The ever-escalating tensions in trade relations between the US and China have caught the nerve of politicians, businesses and the public. This conflict is challenging the traditional approach to trade disputes, which usually involves one of the disputing countries taking the case to the World Trade Organization (WTO) for arbitration or adjudication.
International institutions, including the WTO and the International Monetary Fund (IMF), have warned that the consequences of the conflict could include growing economic nationalism, rising protectionism and a downturn in global growth.
This will have flow-on effects for other countries such as Australia and New Zealand.
A new framework
Both countries have developed close political ties with the US while fostering strong economic ties with China. As China is a top trading partner for Australia and New Zealand, the impact of the US-China trade war on their exports could be significant.
Although the dollar value of any effect of the trade war is difficult to gauge, a qualitative analysis is important so that policymakers, investors and businesses can develop an informed view of this live event.
To analyse the impact of the trade war on the exports of third-party countries, we have developed a new framework.
The first factor to consider is whether an original demand for products from a disputing country has been redirected to a third-party country. For example, China’s demand for Brazil’s soybeans has sky-rocketed over the past year, with 5.07 million tonnes imported from Brazil in November 2018, up more than 80% from a year ago. It is predicted that members of the European Union, Mexico, Japan and Canada, among other countries, may capture about US$70 billion of US-China bilateral trade affected by the trade war.
The second factor is whether an original supply from one disputing country to another has been redirected to a third-party country. It has been reported that soybean exports from the US to the European Union have increased by 133% from July through mid-September 2018, compared with the same period in 2017.
European Union consumers and downstream businesses of the soybean industry, such as producers of animal feed and biofuels, have enjoyed the benefits of a lower price of soybeans as a result of the additional supply from the US.
Changing international supply chains
The third factor is whether the trade tension has disrupted the global supply chain of an industry (e.g. smartphones) that is important to the third-party country. The levies imposed by the US government on imports from China are said to destabilise international supply chains inside and outside of China that companies have invested in over years. Countries such as Thailand, Cambodia and Vietnam are catching up with China in terms of manufacturing expertise and capacities. Companies from already industrialised economies such as Taiwan and South Korea are considering revamping their home country’s competitive advantages.
Uncertainty in the price and supply of intermediary goods from these countries into the third-party country’s supply chain are critical for determining the spillover effect on the third country.
The last factor is whether the focal industry in the third-party country has developed a proactive response to the risk from the trade war. A proactive response would mean that companies in the focal industry in the third-party country have started to adjust strategic investment in research and development, sourcing, and manufacturing in or outside the US or China.
Risks and opportunities
The trade war will create risks and opportunities to third-party countries such as Australia and New Zealand. Filling the supply and demand gaps caused by higher tariffs on both sides of the trade war is an opportunity for a third-party country. But this requires flexibility in production and export capabilities in companies and industries.
As the trade spat continues, it remains a balancing act for the third-party country dangling between two political and economic powers. We have already seen the tensions between the US and China spill to this region in the context of the US ban on Huawei and its persuasion of Australia and New Zealand to follow suit.
Julian Assange, the Australian cofounder of Wikileaks, was arrested on April 11 by British police at the Ecuadorian embassy in London, where he had been claiming political asylum for almost seven years.
He has faced a range of criminal charges and extradition orders, and several crucial aspects of his situation remain to be resolved.
What are the British charges against Assange, and what sentence could be imposed?
Assange moved into the Ecuadorian embassy in London in June 2012 after losing the final appeal against his transfer to Sweden on a European Arrest Warrant (EAW). He was then charged with failing to surrender to the court.
While in the embassy, Assange could not be arrested because of the international legal protection of diplomatic premises, which meant police could not enter without Ecuador’s consent. On April 11, British police were invited into the embassy and made the arrest. On the same day, Assange was found guilty, and awaits sentencing. The charge of failing to surrender to the court carries a jail term of up to 12 months.
What are the US charges against Assange?
Also on April 11, the United States government unsealed an indictment made in March 2018, charging Assange with a conspiracy to help whistleblower Chelsea Manning crack a password which enabled her to pass on classified documents that were then published by WikiLeaks. The US has requested that the UK extradite Assange to face these charges before a US court.
What were the Swedish charges, and could they be revived?
In 2010, a Swedish prosecutor issued the EAW requesting Assange’s transfer to Sweden to face sexual assault allegations, which he denies. In 2016, Assange was questioned by Swedish authorities by video link while he remained in the Ecuadorian embassy. In 2017, they closed their investigation.
