arguments picked up steam during the COVID-19 pandemic and have increasingly been turned into actual policy. The potential for a broader trade war looms large. Trump’s short-term goal may be to leverage tariffs as a tool to secure concessions from other jurisdictions. Trump’s threats against Denmark – in his quest to obtain control over Greenland – are a prime example. The European Union (EU), a far more potent economic player, has pledged its support for Denmark. A North American trade war – foreshadowed by the Canadian and Mexican governments – might then only be harbinger of things to come: significant economic harm, the erosion of trust among trading partners, and increased volatility in global markets.