Trans-Pacific View | Diplomacy | Economy

To Compete With China, the US Needs to Drop ‘America First’

If the United States is to engage in a long-term great power competition with China, it will need to decouple from the Trump administration’s “America First” agenda.

Troy Stangarone
To Compete With China, the US Needs to Drop ‘America First’
Credit: Official White House photo by Tia Dufour

Since former President Richard Nixon reoriented U.S. policy toward China, Republican and Democratic administrations have sought to integrate China into the international system in the belief that increasing cooperation with China is in the United States’ interest. That policy began to shift under the Obama administration, which sought to cooperate with China, but also took a multilateral approach to blunt China’s moves toward becoming the region’s dominant power. The Trump administration, however, has overturned that consensus entirely to refocus U.S. strategy from cooperation with China to competition.

In its shift to a more competitive approach to China the United States has taken a more confrontational strategy in regional security, trade, technology and other areas than prior administrations. Despite the Trump administration’s broader foreign policy strategy to move away from multilateral institutions and alliances, after identifying China as the primary security concern for the United States it advanced a strategy for a free and open Indo-Pacific and has sought to deepen security cooperation with Japan, Australia, and India through the Quad.

In trade, the administration conducted a Section 301 investigation into China’s theft and forced coercion of U.S. intellectual property and used the findings from the investigation to underpin its tariffs on Chinese exports in an effort to force China to change its economic practices. It has subjected Chinese technology firms to export restrictions to address concerns about Huawei’s deployment of 5G networks and the control of U.S. personal data at firms such as TikTok.

While increasing U.S. military and diplomatic engagement in the region are important components of any Indo-Pacific strategy to compete with China, the administration’s “America First” leanings could undermine efforts to engage with allies and partners to develop a broader strategy for dealing with China.

The Problem With “America First”

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At its core “America First” is the idea that the United States should place its own interests above those of other nations. It is built on the assumption that international system has constrained the United States while U.S. allies have taken advantage of the United States in its international security and economic commitments.  President Donald Trump was explicit in this desire to shift course in his inaugural address, in saying that “From this moment on, it’s going to be America First. Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families.”

What “America First” means for U.S. trade policy was perhaps best expressed in the Trump administration’s first Trade Policy Agenda in 2017. That document states that “Every action we take with respect to trade will be designed to increase our economic growth, promote job creation in the United States, promote reciprocity with our trading partners, strengthen our manufacturing base and our ability to defend ourselves, and expand our agricultural and services industry exports… Finally, we reject the notion that the United States should, for putative geopolitical advantage, turn a blind eye to unfair trade practices that disadvantage American workers, farmers, ranchers, and businesses in global markets.”

In practice this has led the United States to take firm stands on trade not just with China, but also with allies. The administration’s focus on trade with allies is rooted in Trump’s long-held beliefs that U.S. allies have taken advantage of the United States on trade and national security. In that context, the Trump administration placed a priority on reducing the trade deficit with U.S. trading partners.

Prior to the Trump administration U.S. trade and international economic policy was designed to open markets, remove barriers to U.S. goods abroad, and create international financial and economic stability; it was also designed to expand U.S. international influence or to pursue diplomatic gains. Often the two objectives were combined.

This emphasis on trade and foreign policy dates back to the end of World War II, when the United States worked to establish international institutions such as the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade. In Europe the Marshall Plan helped to rebuild Europe and create prosperous allies that could aid the United States in the Cold War, thus supporting the interests of the United States.

Until the Trump administration, foreign policy had remained a consideration in U.S. trade policy. The United States sought to deepen ties and support the Middle East peace process with its FTAs with Israel and Jordan. In the case of the FTA with Israel, the U.S. also sought to put pressure on other countries to make progress in multilateral trade talks. Likewise, one of the objectives of the United States’ FTA with South Korea was to deepen ties and strengthen the alliance. Beyond South Korea and Israel, the United States has also negotiated FTAs with treaty allies Australia and Canada, as well as key security partners such as Singapore.

The Trump administration’s focus on trade deficits (rather than the broader structural economic issues that drive such deficits) has resulted in the administration threating to withdraw from the KORUS FTA before renegotiating the agreement and using the threat of imposing automotive tariffs on Japan to negotiate a mini-trade agreement. In each case, “America First” tactics strained relations with key allies in the Indo-Pacific.

The Trump administration has also used steel tariffs against South Korea and Japan, as well as U.S. allies in Europe. It threatened European allies with tariffs on automobiles to push the EU to negotiate on trade. To do this the Trump administration has often resorted to Section 232 of the Trade Expansion Act of 1962 which provides for a national security exemption to U.S. tariff levels. This tool is now abused in trade negotiations.

In the case of steel tariffs, the Department of Defense noted that there is sufficient domestic production to meet its needs and expressed concern about the negative impact of the tariffs on U.S. allies, while the U.S. Court of International Trade ruled that the Trump administration misused the tariffs on Turkey. The administration never released its investigation into imports of automobiles, which it used as leverage with Japan and the EU, despite being required to by law.

Rather than use economic policy to develop a deeper network of partners and allies in the region, the United States focused on the U.S.-China trade war and the return of supply chains to the United States. However, some countries in Southeast Asia have benefited from the trade war China as firms shifted production to the region to avoid the tariffs on China. With the outbreak of COVID-19 the Trump administration has placed an emphasis on returning supply chains to the United States, and as if to signal to companies that they should move production back to the United States rather than other parts of Asia it opened a Section 301 investigation into Vietnam’s currency practices. Yet Vietnam is a partner the United States needs to work with in any strategy dealing with China in the Indo-Pacific.

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Time for a New Trade Policy

Trade policy will be increasingly important in any competition with China in light of changes since the end of World War II. For much of the post-war period the United States was the largest trading partner for most countries, but since the Global Financial Crisis China has displaced the United States as the most important trading partner for most countries. As of 2018, around two-thirds of the countries in the world did more trade with China than the United States, with 90 countries doing twice as much trade with China as the United States.

As Fred Bergsten of the Peterson Institute for International Economics has noted, while the United States needed to take a harder line on China, “China can stand up to us one on one, but it cannot stand up to us if we maintain our alliance structure.” The United States’ commitment to rules and norms, as well as an open trading system, will play in important role developing the type of cooperation needed to address China’s challenges to the global trading system.

Deeper economic relationships with partners in the Indo-Pacific also serve U.S. security interests. China has demonstrated an increasing willingness to use the economic leverage in its broader relationships. South Korea has faced economic coercion over the deployment of THAAD, while Australia has faced retaliation over its call for an independent investigation into the origins of COVID-19. To date China’s economic coercion has not succeeded, but in time it could. Expanding U.S. trade with allies and partners will help to blunt the leverage China has in these relationships. In time, it will also make partners in the region stronger security partners as their economies grow.

Countries need assurances that the United States is an economic partner looking to develop mutually beneficial relations, rather than a country solely looking to maximize its own interests. Transactional relationships, rather than those built on mutual interests, will be subject to competing transactions and increasingly open to Chinese influence if the U.S. is only concerned with its economic gains. This does not mean that the United States should ignore clear violations of trade agreements to support security relationships, but at the same time it cannot expect to deepen those security relationships if it seeks to coerce economic gains from its partners.

The United States has a fundamental choice – it can work to maximize its economic interests or it can engage in a global competition with China. It cannot do both.