Senoy, thank you for your first post in this thread. Really helpful summary.
And you’re right (see my other post). Right now. But recent events are going to little by little have other countries inch away from trading with the USA because now people are seeing the USA as being a potentially unstable partner. And it is this attitude that the USA is the best (despite not really being the best at a great many things) and we will always be the best that also helps to push people away. Empires fall and the USA is no different. It is simply a question when and how.
Yeah, I agree. Was I not clear that I’m not happy about the USA descending? I mean I am a little bit because I think Americans kind of having it come because of the arrogance and the way they treat the world, but that’s a whole other kettle of fish. But from the perspective of the country I love, Canada, yeah, of course I wish the USA would continue to be successful. A powerful USA has been great for Canada, there is zero doubt about this. A descending USA will imply a descending Canada (and Mexico for that matter). I wish for nothing more than for Canada and the USA to remain good friends and allies. It is too bad that one of those friends just called the other friend a national security risk. You cannot on the one hand say to a friend, we don’t trust you, but on the other hand keep treating us as if we’re you’re close friend.
And as per my other post, I have no problem with NAFTA being renegotiated. It was a slightly older agreement. It could be modernized. No problem. It is that it was re-negotiated that irks me, it probably needed it because a lot has changed in the past couple of decades. It was the manner in which it was done that is irksome.
You see, you say that, but will you, really? Trump is just the tip of the iceberg. Trump by himself wouldn’t be a problem, it’s everyone else around Trump who is the real problem. The people who voted for him, despite his obvious flaws. The people who still support him, because of his obvious flaws. The cowards and scoundrels in Congress who won’t act to curb him. The cowards and scoundrels in Congress who go out of their way to *help *him.
And every scumbag power grabber out there who’s watching this all, and taking notes. How many open Nazis and regular racists have thrown their hat into the Republican ring this election cycle?
Do you really see a way back to how it used to be? I can’t see that happening even if you tried to do a 180 right now. After another 6 years of this? Your government will be so irrevocably broken that you’ll pretty much have to start over.
And gods alone know what that will look like.
Let’s be fair here, a powerful USA has been great for nearly everyone who isn’t Middle Eastern. The US as the world’s sole superpower has largely been remarkably benign. Yes, it sucks to be Iraq, but even there, the US has not been a horrible oppressor. It hasn’t set up a colony and sent everyone to the mines. It destabilized the government and set up a new one, but the government that it set up isn’t even particularly acting in the US’s interests and largely the US has let that happen.
I don’t think that the end of the Pax Americana is something to be celebrated. If you look at the countries waiting in the wings, I don’t think that the world is going to get noticeably better off as American power declines, quite the contrary.
I mean, really. Look at Canada. Try to imagine any other period in history where a large well-armed super power has not had any conflict with its comparatively militarily weak, resource rich neighbor? And it’s not like Canada is some sort of client state either. We frequently have disagreements on the world stage and are at odds, but I doubt any Canadian goes to sleep at night worrying about the American hordes pouring over the border except maybe as tourists at Niagara.
If you look at the American military, most countries are far more worried about US troops pulling out of their territory rather than invading it. When Poland is rolling out the red carpet and I don’t want to say ‘begging’ since that sounds demeaning, but asking very nicely for US troops to basically set up shop in their country, that’s not typically how we’ve seen things done in the past (although to be fair, it’s not unique either.)
As a world power, the US is not that bad all things considered (not an angel mind you, but hardly a devil.) Even Trump who has arguably been the least friendly American President in living memory hasn’t actually been that bad. Look at his real geo-political aims. “If you don’t get a stronger military, we’re going to withdraw from our treaty.” That’s a really weird thing to say historically speaking and probably the opposite of bullying. His real message is isolationism which is essentially, “If you don’t do what we want, then we’re going to leave you alone.” The fact that this is seen as destabilizing and horrifying and unhinged (which it is.) probably tells you all you need to know about American power.
I’m not sure that what ever order comes about in the post-American world is going to be quite so nice.
