Trade Wars Are Easy to Lose: Beijing Has Escalation Dominance in the U.S.-China Tariff Fight - Adam S. Posen (Foreign Affairs)

 ... “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with,” U.S. President Donald Trump famously tweeted in 2018, “trade wars are good, and easy to win.” This week, when the Trump administration imposed tariffs of more than 100 percent on U.S. imports from China, setting off a new and even more dangerous trade war, U.S. Treasury Secretary Scott Bessent offered a similar justification: “I think it was a big mistake, this Chinese escalation, because they’re playing with a pair of twos. What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them.”...

...The Trump administration is embarking on an economic equivalent of the Vietnam War—a war of choice that will soon result in a quagmire, undermining faith at home and abroad in both the trustworthiness and the competence of the United States—and we all know how that turned out...

 

Trade Wars Are Easy to Lose

Beijing Has Escalation Dominance in the U.S.-China Tariff Fight

Adam S. Posen

Foreign Affairs, April 9, 2025

ADAM S. POSEN is President of the Peterson Institute for International Economics.

 

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with,” U.S. President Donald Trump famously tweeted in 2018, “trade wars are good, and easy to win.” This week, when the Trump administration imposed tariffs of more than 100 percent on U.S. imports from China, setting off a new and even more dangerous trade war, U.S. Treasury Secretary Scott Bessent offered a similar justification: “I think it was a big mistake, this Chinese escalation, because they’re playing with a pair of twos. What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them.”

In short, the Trump administration believes it has what game theorists call escalation dominance over China and any other economy with which it has a bilateral trade deficit. Escalation dominance, in the words of a report by the RAND Corporation, means that “a combatant has the ability to escalate a conflict in ways that will be disadvantageous or costly to the adversary while the adversary cannot do the same in return.” If the administration’s logic is correct, then China, Canada, and any other country that retaliates against U.S. tariffs is indeed playing a losing hand.

But this logic is wrong: it is China that has escalation dominance in this trade war. The United States gets vital goods from China that cannot be replaced any time soon or made at home at anything less than prohibitive cost. Reducing such dependence on China may be a reason for action, but fighting the current war before doing so is a recipe for almost certain defeat, at enormous cost. Or to put it in Bessent’s terms: Washington, not Beijing, is betting all in on a losing hand.

SHOW YOUR HAND

The administration’s claims are off base on two counts. For one thing, both sides get hurt in a trade war, because both lose access to things their economies want and need and that their people and companies are willing to pay for. Like launching an actual war, a trade war is an act of destruction that puts the attacker’s own forces and home front at risk, as well: if the defending side did not believe it could retaliate in a way that would harm the attacker, it would surrender.

Bessent’s poker analogy is misleading because poker is a zero-sum game: I win only if you lose; you win only if I lose. Trade, by contrast, is positive-sum: in most situations, the better you do, the better I do, and vice versa. In poker, you get nothing back for what you put in the pot unless you win; in trade, you get it back immediately, in the form of the goods and services you buy.

The Trump administration believes that the more you import, the less you have at stake—that because the United States has a trade deficit with China, importing more Chinese goods and services than China does U.S. goods and services, it is less vulnerable. This is factually wrong, not a matter of opinion. Blocking trade reduces a nation’s real income and purchasing power; countries export in order to earn the money to buy things they do not have or are too expensive to make at home.

What’s more, even if you focus solely on the bilateral trade balance, as the Trump administration does, it bodes poorly for the United States in a trade war with China. In 2024, U.S. exports of goods and services to China were $199.2 billion, and imports from China were $462.5 billion, resulting in a trade deficit of $263.3 billion. To the degree that the bilateral trade balance predicts which side will “win” in a trade war, the advantage lies with the surplus economy, not the deficit one. China, the surplus country, is giving up sales, which is solely money; the United States, the deficit country, is giving up goods and services it does not produce competitively or at all at home. Money is fungible: if you lose income, you can cut back spending, find sales elsewhere, spread the burden across the country, or draw down savings (say, by doing fiscal stimulus). China, like most countries with overall trade surpluses, saves more than it invests—meaning that it, in a sense, has too much savings. The adjustment would be relatively easy. There would be no critical shortages, and it could replace much of what it normally sold to the United States with sales domestically or to others.

