US treats its allies like they are enemies

This is an editorial from China Daily.

The European Union and the United States reportedly failed to make much headway in their trade talks in Prague on Monday.

The EU is upset about Washington's Inflation Reduction Act, which it says will put EU companies at an unfair disadvantage. The 27-nation bloc is calling on the US to treat EU electric vehicles, batteries and sustainable energy equipment sold in the US the same as those from Canada and Mexico.

The Inflation Reduction Act, which was signed by US President Joe Biden into law in August, is purportedly aimed at fighting climate change and making the US a world leader in the electric vehicle market. The law says that electric vehicles have to be assembled in North America to qualify for tax credits. The EU says this discriminates against EU-made cars while US vehicles sold in Europe enjoy the same tax breaks as European ones.

European Commission Vice-President Valdis Dombrovskis said the EU was concerned "about a number of discriminatory elements in this Inflation Reduction Act", and the EU was assessing whether the US' move is "in line with WTO requirements".

US Trade Representative Katherine Tai flew to Prague for talks on Monday aimed at resolving the dispute. But while she emphasized the US' commitment to strengthen its economic and trade relationship with the EU, no breakthrough in the dispute was forthcoming, and the two sides are to continue their talks.

The latest trade dispute between the two sides comes not long after they resolved their long-running spat over aircraft subsidies, which had dragged on for 17 years. To quote media reports when they finally reached an agreement in June last year that only "ended one front of their trade war".

One year later, Forbes reported that "Commercial storm clouds are amassing over the Atlantic". Now there are sparks flying in their trade relations once again as frictions heat up. Electric vehicles are only one of the fronts where a US-European trade war is possible. As early as June, the US was reportedly mulling new tariffs on "a host of European products sold in America, from chocolate to cashmere".

It seems that despite the evidence of the past few years, the US has still not grasped the fact that there is no winner in a trade war. Trade is a form of "exchange" in which the participating parties benefit. A war, even a trade war, is a conflict in which the belligerents suffer.

The US' discriminatory trade policies and weaponizing of trade are particularly malevolent at a time when the world faces an economic slowdown because of the long-tailed COVID-19 pandemic and high inflation. Its making decisions in its own self-interest cannot result in an optimal solution even for itself. Ultimately, its wrong answer to the prisoner's dilemma seriously undermines the well-being and interests of people in all countries, including in the US. It isn't just bullets that make people bleed.