Some White House advisors see trade deficits as a threat to growth and security. But no one wins in a trade war, certainly not U.S. and Chinese consumers who will have to pay higher prices.
India is the world’s largest democracy, with more than one billion people and an economy expanding faster than China’s.
Most of the discussions among economists about the impacts of tariffs and trade intervention are more ideological than logical. While tariffs may cause households to pay more for tradable goods, there are many other ways households, and the overall economy, are affected, positively and negatively. What matters are the conditions under which trade intervention policies are made.
The U.S. strategy in the Indo-Pacific is still evolving. By engaging now, European countries would have the opportunity to shape it.
The prospect of growing U.S. isolation did not discourage President Trump from pushing his unilateral trade agenda at the G7 summit. This divisive approach is severing the unity that for decades tied together the multilateral economic system.
Trump’s recent trade tariffs severely undermine the transatlantic relationships with U.S. allies in Europe, creating new space for Beijing and Moscow to exert influence.
As President Trump continues to disregard European concerns, Germany feels the need to cultivate better relations with China, with an understanding of the pitfalls and limitations of working with Beijing.
Although the United States and the EU do not always speak with one voice, they should coordinate and present a united front as Chinese capital continues to flow towards the European continent.
U.S. defense sales to India remain important to the broader U.S.–India strategic relationship and deserve sustained focus by officials in both capitals to overcome obstacles to collaboration.
Simply having China buy more American goods would make little difference to overall U.S. trade imbalances, but addressing U.S. capital imbalances with the world could be a more effective approach.