After Assange was arrested and removed from the embassy, the lawyer for one of the complainants indicated she would ask the prosecutor to reopen the case, as the statute of limitations on the alleged offence does not expire until 2020. As of April 12, Sweden’s Prosecution Authority is formally reviewing the case and could renew its request for extradition.
What are Britain’s legal obligations to extradite to Sweden or the US?
The UK, as a member of the European Union (for now!), is obliged to execute an EAW. The law on EAWs is similar to extradition treaties. However, the law also says it is up to the UK to decide whether to act first on the EAW from Sweden or the US extradition request.
Bilateral extradition treaties are usually based on identical reciprocal obligations. But the current UK-US extradition treaty, agreed in 2003, has been criticised for allowing the UK to extradite a person to the US solely on the basis of an allegation and an arrest warrant, without any evidence being produced, despite the fact that “probable cause” is required for extradition the other way.
The relative ease of extradition from the UK to the US has long been one of the concerns of Assange’s legal team. The treaty does not include a list of extraditable offences but allows for extradition for any non-political offence for which both states have criminalised the behaviour, which carries a sentence of at least one year in prison.
Espionage and treason are considered core “political offences”, which is why the US request is limited to the charge of computer fraud. Conspiracy to commit an extraditable offence is covered in the US-UK treaty, as it is in the EAW (and in the US-Australia extradition treaty).
Assange may legally challenge his extradition either to the US or to Sweden (as he previously did). Such challenges could take months or even years, particularly if Assange applies to the European Court of Human Rights arguing that an extradition request involved a human rights violation.
Given Assange’s previous conduct, and the likelihood that he will be sentenced to prison for failure to surrender to court, he will probably remain in a UK prison until all legal avenues are exhausted.
What are Australia’s obligations to Assange?
As an Australian citizen, Assange is entitled to consular protection by the Australian government, which means staff from the Australian High Commission in London will provide support for him in the legal process. The extent of that support is not set in stone, however, and both Foreign Minister Marise Payne and Prime Minister Scott Morrison have declined to provide detail on the basis that the matter is before the courts.
One possibility is that Assange will serve his sentence for failing to surrender to the court, after which the UK will deport him to Australia. At that point, it is possible the US could request extradition from Australia, and the US-Australian extradition treaty would apply. The US charges would most likely be covered although not specifically mentioned in the treaty.
As with the UK-US treaty, political offences are excluded, and an extradited person can only be tried for the offence in the extradition request or a related offence, and in any event not for an offence not covered by the treaty. In addition, the treaty specifies that neither Australia nor the US is obliged to extradite its own nationals, but may do so. The fact that Australia has the option to refuse extradition purely on the ground of Assange’s nationality could lead to intense pressure on the government to do just that.
It is 9am on a chilly March morning. Delegates from across the world have assembled for an emergency meeting of the North Atlantic Council, NATO’s main decision-making body. The main item on the agenda: an update from the Supreme Allied Commander Europe on Russian escalations in Ukraine and elsewhere in Europe, to determine NATO’s response.
No one doubts the gravity of the situation. Russian forces are moving west to occupy parts of Ukraine beyond the Donbas region and the Crimea. There have also been severe Russian cyber attacks on German infrastructure, while Vladimir Putin has threatened to invade Estonia. NATO’s secretary general has asked one of his predecessors, Lord Robertson of Port Ellen, to join the meeting and share advice.
Do not adjust your set: this meeting took place, but it was a simulation – set in a very near future in which the Ukraine has joined NATO and the UK has left the EU.
These kinds of exercise are conducted regularly by NATO and national armies to anticipate what might happen in the “fog of war”. Standing in for the NATO headquarters in Brussels on this occasion was the University of Stirling in central Scotland. The delegates were students on the university’s masters programme in international conflict and cooperation, and the doctorate in diplomacy.
Lord Robertson was the only person playing himself. He briefed delegates under Chatham House rules on his time chairing NATO, including the historic decision on September 12, 2001 to invoke collective defensive action under Article 5 of the founding treaty.
Immersed in NATO’s engine room, our delegates had to strike a balance during two days of negotiations between countries advocating conflict resolution and those inclined to deterrence – if not pre-emptive action. As well as informing the students’ learning, it produced the following insights for the real world.
1. Russian capabilities
Delegates had to assess Russian defensive capabilities using real-life data. They concluded that while Russia looks strong on a country-by-country comparison, its armed forces remain stretched and are sometimes poorly equipped. Russia would probably not be able to sustain a war with NATO troops over several months, and would likely be challenged by fighting on two fronts.
