There’s been a recent easing in trade tensions between the US and the European Union, as Joe Biden seeks to undo the damage wrought by Donald Trump’s tariff wars.
In terms of hitting Republican policy objectives it’s an open question how effective Trump’s tariff policies actually were, as almost all global economic policy was completely derailed by the coronavirus towards the end of his presidency.
Perhaps his most striking legacy though, is a new global recognition of the threat of China.
It’s that agreement of a mutual threat that lies in part behind the recent rapprochement, although broker Liberum is sceptical in a recent note about the whether or not China constitutes a real trade risk.
The pitch made by US and EU policy makers, according to Liberum, is that China’s metal exports pose various risk to their industries.
“But China’s exports are shrinking,” says the broker. “Soon, they may even be missed.”
Whether or not that analysis is eventually borne out may not be the real point though.
After decades of blatant intellectual property theft from China, the world has now had to come to terms with repeated and ongoing obfuscation as to the causes of the pandemic.
To some extent, Democrats in the US have run cover for the Chinese, partly because in recent years there’s been a crude favouring of China by Democrats and Russia by Republicans (read, Trump).
But that Democrat position is no longer washing with the American voting public, as a slow but rising tide of opinion comes to believe that COVID-19 was created in a laboratory in Wuhan and accidentally released.
This hardening of views can partly be traced back to a celebrated appearance by Jon Stewart on the Tonight Show earlier this year, but equally to a quiet determination on the part of some US journalists who have resolutely refused to follow the narratives laid down for them.
A quick googling of the phrase ‘Newsweek lab leak’ will throw up dozens of hits, including for example an article which shows that the Wuhan Institute of Virology was manipulating bat coronaviruses in the years leading up to the pandemic [https://www.newsweek.com/wuhan-us-scientists-make-coronaviruses-ecohealth-wiv-drastic-documents-1636532], and one that explains how some of the main talking heads rolled out onto the media to talk about the virus lacked credibility.
As far as international relations go, the world’s major governments cannot have failed to notice the major sanctions China imposed on Australia for daring to suggest that a proper investigation into the lab leak theory ought to take place.
It was that decision by China that underpinned the recent creation of the new AUKUS alliance, which has been broadly welcomed across the Pacific region, and which looks specifically towards the containment of China.
The Democrats have always been the party of globalisation, so rolling back tariffs sits well enough with them. But these days, the shadow of China looms over everything, and it may be that which ends up really hastening the re-normalisation of trade.