Much ado about nothing

The Transatlantic bond endures for economic reasons alone

One cannot conjure up self-importance anymore than one can delete the importance of others.

True in interpersonal relations; true in international relations

Last week Vice President JD Vance spooked Europe with a lecture on mass migrations and needing to be more open to far-right political influences — a fairly obvious attempt to school allies on the MAGA agenda (in effect, arguing, Come on in! The water’s fine!). Naturally, that sort of self-regard went over like a lead balloon. Just because the US is retreating from globalization doesn’t mean Europe has to follow. Anyway, the real message was that America is abandoning Ukraine as soon as possible, so be prepared Europe!

With that sort of messaging, Europe naturally freaks out, the Russians are delighted, and US media and experts celebrate or decry the “deathknell” of the Transatlantic bond.

It kind of amazes me that whenever Trump 2.0 makes some sort of pivoting announcement, like Vance did by saying US security concerns for the next several decades were going to be China-centric versus Euro-Russia-centric, everybody treats it like a done deal that supersedes all past, present, and future realities.

It does nothing of the sort. It is pure assertion fueled by aspiration.

Obama announced a “pivot’ to Asia and it amounted to almost nothing and accomplished almost nothing. Chess pieces moved, China kept rising.

Then Trump 1.0 came in and stuck with the concept, building up the “quad” of US, Australia, India, and Japan and, by doing so, accomplishing almost nothing. China kept rising.

Biden gets redirected to Europe when Putin goes into Ukraine in 2022, and that changed almost nothing in our correlation of forces vis-a-vis China or in China’s vis-a-vis the rest of Asia. Sure, we make some subs happen with Australia — big nothing-burger. Meanwhile, China slows down but keeps exporting for growth, achieving a trillion dollar trade surplus last year — stunning and completely oblivious to these geostrategic calculations that we take so seriously in the West.

But I tell you, sir, I read it in a REPORT!

Now, Vance signals a renewed something back to Asia, overtly and rather insultingly downgrading Europe/EU/NATO/Ukraine, and we’re supposed to view the Transatlantic bond as completely severed?

Strikes me as kind of ridiculous.

From my second Massive Open Online Course (MOOC) currently available on both edX and Coursera:

The EU is not only the largest single market area but also one of the most outwardly focused economies. That combination makes the EU powerful and influential and not somebody to be downgraded over — quite frankly — far less important security matters.

Being a trade partner of note is a powerful leverage not merely for the US but for Europe even more so.

Taleb’s notion of the intransigent minority can be applied to trade relations. The one most familiar to American businesses is the California Rule: California is such a big market that, when it sets rules, anybody operating in that market pretty much chooses to meet that higher standard to avoid export loss. Theoretically, any business could tier its offerings: one tier for the rest of America and one just for California, but, since this is highly inefficient, businesses just go with the more stringent CA requirements, allowing California to be an intransigent minority that defines and shapes the larger US market on that basis (Yay! States rights!). That happens both inside America (the rest of US states “exporting” to California) and in America’s trade relations with the world — sort of a tail-wagging-the-dog effect.

Good example: California accounts for almost 40% of electric vehicles sales in the US right now. So, if you’re in that business (and you’re not Elon Musk holding a forever Drake-v-Kendrick-like grudge with Gov. Newsom), then you pay attention to that markets and its rules, in turn, yielding some genuine power to California the rule-setter. Forty percent is hugely decisive as intransigent minorities go.

So, when we look at how superpower ranks as export markets for one another, we see the following:

Europe is the biggest export market for the US, triple the importance of China. In reply, the US is not all that important an export market for the EU, so you could say that we need Europe more than vice versa. Part of that disparity is due to the fact that Europe mostly exports to Europe (internally within the EU). If the US counted all the trade among US member-states, then Europe’s share of US exports would be a lot smaller. Still, it would be larger than China’s.

When you look at China’s exports, the EU outranks the US as target market. Same is true for rising India. Point being, America’s “trade centrality” is less that of Europe pretty much all over the world, to include their direct trade with one another.

When we look at the world’s major regions, the EU is the decisive target export market for North America, Africa, and South Asia. It’s also the most important market for the Middle East/North Africa and East Asia.

Indeed, the only external regions where the EU isn’t #1 is in the Former Soviet Union (deeply curtailed in 2022 due to the Russian invasion of Ukraine) and Latin America, where it trails China but edges out we’re-number-three(!) America.

This is where American arrogance is truly revealed: we act like we decide whether Europe is important to us and the world order, when, in economic terms, the EU is far more central to global trade than we are — even more decisive than risen (and already slowing down) China.

The EU is rated “strong” or “decisive” as an export market for all of the world’s 7 other regions; America commands far less centrality, being rated “strong” in only 3 of 7 regions and “decisive” in none of them.

Remember: demand is local while supply is global. Europe the region is the biggest demand function out there — being important to the exports of every world region.

Another way to look at it:

In terms of intra-regional trade, Europe the region is more integrated than either East Asia (dominated by China) or North America (dominated by the US). Now, part of that lower number for the US is the sheer disparity of economic size among Canada, Mexico, and us. But, still, you get the picture.

America has the habit of imaging ourselves simultaneously to be the most important trade partner in the entire world and across the Western Hemisphere, when we’re not in either case. We are just far less central to global trade than we once were, which is why Trump 2.0’s launching of a 360-degree trade war isn’t likely to earn us what MAGA expects in terms of resumed global trade domination of the sort so fondly remembered from the 1950s-1960s — or the Boomers’ youth.

So, yeah, you can say the US is in a fierce competition with China around the world, but that hardly zeroes out Europe. Plus, being as America tends to frame that competition so exclusively in high-tech (domain) and East Asia (region) alone, such a bilateral/Cold War-like fixation on the part of the US simply ignores the fact that China is outperforming us throughout the Global South — to include Latin America, and that, in many instances, Europe is outperforming (in terms of trade centrality) us as well.

So what we have here is a failure to contextualize.