Having said that, the country’s forces have recently modernised, making them more effective than a few years ago. Russia is also closer than most NATO powers to Ukraine and the Baltics, so could mobilise more quickly and potentially gain strategic advantages.
NATO action in Ukraine would be complicated by a low bridge that Russia has opened connecting Crimea to the Russian mainland. This makes it difficult for larger ships to move between Ukraine’s Black Sea ports and the Mediterranean. Russian expertise in cyber attacks and creating confusion by spreading fake news could also create disunity among NATO members.
Takeaway: the Russian bear is frail but can still bite.
2. Expect complexity
Countries in our simulation negotiated according to national interests. The multilateral negotiation splintered into smaller discussions as mini-alliances emerged. For example, Turkey – with its improving relations with Russia and exposure to potential refugees – was so conciliatory to Moscow that its NATO membership became questionable.
On the other side of the spectrum, Ukraine and also Romania, which feels threatened by Russian aggression in the Black Sea region, sought immediate offensive action. Alliances like these weren’t always visible to the outside world. They complicated negotiations, especially when such countries had essentially non-negotiable aims.
Takeaway: things are not always what they seem, even within a negotiation. Try and stay flexible, and don’t rely on media reports about counterparts’ interests.
3. Events, events, events
Just like in real life, our delegates had to keep monitoring an internal news feed. In one announcement, Russia began mobilising after hard-line statements from certain NATO members leaked to the media on day one of the negotiation. Several times, discussions had to start from scratch as delegations changed priorities and strategies.
Takeaway: constantly ask yourself how events affect your own position and those of your counterparts.
4. Clarity under pressure
With full military intervention and occupation of Ukraine by Russia on the cards by the middle of day two, NATO allies had to deploy ground troops or risk ceding ground to Moscow. Issues agonised over the day before became less relevant as delegations were forced to compromise in the interests of collective action.
Takeaway: time pressure can make decision-making hot-headed, but can lead to clarity of purpose. Negotiators who understand this can use it to their advantage.
5. EU security
As EU members of our fictional North Atlantic Council discussed issues among themselves, we witnessed how the EU has become a geopolitical actor with “state-like” qualities. Before committing to security actions through NATO, EU members negotiated with each other and sought a coherent position.
One important dimension in the real world is the EU’s Russia sanctions, which are slightly different to US sanctions. With Ukraine now also party to an EU Association Agreement, the EU is demonstrating its capability to project power abroad.
Takeaway: the EU is developing its own geopolitical and security role in Europe, with potential consequences for NATO.
6. The UK squeeze
Within NATO, the UK has generally mediated between the US and usually softer EU positions. Our simulation showed that after Brexit, despite its important role as a nuclear-armed NATO member, the UK will likely feel squeezed between the US and EU.
Takeaway: the implications of Brexit for the UK in NATO deserve more attention.
7. Refugee risks
In our simulation NATO members closer to Russia, such as Poland and Hungary, were particularly worried that military action in Ukraine would lead to a large number of refugees – with potentially serious domestic political consequences.
Takeaway: we don’t always take enough account of the linkages between military and human security.
8. Take positive decisions
When the BBC war-gamed a similar scenario several years ago, the UK got drawn into a nuclear war. Our fictional delegates managed to avoid such awful outcomes by using what deterrent power they had. They combined mobilisation with the offer of talks in such a way that Russia backed off. Despite some hawkish pressure, the situation was mostly defused by dominant countries such as the US as well as conciliatory EU voices.
Takeaway: On March 18, on the fifth anniversary of annexation, NATO reiterated its view that Crimea is Ukrainian territory. Meanwhile, hostilities continue in Donbas. The apparent stalemate in Ukraine could change overnight – not least with the presidential election at the end of March. If so, NATO members will have to make a choice, despite the fact that Ukraine is not currently a member of the alliance. As became clear to our participants, the one thing you can’t do in a moment of international crisis is to refuse to act if your interests are at stake.
With one tweet of 35 words, Donald Trump has changed almost 40 years of US policy towards Israel and Syria:
As with other Trump impulses, such as his sudden order in December to withdraw all US troops from Syria, no administration official appeared to have been consulted. Hours earlier, the US secretary of state, Mike Pompeo, said from Jerusalem that there was no change in the US position declining to recognise Israel’s 1981 annexation of the Heights. His appearance alongside Israeli prime minister Benjamin Netanyahu was delayed for almost an hour for Pompeo to assessed the suddenly altered situation.