Countries with overall trade deficits, like the United States, spend more than they save. In trade wars, they give up or reduce the supply of things they need (since the tariffs make them cost more), and these are not nearly as fungible or easily substituted for as money. Consequently, the impact is felt in specific industries, locations, or households that face shortages, sometimes of necessary items, some of whichare irreplaceable in the short term. Deficit countries also import capital—which makes the United States more vulnerable to shifts in sentiment about the reliability of its government and about its attractiveness as a place to do business. When the Trump administration makes capricious decisions to impose an enormous tax increase and great uncertainty on manufacturers’ supply chains, the result will be reduced investment into the United States, raising interest rates on its debt.

OF DEFICITS AND DOMINANCE

In short, the U.S. economy will suffer enormously in a large-scale trade war with China, which the current levels of Trump-imposed tariffs, at more than 100 percent, surely constitute if left in place. In fact, the U.S. economy will suffer more than the Chinese economy will, and the suffering will only increase if the United States escalates. The Trump administration may think it’s acting tough, but it’s in fact putting the U.S. economy at the mercy of Chinese escalation.

The United States will face shortages of critical inputs ranging from basic ingredients of most pharmaceuticals to inexpensive semiconductors used in cars and home appliances to critical minerals for industrial processes including weapons production. The supply shock from drastically reducing or zeroing out imports from China, as Trump purports to want to achieve, would mean stagflation, the macroeconomic nightmare seen in the 1970s and during the COVID pandemic, when the economy shrank and inflation rose simultaneously. In such a situation, which may be closer at hand than many think, the Federal Reserve and fiscal policymakers are left with only terrible options and little chance of staving off unemployment except by further raising inflation.

When it comes to real war, if you have reason to be afraid of being invaded, it would be suicidal to provoke your adversary before you’ve armed yourself. That is essentially what Trump’s economic attack risks: given that the U.S. economy is entirely dependent on Chinese sources for vital goods (pharmaceutical stocks, cheap electronic chips, critical minerals), it is wildly reckless not to ensure alternate suppliers or adequate domestic production before cutting off trade. By doing it the other way around, the administration is inviting exactly the kind of damage it says it wants to prevent.

This could all be intended as just a negotiating tactic, Trump’s and Bessent’s repeated statements and actions notwithstanding. But even on those terms, the strategy will do more harm than good. As I warned in Foreign Affairs last October, the fundamental problem with Trump’s economic approach is that it would need to carry out enough self-harming threats to be credible, which means that markets and households would expect ongoing uncertainty. Americans and foreigners alike would invest less rather than more in the U.S. economy, and they would no longer trust the U.S. government to live up to any deal, making a negotiated settlement or agreement to deescalate difficult to achieve. As a result, U.S. productive capacity would decline rather than improve, which would only increase the leverage that China and others have over the United States.

The Trump administration is embarking on an economic equivalent of the Vietnam War—a war of choice that will soon result in a quagmire, undermining faith at home and abroad in both the trustworthiness and the competence of the United States—and we all know how that turned out.

 

The Age of Tariffs - Eswar Prasad (Foreign Affairs)

 The Age of Tariffs

Trump Is Launching a Turbulent New Era for the Global Economy

Eswar Prasad

Foreign Affairs, April 3, 2025

U.S. President Donald Trump announcing new tariffs in Washington, D.C., April 2025  Carlos Barria / Reuters

ESWAR PRASAD is Professor in the Dyson School at Cornell University and a Senior Fellow at the Brookings Institution.

 

The era of increasingly free and extensive international trade, built on a rules-based system that the United States helped create, has come to an abrupt end. On April 2, in a theatrical White House event, U.S. President Donald Trump rolled out a series of massive tariffs that will affect almost every foreign country. In one sense, his announcement wasn’t a surprise: from the moment he took office, businesses and financial analysts knew that Trump would raise trade barriers. But the scale and scope of the tariffs confirmed their worst fears. In one fell swoop, Washington has severely restricted international commerce.

In justifying this new era of tariffs, Trump has argued that the United States is the victim of unfair trading practices. As with many of Trump’s ideas, there is more than a kernel of truth in his claims. China, for instance, has taken advantage of World Trade Organization rules to gain access to other countries’ markets for its exports while limiting access to its own markets. Beijing has also used extensive subsidies and other measures to boost the global competitiveness of Chinese companies, including by forcing foreign firms to hand over technology.

