So much winning - just not for the US.

I wrote back in December 2016 of the risks of a trade war, even for a country with the US’s market power:

“Even if it doesn’t escalate to a full trade war, belligerence like this from the US ... [could] cause other countries to search elsewhere for suppliers and customers that don’t impose such penalties on international trade.”

Now, in order to avoid dealing with a belligerent US: the TPP is going ahead without them and many of their hard-fought-for provisions that would have reigned in China’s unscrupulous behaviour; the EU is negotiating directly with Japan, Australia and NZ; South Korea with Russia; and China is pursuing stronger ties with Japan, India, even formerly fierce rival in manufacturing Mexico.

All because Trump is squandering the reputational capital the US spent decades building. 

So much winning. Just not for the US.

America’s Trading Partners Are Having Plenty of Fun Without Us

By Wendy S. Cutler

There is a new buzzword in trade circles these days: diversification.

“There has never been a better time to diversify,” a spokesman for Canada’s trade minister wrote in a tweet after the disastrous recent Group of 7 meeting.

South Korea became so frustrated as it renegotiated its six-year-old trade agreement with the United States in the spring that it became determined to turn elsewhere. South Korea’s trade minister started a “trade diversification” strategy soon after the agreement was announced.

Diversification is the polite way of saying that America’s friends and allies believe we have become an unreliable partner, and they are now looking elsewhere. From Ottawa to Brussels to Seoul, our trading partners are fed up with the Trump administration’s tariffs, and they have given up on trying to charm President Trump or persuade him that free trade is good. To reduce their economic dependence on the United States and their exposure to a potential global trade war, they are forging trade deals that leave us out of the picture altogether.

On June 14, Canada’s government asked Parliament to ratify a new version of the Trans-Pacific Partnership, which the United States backed out of last year. On June 18, the European Union trade commissioner visited Australia and three days later, New Zealand to begin negotiations for free-trade agreements; and on June 22, South Korea announced plans to pursue negotiations for its first free-trade agreement with Russia.

These moves are a direct response to the Trump administration’s unreliability and unpredictability, and they are a clear sign that the administration’s trade policy priorities — renegotiating deals and punishing violations — are not working out as expected.

The president may want better deals to replace the old, “terrible” deals he doesn’t like, but so far, the rest of the world has been reluctant to negotiate new agreements with the United States. The long and growing list of tariffs, particularly those based on dubious national security grounds, has weakened the administration’s ability to form coalitions with other countries to tackle legitimate concerns, especially China’s unfair trade practices.

Instead, our closest trading partners are scrambling to find new markets for exports subject to tariff increases by the United States, and to secure new suppliers for the American products that their own countries are planning to hit with retaliatory tariffs.

Prime Minister Shinzo Abe of Japan, for example, has worked diligently to build close ties with the president. But now Japan’s top exports, autos and auto parts, are suddenly facing the threat of a 25 percent tariff. As Mr. Abe told Japanese legislators: “It’s hard for Japan to understand, and we cannot accept it.”

Japan is thus accelerating negotiations with other countries. Japan and the European Union plan to sign their free-trade agreement in July. Moreover, it was Japan who stepped up to fill the leadership void left by the American exit from the Trans-Pacific Partnership. The Japanese Diet approved a bill to ratify the revised pact this month.

The tone and policies of the Trump administration have even managed to bring two longtime rivals, China and Mexico, closer together. The two countries once competed head-to-head as low-cost manufacturers, with the United States as the most important market. After Mr. Trump began beating the drum for tariffs and a possible withdrawal from Nafta, Mexico’s economy minister, Ildefonso Guajardo, called a visit last year to China “strategic leverage,” saying it “sends the signal that we have alternatives” to the United States.

China, meanwhile, is on a mission to woo trading partners. Beijing’s campaign to be viewed as a champion of free trade and guardian of the multilateral trading system has been met with considerable skepticism. But efforts by China to promote stronger commercial ties with Japan, India and other countries are making headway. After a meeting in May with China’s premier, Li Keqiang, Mr. Abe said he wanted to “lift up the Japan-China relationship to a new stage.”

Regrettably, this leaves the United States on the margins as the rest of the world builds a new trading structure without us. Our workers, farmers and companies will be locked out of important markets. We will lose our chance to help write the rules and set standards for trade in advanced technology, such as alternative-fuel vehicles, 3-D printing and artificial intelligence. Global and regional supply chains will increasingly bypass the United States. And years of efforts by the United States to curb China’s unfair trade practices will lose critical international support.

To be sure, as the world’s largest economy, the United States will remain a major player in international commerce. Our market is a magnet for imports and our export competitiveness in manufacturing, services and agriculture is strong. The dollar remains the primary global reserve currency, with much of the world’s commerce denominated in dollars.

There is a danger, however, in overestimating our negotiating leverage. Trade patterns will shift as our partners look elsewhere. We have spent decades building trust with our allies. We are now squandering it.

Correction: June 28, 2018

An earlier version of this article misstated a former position held by the author, Wendy Cutler. She was an acting deputy United States trade representative, not an acting United States trade representative.