I don’t think I can be any clearer than I already have been that I agree. I’m not cheering that China is likely to be the next ascendant power. This is horrible. An ascendant Germany probably wouldn’t be so bad for the world, but it would be terrible for Canada. But an ascendant Germany is very unlikely. They’re economically strong but they do not have the kind of power projection needed to be a real dominant world power. Germany is not likely to acquire the kind of power projection needed. China doesn’t either but they are slowly getting it hence the likelihood of them ascending to the top spot.
Uh, what? Why?
The market is farther away, so longer supply chains for one. Canada would also be more difficult for Germany to defend and presumably less of a priority in the event of a war. Canada knows that in the event of a true throw-down cataclysmic war, the US is almost required to defend it or else risk a hostile enemy at its borders. Germany would not be required to defend Canada in the same way. Its main concern would be for European states and Canada almost by default would be a lower priority to Germany than it would be to the United States. The United States is also more interested in the stability of Canada in ways that Germany would not need to be. If the Canadian economy were to tank, it would seriously, seriously hurt the US and so ultimately it is in US interests to aid the Canadian economy. Germany though is much better shielded from a Canadian economic collapse and would be able to stomach a greater risk from it.
I should have been clearer. It would be terrible for Canada economically. Maybe terrible is an overstatement, but we do benefit greatly from having the world’s dominant power right next door.
Alternative reply: What senoy said.
Trump supporters do not now believe in free trade but they are no longer agitating for trade restrictions.
Trump is like most politicians, once a subject is dealt with, they declare victory and move on. There won’t be anymore rumblings of a trade war with Mexico or Canada for a decade at least.
That doesn’t found at all like Trump. This is a guy who would maintain a pointless grudge for decades as well as someone who tells ridiculous preposterous lies with the casualness of chatting about the weather. Assuming he’s still president a year from now, I predict insane accusations against Mexico or Canada or both, possibly in the same breath as talking about how great a deal he made, if he wants to get a cheer from a friendly audience and distract from whatever new mess he’s created.
How bizarre. Why would a stronger Germany be bad for Canada? It’s not as if the United States would cease to exist; indeed, as they are allies, a relatively stronger Germany would mean a USA that was richer, even if it wasn’t as important as Germany. In no way would Germany being stronger change the military or economic realities of North America, nor would it change the likelihood of Canada being invaded, which is effectively zero.
I believe they are positing an isolationist US that doesn’t trade with Canada or the rest of the world, and a (even more fantastic) ascendant German global hyperpower. This wouldn’t really benefit Canada that much, since it’s going to be hard to have the same volume of trade with Germany as Canada does with the US, and no way could Germany protect Canada in any meaningful way.
Of course, the reality is that the US couldn’t be completely isolationist as we rely so much on goods and services imported into the US…and if we did and decided that going back to those good old days of a 19th century economy, we’d pretty much take down the rest of the world as well, especially in the short term. Germany isn’t going to rise up like a, well, was going to say phoenix but I guess a two headed eagle to become a global hyperpower…and neither is anyone else, at least not for a long, long time. Happily, even if Trump gets re-elected he can’t possibly do that level of damage to the US or the world economy even with a second term…
In such a scenario, Germany’s relative strength is irrelevant.
Trump is absolutely not like other politicians. This is a guy who breaks every contract he can get away with the moment he perceives even the slightest advantage to himself for breaking it. The first time he sees Canada or Mexico benefiting from this new deal, he’ll denounce it as unfair and disastrous.
I’m less sanguine on this. I think major economic changes can get set in place in a very short time period and then have their effects last for decades.
As an example, I’ll offer the cotton trade. The economy of the southern United States in the mid-19th century was based on producing cotton for export. Then there was an issue which caused the shipping of cotton to be interrupted.
That “issue” was resolved in less than five years but the southern states found that the cotton market had drastically and irrevocably changed when they tried to re-enter it. When access to American cotton was cut off, new cotton fields were planted in Egypt, India, and Central Asia. American cotton producers found that nobody wanted to buy the cotton that they now wanted to sell. The temporary change caused by the war had become a permanent fixture.
