A new age

During the eight years before Donald Trump took office in 2017, the U.S. seemed to be adapting creatively to some serious challenges to its post-Cold War global hegemony. After the 2007-2008 financial crisis, the worst since the Great Depression, a bipartisan stimulus program saved the nation’s auto industry and launched a slow but sustained economic recovery.

Fueled by renewed economic vitality, Washington seemed to have a reasonable shot at checking China’s all too real and growing global economic challenge. After all, using the $4 trillion in foreign exchange reserves it had earned by 2014 from its new role as the world’s workshop, Beijing had launched a trillion-dollar Belt and Road Initiative focused on making the vast Eurasian landmass (and parts of Africa) into an integrated trade zone — a veritable “world island” that would exclude America and so radically undercut its global leadership.

In his two terms as president, Barack Obama, Trump’s predecessor, pursued a clever countervailing strategy, seeking to split Beijing’s potential world island economically at its continental divide in the Ural Mountains. Obama’s planned Trans-Pacific Partnership (TPP), which pointedly excluded China, was the keystone to his strategy for drawing Asia’s trade toward America, thereby rendering that Belt and Road Initiative a hollow shell. That draft treaty, which would have surpassed any other economic alliance except the European Union, was designed to integrate the economies of 12 Pacific basin nations that generated 40% of gross world product — and the U.S. was to be at the very heart of it.

To drain commerce away from the other half of Beijing’s would-be world island, Obama was also pursuing negotiations for a Transatlantic Trade and Investment Partnership with the European Union. Its combined $18 trillion economy was already the world’s largest, accounting for 20% of gross world product. The proposed regulatory alignment between Europe and the United States would supposedly have added $260 billion to their total annual trade. Obama’s bold grand strategy was to use those two pacts to beggar Beijing’s plans by giving the U.S. preferential access to 60% of the world economy.

Of course, Obama’s effort was encountering strong headwinds even before he left office. In Europe, an opposition coalition of 170 civil society groups protested that the treaty would transfer control over the regulation of consumer safety, the environment, and labor from democratic states to closed corporate arbitration tribunals. In the U.S., Obama’s scheme faced sharp criticism even within the Democratic Party. Key figures like Senator Elizabeth Warren opposed the potential degradation of labor and environmental laws via the TPP. In the face of such strong criticism, Obama had to rely on Republican votes to win Senate approval for fast-track authority to complete the final round of negotiations over the treaty. That opposition, however, ensured that neither agreement would be approved before he left office.

It was, however, Donald Trump who delivered the coup de grâce. Right after his inauguration, he curtailed trade talks with Europe and withdrew from the Trans-Pacific Partnership, saying: “We’re going to stop the ridiculous trade deals that have taken… companies out of our country, and it’s going to be reversed.”

Trump would instead adopt a unilateral America First strategy that soon sparked a costly trade war with China. After two years of escalating tariffs on both sides of the Pacific that damaged the US economy, Trump capitulated in January 2020, signing an agreement that rescinded the most prohibitive US duties in exchange for Beijing’s unenforceable promise to buy more American goods. The president then hailed his “big, beautiful” trade deal as a great victory, even though it was nothing less than an ill-concealed surrender.

While his White House seemed obsessed with gaming its bilateral ties with China, Beijing was stealing a page right out of Obama’s strategic global playbook, outmaneuvering Washington by pursuing two multilateral trade agreements that should have seemed eerily familiar to anyone who lived through the Obama years. In November 2020, Beijing would lead 15 Asia-Pacific nations in signing a Regional Comprehensive Economic Partnership that promised to create the world’s largest free-trade zone, encompassing 2.2 billion people and nearly a third of the global economy.

Just a month later, China’s President Xi Jinping scored what one expert called “a geopolitical coup” by signing a landmark agreement with European Union leaders for the closer integration of their financial services. In effect, the accord gives European banks easier access to the Chinese market, while drawing the continent more closely into Beijing’s orbit. So serious is the shift away from Washington that President Biden’s incoming National Security Advisor Jake Sullivan publicly urged the NATO allies to first consult with the new administration before signing onto the deal — a plea they simply ignored. Indeed, this treaty is arguably the biggest breach in the NATO alliance since that mutual defense pact was formed more than 70 years ago.

Through a stunning inversion of Obama’s bold yet unrealized geopolitical gambit of using multilateral pacts to draw Eurasia’s trade toward America, those two agreements will give China preferential access to nearly half of all world trade (without even factoring in the still-developing Belt and Road project). In a diplomatic masterstroke, Bejing exploited Trump’s absence from the international arena to negotiate agreements that could, along with that Belt and Road Initiative, steer a growing share of the Eurasian continent’s capital and commerce toward China. In the years to come, Beijing’s inclusiveness could well mean Washington’s exclusion from much of the burgeoning trade that will continue to make Eurasia the epicenter of global economics.

If that were all, then we could chalk up a few significant wins for China and just wait for Biden’s foreign-policy team to try to even the score. But there’s far more happening that suggests those treaties were a clear manifestation of deeper, more troubling trends.

When empires decline and fall, they seldom collapse in the sort of sudden apocalypse portrayed in a monumental series of paintings entitled “The Course of Empire” by another denizen of the Catskill Mountains, the renowned artist Thomas Cole.

Excerpted: ‘Waking from a Four-Year Fever Dream to Find US Global Power Gone’

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