Of course, White House officials scrambled to gloss the announcement. One insisted that Trump had spoken with national security advisor John Bolton, son-in-law and advisor Jared Kushner, and Jason Greenblatt, the special representative for Middle East negotiations. In a curiously defensive assertion, the official said: “There’s no obvious constituency not to do this.”
Others wheeled out Trump’s vague references to “security” and “stability”. Pompeo recovered to say the declaration was “historic” and “bold”.
But make no mistake. Trump’s priority had nothing to do with a Middle East strategy. His impulse was fed by three desires: the re-election of Netanyahu on April 9, his own 2020 campaign and the need to constantly stroke his own ego.
Israel seized the Golan Heights in the 1967 Arab-Israeli War. Fourteen years later, just before its entry into Lebanon’s civil war, the government of Menachem Begin consolidated its hold with the declaration of sovereignty.
Few in the international community accepted the declaration. The Reagan administration, despite its pro-Israel rhetoric, suspended a strategic cooperation agreement with Tel Aviv. The US joined every member of the UN Security Council in Resolution 497, calling the annexation “null and void and without international legal effect”.
The Heights remained in a de facto division, with a UN observer force seeking to prevent any clashes. The Assad regime’s response to the 2011 Syrian uprising, killing 100,000 and displacing more than 11m, threatened to spill over into the area as the UN force withdrew. But the Israeli military presence deterred any regime action, and Netanyahu secured an agreement with Russia’s Vladimir Putin in September 2015 to keep Iran and Hezbollah out of the area.
Friends in need
But Trump’s immediate concern is not with that interplay of Syria, Israel and external actors. As with his order to move the US Embassy to Jerusalem, his focus is on a side-by-side declaration linking his fortunes and those of Netanyahu.
The formal indictments of the Israeli prime minister for fraud, bribery, and breach of trust await a hearing. He may face a criminal graft investigation over the state purchase of naval vessels and submarines from German shipbuilder ThyssenKrupp, in one of the biggest cases in Israeli history. Polls have him neck-and-neck with the Blue and White Party of former general Benny Gantz and former finance minister Yair Lapid.
But on Thursday, Netanyahu could be exultant: “President Trump has just made history. He did it again.”
Trump will hope that exaltation boosts his own re-election prospects in a year’s time. His approval ratings are doggedly sticking at just over 40%. They haven’t collapsed despite multiple criminal investigations, the furor over anti-immigration policies and the government shutdown — but neither have they risen amid an economy fuelled by December 2017 tax cuts.
Thus an appeal to a domestic constituency which traditionally votes Democratic — with few exceptions over the past century, Jewish voters have given more than 70% support to the Democrat candidate, including 71% for Hillary Clinton in 2016.
Trump’s calculation may be misguided. The Jewish vote is largely propelled by social issues at home, rather than Israel abroad: only 9% cited the latter as the primary cause for their vote in the last presidential election. But an “Israel first” stance could also resonate with non-Jews in America – and pro-Trump Jewish donors and lobbies could be significant in the contest for the US electorate next year.
Then there’s the far from insignificant factor of Trump’s ego. As is often the case with his orders and proclamations, he used the announcement to try to portray his unique place in US history. Throwing in the falsehood that all of his predecessors – as opposed to none – had pushed for recognition of Israeli sovereignty over the Golan, he said: “Every president has said ‘do that’. I’m the one that gets it done.”
Recipe for danger
Despite the immediate headlines, Trump’s tweet has little significance for the Heights. The international community, including the UN, is not going to shift its position on their status. And, while Netanyahu may be boosted, the Israeli presence will continue to depend on the strength of arms, the expansion of settlements and the acceptance of actors such as Russia.
But that does not mean the declaration is without effect. Trump’s “stability” is likely to make a further contribution to regional instability.
The Assad regime will seize upon the opportunity to cover up its repression and hold on power. The Syrian foreign ministry’s pledge to regain the Heights is bluff, as the regime’s military can’t even secure its president without the lead of Russia, Iran and Hezbollah. But Bashar al-Assad and his inner circle will play the victim over the Heights for their narrative that the US and Israel are the supporters of “terrorism” and aggression.
Trump’s message also casts a dark shadow over the still to be presented Israel-Palestine “peace plan” of his son-in-law Jared Kushner. Some will rightly note that the plan, if it exists, is already a zombie proposal. However, the Golan Heights declaration on top of the relocation of the US embassy to Jerusalem confirms a Trump administration that has reduced its real objective to pleasing one Israeli – the one sitting in the prime minister’s chair.