But rather than fixing the rules that some U.S. trading partners took advantage of, Trump has chosen to blow up the entire system. He has taken the hatchet to trade with practically every major U.S. trading partner, sparing neither allies nor rivals. China now faces high tariffs, yes, but so do Japan, South Korea, and Taiwan. Long-standing, mutually beneficial economic relationships and geopolitical alliances have counted for little.

Many people hope that Trump’s tariffs will prove ephemeral—that, confronted with tanking stocks and rising prices, Washington will roll the restrictions back. It is possible that the White House will lower some of its rates, especially as countries lobby for exemptions. But the reality is that the age of free trade is unlikely to come back. Instead, any haggling between Trump and other states will shape an emerging economic system defined by protectionism, tensions, and transactions. The result will not be more jobs, as Trump has pledged. It will be turbulence for all, and for years to come.

BAD MATH

According to Trump, the United States needs massive tariffs to rectify its trade imbalances. There is little logic to this notion. It is true the United States runs trade deficits with most countries, but there is nothing wrong with that fact. Instead, it just means other countries are efficient at producing goods U.S. consumers want, so Americans buy more from them than the other way around. Yet Trump believes that any country that runs a bilateral trade surplus with the United States is, by definition, cheating, and that reciprocal tariffs are needed to even things out.

To decide what tariffs to levy, Trump ostensibly calculated all the ways in which countries cheat—including through tariffs, nontariff barriers, and currency manipulation—to estimate the total “tariff” each country imposed on the United States. In practice, this meant dividing the U.S. trade deficit with a country by the amount of goods it exported to the United States. (These calculations conveniently exclude services trade—such as tourism, education, and business services—in which the United States runs a surplus with most of its trading partners). Trump then generously gave each country a discount of 50 percent, imposing reciprocal tariffs on goods imports equivalent to half that measure.

To see how this works, in practice, look at China. In 2024, the United States had a $295.4 billion trade deficit with this country, and it imported $438.9 billion worth of Chinese goods. Trump thus calculated that China has an effective tariff rate of 67 percent on imports from the United States—or $295.4 billion divided by $438.9 billion. Trump thus set the reciprocal tariffs on U.S. imports from China at 34 percent (half of 67 percent). This figure seems to be on top of the 20 percent tariffs already in place, amounting to a total tariff rate of 54 percent on imports from China, but who’s counting?

The United States and South Korea have a free trade agreement, but South Korea does run a trade surplus with the United States. Therefore, by Trump’s logic, they must be cheating. According to the White House’s calculations, South Korea applies roughly a 50 percent tariff on U.S. exports. As a result, Trump slapped a 26 percent tariff on imports from South Korea.

Trump has blown up the entire trading system.

What about countries that the United States runs a trade surplus against? The United States exports more goods to Australia and the United Kingdom than it imports from these countries. Surely, this shows the United States to be the cheater in these two relationships. But in the White House’s view, only other countries cheat. In fact, these two countries were still hit with ten percent tariffs. One might ask, why apply any tariffs in such cases? The answer, it seems, is, Why not?

Tariffs by themselves will not erase the overall U.S. trade deficit—unless the country completely walls itself off from international trade. That is because the trade deficit is, in effect, the gap between domestic savings and investment. The United States remains a good place to invest, but its private saving rate is low, and the government runs huge budget deficits. If Trump really wanted to bring the trade account into balance, he would be better off pursuing measures to promote national savings. And even if the United States were to have no overall trade deficit, it would still probably run trade deficits with some countries and surpluses with others. Bilateral trade imbalances are just the nature of international commerce.

Trump also views tariffs as a tool for reviving U.S. manufacturing. But that benefit is speculative, would occur far in the future, and is outweighed by the obvious costs. Trump’s tariffs encompass such a broad swath of products and trading partners that they will inevitably have adverse effects on the U.S. economy—with the costs of disruption borne by American consumers and businesses in practically every sector.

