The US and Europe are still stronger together
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The war in Iran has brought home, yet again, the sharp choice that Europeans face in a new great power conflict between the US and China.
Should Europe side with the guys who decided to start a war of choice that threatens to wreak havoc on the global economy? Or get into bed with a country that will eventually destroy its industrial base?
It’s not an easy choice. But I think that despite President Donald Trump, who will eventually leave office, Europe is still better off siding with the US than China — and not just because Beijing is supplying Russia and now Tehran with military technology and support.
The only hope that either the US or Europe has of surviving the current geoeconomic moment is to create a new type of alliance — one based not on an asymmetric security relationship, of the kind that gave birth to Nato after the second world war, but a true partnership of equals based on deeper economic and industrial integration.
It’s not an easy moment to make this argument, but it’s important to do so, because the stage is currently being set in both the US and Europe for what comes after Trump.
In America, the likely strong showing by the Democrats in November’s midterm elections will affirm the need for a more “populist” — I’d say realistic — focus on issues of class and affordability, rather than progressive identity politics or the kind of centrist globalism that belongs to the 1990s.
Neither are winning solutions to the problems of the day. But while Democrats (and thoughtful Republicans) are starting to understand that it is still “all about the economy, stupid” at home, there remains no coherent theory of how to engage with the rest of the world. It is high time we came up with one.
Finally, and belatedly, Europe is coming to terms with the intractable reality of Chinese mercantilism. Like many, I was amazed that Beijing didn’t grab the low-hanging fruit left by Trump after the announcement of his “liberation day” tariffs last year and decide to work with the Europeans to come up with a solution to the problem of Chinese goods dumping. That could have been the germ of a new trade paradigm. And it would have been the perfect moment for the Chinese to present some ideas, however half-formed or imperfect, to Brussels as a show of good faith.
Instead, China has doubled down on its export-led growth model, which has stretched much higher up the value chain into areas such as clean technology and robotics, where Europe and the US have important interests.
Beijing wants to keep a chokehold in areas such as critical minerals and raw inputs for pharmaceuticals. It has shown no desire to be either a global policeman or a provider of global commons. As Hoover Institution fellow and China scholar Elizabeth Economy put it at a conference in Washington recently: “China wants the rights of being a superpower without the responsibilities.”
The question of how to deal with this trade challenge is, as French President Emmanuel Macron has said, a matter of “life or death”. Even increased investment carries risks “when integration becomes the source of subordination”, as Canadian Prime Minister Mark Carney put it in his era-defining speech at Davos in January. While a certain amount of large-scale consumer and industrial demand could, in theory, be achieved by the sort of middle-power alliance that Carney has advocated, a new system with both the US and Europe at its core would be far more effective.
As former Joe Biden advisers and China experts Kurt Campbell and Rush Doshi have written, “allied scale”, in the form of economic and industrial partnerships between the US, Europe and large middle-sized countries, would represent more than twice Chinese GDP. It would also create far more resilience across crucial supply chains. The US, after all, is the only player outside China with a competitive advantage in AI, technology that will transform every industry and desperately needs to be underwritten with European values. Unless that happens, the world will have only two options — control by American oligarchs or Chinese mercantilists.
That’s exactly the set of bad choices that the Biden administration was trying to avoid. And I suspect there are more than a few Europeans who now, just 15 months into Trump’s destructive second term, wish they had been more open to the Biden approach to creating a new economic paradigm.
But even the Trump administration knows that the US can’t go it alone. Its efforts to develop a global critical mineral alliance to combat Chinese hoarding is an admission of that. The same is true of its new maritime strategy — including a 2027 budget request for $65.8bn in new shipbuilding money — that will require working with partners in South Korea and Japan as well as Europe.
These are worthy ideas, even if they come from the Trump White House. Of course, Europeans are rightly sceptical of anything emanating from America right now. The French and British are, for example, putting together a coalition of nations to help free up the Strait of Hormuz once the war is definitively over, one that may not include the US or Israel. That’s an understandable reaction to the moment. But Europe alone — like America alone — isn’t a viable alternative to China. It’s not too soon to start thinking about what is.
