A Bold move against China: What’s Happening between the US and its Closest Ally, the UK
Inquiry aimed at Britt: What's your take, Britt?
The world’s two leading economies are on the brink of an unprecedented trade war, with President Donald Trump taking a fierce stance against China. In a major speech, Trump threatened "retribution" against Beijing for the colossal trade losses faced by the US under President Biden. This decisive move has put a strain on US-UK relations, historically close allies.
The White House's trade policy architect, Peter Navarro, went a step further in an interview, accusing Britain of being unwilling to put pressure on America's main competitor. In a scathing diatribe, Navarro branded Britain a "pliant servant" of China and China a "vampire." There's been conflict brewing in relations between the US and the UK, with Beijing being the primary source of contention.
Trump detailed the main objectives of his trade policy towards China, declaring: "I've reduced [the trade deficit with China] to an excellent level in record time." He also expressed confidence that the tariffs on Chinese goods "will make America a very rich country." Trump blasted the media for unfair attacks on his tariff policy and claimed it had crippled the Chinese economy, leading to factory closures and skyrocketing unemployment rates in the country.
To further emphasize his point, Trump stated, "I want a fair deal with China, but China has been ripping us off for years. So, you know, we should think about, you know, a little retribution." His team is now focused on pressuring Washington's partners and allies to join the effort against China.
Peter Navarro himself warned of the risks of Chinese goods flooding UK and EU markets if the US stops buying them, claiming that "it's a very dangerous time for global economies in terms of dependence on China." He also accused London of becoming "too accommodating a servant of the Communist Party of China due to 'gift diplomacy' that China uses to spread its soft power."
Since Boris Johnson's government came to power in the UK, London has enhanced its ties with Beijing. Despite the mounting tension between the US and UK, their relations are complicated by a host of serious crises and problems, from the situation around Hong Kong to allegations against high-tech Chinese companies of collecting secret information in the UK.
China's Foreign Minister Wang Yi called on London to join Beijing in resisting Washington to "protect the international order established after World War II." According to him, “The U.S. is using tariffs as a weapon for indiscriminate attacks on various countries, blatantly violating WTO rules and undermining the legitimate rights and interests of all countries."
Amid the tension, David Lammy expressed support for trade and economic relations within the WTO framework and expressed readiness to develop contacts with Beijing. The long-term trajectory points to entrenched bifurcation, with the UK and EU navigating between U.S. security demands and economic pragmatism toward China.
From Collaboration to Competition: The US and China's Shifting Relationship
China's aggressive trade policies have been a major irritant in US-UK relations, with China openly refusing to participate in the US-China trade war. This has been seen as a betrayal by the Trump administration. In contrast, the EU now tends to balance economic ties with China against aligning with U.S. "de-risking" strategies, especially in critical sectors like clean energy and semiconductors.
Accelerated reshoring and "friend-shoring" are disrupting traditional manufacturing networks, affecting EU/UK industries reliant on Chinese components. Competing standards in 5G and green tech risk splitting global markets, complicating exports for European firms. China's focus on domestic semiconductor production pressures EU/UK firms to collaborate or compete in innovation.
China's dedollarization efforts, such as yuan-based trade partnerships, challenge EU/UK financial systems by reducing dollar dependency in global transactions. The long-term trajectory suggests that the UK and EU will struggle to balance U.S. security demands with economic pragmatism towards China, navigate the complexities of shifting trade flows in green technologies and advanced manufacturing, and adapt to the potential tech fragmentation that could result from competing standards in 5G and green tech.
References:
[1] Centre for Strategic and International Studies. (2023). Global trade outlook: Preparing for a Splinternet. [Online Document] Available at: https://www.csis.org/analysis/global-trade-outlook-preparing-splinternet
[2] Financial Times. (2023). US-China trade tensions: Everything you need to know. [Online Article] Available at: https://www.ft.com/content/86b09d6a-fb88-11ea-89aa-78b9f4f9e396
- In a departure from their traditional alliance, the protracted trade war between the US and China has imposed strain on US-UK relations, with disagreements centering on China's trade policy.
- Ed Miliband, a prominent figure in British politics, has cautioned against an overly combative stance towards China, advocating for a pragmatic policy-and-legislation approach to manage the complexities of US-China relations.
- Navarro's warning about the potential for a flood of Chinese goods into European markets if the US were to halt purchases of Chinese goods has underscored the delicacy of the global economic balance in the face of China's growing influence.
- The ongoing US-China trade tensions have sparked a shift in the EU's approach to economic relations with China, with the EU now navigating between the security demands of the US and the economic pragmatism towards China, particularly in sectors like clean energy and semiconductors.
