A new trade war offers no easy way back for old global order
Then-President Donald Trump fired the first shots with tariffs on China seven years ago, and then Joe Biden ushered America into the new industrial policy age. Stage three, punctuated by Biden’s latest round of duties on Chinese imports, builds on the first two: using tariffs to defend US interests, with subsidies now at the core of policy and without fear of retaliation.
The $31 trillion arena of international commerce has withstood a series of shocks in recent years, including the US-China trade war. This time, the linchpin is the European Union — caught between preserving its self-styled role as defender of multilateral rules and fearing the loss of millions of jobs and tens of billions in investment while the US and China wield market-distorting subsidies and tariffs.
“Trump let the protectionist genie out of the bottle,” said Simon Evenett, founder of the St. Gallen Endowment for Prosperity Through Trade, a group based in Switzerland that tracks trade policies. “No one dared to put it back in.”
After the US tariff announcement last week, China signaled it’s ready to unleash duties as high as 25% on imported American and European autos — a retaliation threat aimed at both sides of the Atlantic.
That’s because Brussels is nearing the end of an electric-vehicle subsidy investigation that is likely to lead to defensive measures against China’s auto exports. The bloc’s levies are expected to be significantly lower than the US’s and based on a different approach within World Trade Organization rules and