And if one wants to take Trump’s “bigly” view of his influence, one can look beyond the Middle East. Martin Indyk, a former US ambassador to Israel, noted that: “[President Vladimir] Putin will use this as a pretext to justify Russia’s annexation of Crimea.”
That, of course, may not cause Trump – who “gets it done” – the loss of a moment’s sleep, even as some of his advisors and almost everyone across the Middle East are worried sick.
In the days before the mass shootings in Christchurch I was visiting Parkland, Florida, where 17 people were killed in a school shooting on Valentine’s Day 2018. I was recording a story about how those survivors and their allies built a global movement against gun violence. I met students, teachers and supporters.
These American students knew all about Australia’s gun laws. “How did you get such strong laws?” they would ask. And I would tell them about the Port Arthur massacre and how our conservative prime minister acted. “We haven’t had a gun massacre since,” I proclaimed. Days later, I felt shame at my hubris – an Australian has been charged with the shootings at two mosques in Christchurch, New Zealand.
Lessons from a ‘high-security’ suburb
We have so much to learn from Parkland. And it’s not simply how they built a remarkable social movement. Some lessons become visible only when you actually see the place.
Parkland is a suburb close to the Everglades, 30 minutes from the beach and an hour north of Miami. It is a wealthy, majority-white neighbourhood. But the thing that overwhelmed me when I was driving around is that it is a gated community.
The entire suburb is broken up into large blocks, and at the centre of each block is a single entrance for cars. The road has a security hut, large barriers stretching across and there is a large gate. You need a PIN code to go inside.
When you go through, the homes and streets are beautiful. Green grass, and every home has one of those white mailboxes with a red flag that turns up when the mail arrives.
These gated communities tell you something. Parents choose to live behind walls to create a nice way to live and keep their family safe.
But in Parkland all that security didn’t keep them safe. Darkness found a new way in – and everyone is still feeling the murderous pain.
The limits of security and walls offer a profound lesson for us in Australia as we work out how to respond to the terrorism in Christchurch. Prime Minister Scott Morrison wants to lock up our places of worship – particularly mosques. He wants police with guns and security checks. It’s like he wants to build religious gated communities.
This approach is consistent with his other policies – use the navy to stop boats, use cages to stop refugees. Our prime minister has only one register – security.
But if Parkland showed anything, it’s that gated communities don’t stop violence. The violence just moves and shifts. An aggressive security response might make you “feel” safer, but it doesn’t make you safe.
At the same time, security heightens the tension. And it does nothing to deal with the causes of the violence.
So how do we respond to the causes of the violence? In Parkland, the main issue was access to guns. The March for Our Lives students called this out quickly. They gained traction because they bravely and forcefully condemned the National Rifle Association for creating the context for mass shootings – easy access to guns.
It started with the demonisation of others
Our context is different. The issue in Christchurch was about guns, yes, but equally it was about motive. As Australians, one of our citizens “radicalised” themselves to such a point that they massacred other people. How did this happen?
White supremacy. OK, but how do we unpack white supremacy? Who emboldened this? Who made it OK to demonise Muslims – to say they don’t belong?
But it’s more than that. Murdoch news media have been running a crusade against Muslims for years. The Coalition has brutalised Muslims and refugees for votes since September 11 2001. And the Labor Party has given bipartisan support to the offshore detention of predominantly Muslim refugees.
Come together in love to overcome hate
But knowing who prosecutes hate is not enough. Hate can’t drive out hate. As Martin Luther King junior said, only love can do that.
How do we bring love into our work to stop race being used as a divisive power? I wish I had the answer. But I do know that building love is something that can happen everywhere all the time – not just at vigils or special services.
Can we build a movement that would amplify love at work, in our community, in our schools, where we have intentional conversations to talk about what Christchurch meant and why the Muslim community was targeted?
The Muslim community are in pain. We – especially white people like me and some of you – have to do the heavy lifting on this one. We can take the lead on doing something about white supremacy and dividing people by race and religion.
Imagine if we could take the pain of this moment and turn it into a real reckoning for our country. For as long as white people have stood in Australia we have caused harm to others. But too often we shrug off responsibility through phrases like “the most successful multicultural country in the world”. Or we get scared off the conversation by phrases like the “history wars”.
Yes, the shock jocks will berate and the trolls will yell. But let’s have them yell at white people taking on white supremacy instead of Muslim and other leaders of colour.