Or consider car sales. It was long accepted that American consumers would exclusively buy American cars. Foreign cars were basically a novelty. Then the oil price crisis in the early seventies created an opening for companies like Honda and Toyota to enter the American car market in a big way. The American car companies were shaken out of their complacency and began making cars that could compete with foreign manufacturers. But they never recovered their exclusive access to the American market. Those foreign car makers established a production and sales network in the United States which has made them a permanent presence.
That’s the kind of possibility I worry about happening to American exporters. A Trump-led trade war could shake foreign consumers out of their default tendency to buy imported American products. Other countries would step in to fill that void and will build up manufacturing and distribution systems. Then in a few years Trump would be out of office and the next American president will try to go back to business as usual in exports. But foreign markets will no longer have the default acceptance for American imports. The markets we lose in the next five years may not be regained in the fifty years after that.
I was saying that mainly with hope, not absolute conviction (which is why I put the ellipses at the end). That said, a major market shift as you are positing would be pretty painful. Look at what’s happening with soybeans and China. China is trying to find other markets, or build up their own soybean cultivation, but they are running into issues with both. Brazil is already at max capacity for growing the things, at least in the short term, and they already have markets for what they grow. Sure, they have shifted to meet Chinese demand, but they aren’t close to meeting it, and their soy is more expensive…only a bit below the US costs WITH the tariffs. The Chinese agriculture soy is even worse…it’s actually more expensive than the US product with the tariffs. Sure, eventually, after a large capital expense, maybe they can shift completely away from the US…but then, what happens if the sanctions go away down the road? The US could flood the market with the things at cut rates, and you’ll be trying to pay off that large capital expense. Same goes for other products.
Then there is the flip side…the US is the largest single market. So…who is China going to dump their products on that they were selling to the US? Who will India? The EU? You are talking about having to rebuild markets from scratch, rebuild trade and product routes all while not knowing if this is a permanent issue or if it’s a transitory one…and deciding if you REALLY want the huge capital expense and short term losses while rebuilding. Plus, while Trump is an idiot, some of the issues with US trade to China or even other countries aren’t completely without merit or ridiculous…it’s just that HE doesn’t get them. But they are real enough. And the US isn’t the only country that has issues with, say, China wrt trade and WTO compliance. Trump is like that stopped clock…it’s still right 2 times a day, regardless of whether the clock gets it or not.
I think you’re right, and even Trump’s way of dealing with China is not 100% wrong. China can be hard to interact with a soft diplomacy, you kind of need to threaten to upset their apple cart a little bit to get them to pay attention. I’m not saying his approach has been perfect or even great but I kind of get it.
I.e. you can come to Canada and say “NAFTA has been great for everybody but it is a couple of decades old, and some of our industries are hurting because of it. So while we want free trade, we also want to make sure Americans aren’t being left behind because of it. We’d like to take a look at it and modernize it so that everybody is happy.” and I think you’d be well received in Canada. You cannot take that approach with China, in large part because there is no NAFTA equivalent to negotiate.
That’s the point I’ve been making. Too many people are just talking about America importing goods and how a tariff benefits us. But America is also a major exporter. And the retaliatory tariffs other countries enact in response to our tariffs will hurt our export trade.
So where will China export their products to? To the markets that are reducing their purchasing of American exports. Let’s say, as a hypothetical, that the United States imports five hundred billion dollars worth of good from China every year and exports three hundred billion dollars worth of good to the EU. We slap tariffs on foreign goods. So our imports from China drop to three hundred million dollars a year. But China and the EU enact their own tariffs on American goods so our exports to Europe drop to a hundred billion dollars a year. Now China has two hundred million dollars worth of goods it had planned on exporting to the United States and the EU didn’t buy two hundred million dollars worth of goods it had planned on importing from the United States. It doesn’t take much to see China and the EU reaching an agreement. The result is China and the EU are both doing the same amount of business as before and the United States is the one that’s had its business reduced.
As for the infrastructure involved, I’ve also mentioned that. Yes, it costs money to develop new markets. China isn’t currently producing the exact goods that the EU wants. Let’s say it would cost them a hundred billion to retool their factories to do so. China has no immediate interest in doing that. Why spend all that money to retool their production lines when they’re already producing goods that America’s buying? But if a trade war begins, they lose the two hundred billion dollars worth of sales I mentioned above. Now they’re motivated to spend the hundred million needed to switch over to selling products to the EU.
