Economic geography is proving more significant than historical alliances.
To understand why the Trump administration has struggled to build a global coalition of allies in its trade war with China, it helps to understand what is happening in the rolling hills and valleys of Australia’s southeast and southwest coasts.
Vineyards that once made many crisp white wines and fruity red ones popular with American buyers are now also producing more austere reds favoured by a segment of a rapidly expanding market of Chinese drinkers. Since 2008, Australia’s wine exports to the United States have fallen 37 percent; exports to China have risen 959 percent.
Around the globe, longtime allies are planning for a world in which the United States is no longer the economic center. For all the frustrations of doing business with China, including opaque government action and allegations of intellectual property theft, the sheer logic of economic geography is proving more significant than historical alliances.
The tension is evident in many countries with deep economic ties to the United States, including South Korea, Japan and Germany. But perhaps nowhere is the tug more vivid than in Australia, long one of America’s closest allies, which now finds itself pulled in the opposite direction by China, its largest export market.
In national elections scheduled for May 18, both major parties have called for a balanced foreign policy, aimed at maintaining the country’s longstanding national security alliance with the United States — while also looking to nurture the relationship with China.
Neither party’s leaders have adopted the bellicose anti-China language of President Trump, nor the use of tariffs to try to force the Chinese to yield to Australian demands. (The Trump administration recently raised tariffs on $200 billion of Chinese imports to 25 percent from 10 percent and threatened to expand the tariffs to encompass all Chinese imports.)
Australia’s cultural affinity with the United States remains strong. Australian and American troops fought together in World War II, and more recently in Afghanistan and Iraq. The countries’ intelligence agencies share some of their deepest secrets. But in terms of cold hard (Australian) dollars, the nation’s business and political leaders now speak of the world’s two largest economies as equally important partners.
“Our interests are not identical to the U.S.,” Geoff Raby, a former Australian ambassador to China who advises companies doing business in the two countries, said in an interview. “That doesn’t mean we can’t have a close, warm relationship with the United States. But we cannot join the U.S. in a policy premised on China being a strategic competitor.”