It’s time to act. The election is one place – we need to vote for leaders who stand with Muslims because “they are us”.
But this is more than just electoral politics. It’s about a movement committed to connection, understanding, listening, respect and love. And that’s love as a verb, love as action.
A year after the mass shooting, Parkland is still a torn community. Many are still deeply active in social movements pushing for gun law reform. And many others are still healing.
In Parkland the lesson is that they were forever changed, not because of the hate that was inflicted, but because of the love they cultivated in response.
It’s hard to tell if Donald Trump’s trumpeting of “substantial progress” in trade talks, leading to a cosy weekend at Mar-a-Lago to sign a deal with Chinese president Xi Jingping, represents reality.
Most observers, though, will be relieved by his decision to again defer his threat to escalate the US-China trade war and hike up tariffs from 10% to 25% on US$200 billion worth of Chinese imports. (The total value of US imports from China in 2018 was US$493 billion.)
Trade wars are generally considered bad for everyone. KPMG has calculated a full escalation of the trade war – with a 25% tariff applying to all goods traded (worth US$604.5 billion in 2018) – would cost Australia A$58 billion over the next decade.
Bilateral world order
Considering the US administration’s hard-line approach, for a truly comprehensive deal to occur China would have to subscribe to a serious restructuring of its industrial system. This would ultimately mean phasing out covert state subsidies, liberalising its financial markets and giving up on meaningful technological competition in security-sensitive sectors.
But out of fear an ongoing trade war will harm its export-driven economic progress, and also as an expedient step for advancing its regional hegemony, China might eventually agree to all this as part of a grand bargain.
Essentially, a grand bargain with an “America First” US administration makes sense on the mutually beneficial assumption it would lay the foundations for a bilateral world order.
As part of the deal the US would dramatically reduce its strategic footprint from the Middle East through to the Korean peninsula. The advantage would be it could focus resources on limiting China’s naval role across Indo-Pacific trading routes.
Retreating to a more sustainable role as the indispensable maritime power across the Pacific and Indian oceans would leave China free rein to exert its weight on land in Eurasia.
The US might see that as advantage. Chinese regional hegemony inland would give Russia more to think about on its south-eastern border, rather than causing problems for US allies in eastern Europe. It would also put extreme pressure on India to finally evolve into a subsidiary power to the US maritime empire, one of the wildest strategic dreams in Washington.
The downside would be that Russia might end up as a subservient commodity supplier to China’s regional empire. Russia’s geo-economic downgrade would strengthen European resolve to run independently of the US, one of the worst nightmares in Washington.
For China, the prize would be achieving the main strategic ambitions of its Belt and Road Initiative, ultimately controlling land trading routes from Beijing to Venice. The strategic cost would be abandoning its maritime ambitions.
Where this leaves Australia
Where would this bilateral world system vision leave Australia?
Certainly worse off than the current situation. With interlocking spheres of influence across the Indo-Pacific rim (US) and the Eurasian landmass (China), at best Australia would become a marginal economic and security appendage of the two hegemons.
Relegated to the role of a price- and rule-taking commodity supplier to China, Australia would remain only nominally a US ally. It would be a rather disposable buffer state at the frontier of two empires, caught between the economic and security crossfire of proxy conflicts.
Weaknesses and opportunities
Compared to this scenario, a protracted US-China trade war may well serve Australia’s national interests much better.
Though tariffs will weaken the global economy, it will hurt the US and China the most. It might even weaken their respective commercial and military grips on the Asia-Pacific region to the point that patterns of more distributed power relations could emerge.
Malaysia, Japan, Pakistan, Thailand and the Philippines lead the nations gaining from US and Chinese companies buying goods elsewhere. Vietnam, Malaysia, Singapore and India are the top beneficiaries from US companies shifting production away from China.
Several Asian countries have also seized the opportunity to play the US and China against each other.
The Philippines has revitalised relations with China to manage the South China Sea dispute more independently from the US. This has not stopped it remaining by far the largest recipient of US military aid in Asia.
South Korea has signed bilateral free-trade agreements with both China and the US, positioning itself as an intermediary that will allow American and Chinese companies to trade in a way that circumvents the tariffs.
This is arguably an unprecedented opportunity for Australia to start carving a more independent foreign policy.
The worst-case scenario for an ongoing US-China trade war is that it turns into real war. But that’s unlikely.
So long as it remains a manageable trade dispute, it is better for Australia, and much of the rest of the world, than trade peace leading to a bilateral world system.