And here’s the key point; once they’ve spend the money on building the needed infrastructure, they have no motive in abandoning it. Let’s say Trump gets voted out of office in 2020 and the new President rescinds all of the tariffs. We send the word to China that they can come back to selling us five hundred billion dollars worth of goods. And they tell us no thanks; they’ve paid the cost to switch over to manufacturing for the EU market so they have no reason to switch back. So even if we convince the EU to drop its tariffs on American goods, we’re still going to have to compete with all these Chinese goods. So we’ll never regain all of the sales we had before the trade war started. The market structure will have changed and we can’t change it back to what it was, even if only a couple of years have passed.
Well, first off, tariffs don’t benefit us. There is a reason that they haven’t been used much by the US in the recent past, and when they have been tried they have not done much to help us out.
Certainly retaliatory tariffs will hurt our export companies. They will hurt the countries enacting them as well. But I don’t think rebuilding trade networks is going to be nearly as easy or cut and dried as you think because even if you can rebuild the intricate network of shipping, it’s going to be difficult to rebuild the market. The US buys a staggering array of goods and services that require an intricate web of suppliers and manufacturers. But the same market for the same goods and services is not going to exist in, say, Germany or the UK or Canada as the one that exists here. We are at the center of a web of buyers and sellers, of suppliers and manufacturers and you can’t just recreate the market forces that exist in the US somewhere else. China is already selling a ton of goods and services in the EU…so the EU isn’t going to suddenly buy all the stuff they are already buying AND all the stuff we were buying. You are also skipping over the fact that many countries in the EU aren’t exactly thrilled with what China has been doing wrt trade either, and they are also starting to worry about other things…like what China has been doing wrt it’s predatory baited loans, and the fact that they are already manipulating Greece and how Greece is voting in the EU.
Down the road China MIGHT be able to create new markets in Africa…they are already trying to do that. But their own practices might shoot them in the foot, as they are simultaneously ‘helping’ several African nations and putting them into untenable debt. They do this because what they currently want is the network, not the market. But they want it to service their current market (and, also to build new markets for their goods and services, especially construction equipment and labor, but creating the sorts of market that the US represents is still decades down the pike at this point).
And Europe is in sort of the same place. Sure, they can slap tariffs on US goods and services, but if they really have to find new markets to replace US consumption it’s going to be pretty tough. There isn’t a lot of slack. China could, I suppose, buy from Europe what they currently buy from the US, but that’s not going to make up for the US market going away. And, sure, Europe could look for new markets in Africa as well (they are already doing this), but, again, that’s going to take time to build up. No way is this something that will happen by 2020, or 2024…or 2030. Can they survive that long? They are already having issues, and, frankly, if it really went that far that would probably mean the US is pulling out of NATO and pulling back on all fronts. Which means Europe is going to need to up their game wrt military spending levels and force projection. China is already doing this of course, and so is India. Russia would be if they could, but even without a huge spending increase they have the legacy hardware to be a force.
It’s a very tangled mess. And we have a president who doesn’t get any of this stuff and who is like a particularly stupid and clumsy bull in a really delicate china shop. But it’s not just the US who he’ll be hurting if he decides to go for a new round of tariffs all around. Currently, the only ones we are REALLY serious about putting tariffs on are the Chinese. The rest has been, IMHO, mostly for show or to try and see what Trump can get out of the country in question. $250 billion in tariffs is a serious move. I just wish he knew what he was doing, and that his reasons for doing it were the right ones…and his goals for what he’s looking for were the right ones. And that he understood about how American power actually works. While I’m wishing for stuff that isn’t going to happen, I wish Obama were still president. Hell, we’d be better off under GW than this clown.
The company making the car isn’t all that relevant to your purpose.
Since NAFTA was first implemented automakers shifted to producing for the entire North American market. They build in factories located in the three countries. Supply chains can cross borders multiple times before final assembly. You might be turning up your nose at a GM that is mostly Canadian made in order to buy a Honda made in the US.
Welcome to globalization.