Industries with complex supply chains threaded through multiple countries, such as auto manufacturing, will face the most severe consequences. But any business that has benefited from supply chains that are efficient and cost-effective (which is to say most of them) will now have to retrench in order to reduce its exposure to trade policy and geopolitical risks. This will inevitably drive up prices for consumers, because businesses prioritize resilience rather than efficiency. Even the agricultural products, machinery and equipment, and high-technology goods the United States exports will be adversely affected, thanks to retaliatory tariffs imposed by Washington’s trading partners.

POINT OF NO RETURN

The rest of the world is still reacting to Trump’s announcement. But countries will likely respond with a combination of retaliation, appeasement, and diversification. Each of these approaches has challenges.

Consider, first, retaliating against the United States. Multiple countries have already promised to apply tariffs on American-made goods in response to Trump’s provocations. Their citizens, too, are angry. Canadian consumers are boycotting U.S. products, and tourists from the rest of the world are likely to shun the United States. But retaliation carries its own costs because it increases uncertainty about global trade, which hurts business investment.

Appeasement comes with fewer risks, and it certainly is in the interest of each country hit with tariffs to negotiate with Trump. Bilateral trade cannot be balanced overnight, but countries could promise to buy more goods from the United States and reduce barriers to those imports. Trump justified earlier rounds of tariffs on broader national security grounds, using them as a tool to get countries to limit illegal immigration and inflows of illicit drugs; U.S. trading partners could offer to take bold measures to stem those scourges from reaching American shores. Trump loves a deal, after all, so each country will have to find ways to allow him to claim victory (which he will do in any case). Yet even if other countries promise to buy more U.S. goods, it is unlikely that their trade surpluses with the United States will shrink rapidly enough to please the president, leaving them open to additional punitive measures. And if the American economy starts to sputter on account of the tariffs, Trump will inevitably heap even more blame on the rest of the world.

The United States is leading a resurgence of protectionism.

Other countries, particularly those that already have strong trade relationships, could perhaps bypass the United States altogether. For instance, China, Japan, and South Korea might try to collectively shield themselves from the effects of U.S. tariffs by intensifying their mutual trade linkages. But each of these countries relies heavily on exports to power their economies and is beset by weak domestic demand. China’s enormous excess capacity and weak import demand, in particular, threaten the other two economies. As a result, these countries are likely to be wary of opening their markets fully to each other’s exports. The Europeans, for their part, have signaled that they are willing to work with other states on trade. But they do not want to become a dumping ground for other countries’ exports.

Nevertheless, faced with restricted access to U.S. markets and weaker U.S. consumer demand, the rest of the world will look to export market diversification, trade arrangements that exclude the United States, and other approaches to buffer themselves against a looming global trade war. But the reality is they can do only so much. In fact, even if the United States retreats from the broad-based, substantial tariffs that Trump has announced, the damage has been done to business and investor confidence. Washington has cast a pall on business investment and consumption demand, which could tip the softening U.S. economy into a recession—and drag the rest of the world economy down with it.

The United States has ceded its role as a bastion of free trade and is instead leading a resurgence of protectionism that will hurt consumers and businesses worldwide. These tariffs, if they remain in place, will define Trump’s legacy not as a savvy businessman but as a destructive and petulant hindrance to economic progress.

 

China Has Already Remade the International System - Michael B.G. Froman (Foreign Affairs) (via Mauricio David)

 Dica de leitura, proposta por Mauricio David

(repostando um trabalho que elaborei recentemente para uma aula: 4869. “Relações Estados Unidos-China: uma visão não imperial”, Brasília, 11 março 2025, 7 p. Notas para aula, Disponível na plataforma Academia.edu (link: https://www.academia.edu/128207302/4869_Relacoes_Estados_Unidos_China_consideracoes_historico_geopoliticas_2025_); blog Diplomatizzando (14/03/2025, link: https://diplomatizzando.blogspot.com/2025/03/relacoes-estados-unidos-china.html).

 "China Has Already Remade the International System- How the World Adopted Beijing's Economic Playbook" (by Michael B.G. Froman-Presidente do Council on Foreign Relations)

 

Chamo a atenção dos nossos interlocutores que se interessam pela economia política internacional - em especial os nossos queridos e admirados embaixador Rubens Ricupero (ex-diretor geral da Unctad por dois períodos) – e o embaixador Paulo Roberto de Almeida (o mais prolífico dos experts do Itamaraty em política internacional) – para este artigo do Presidente do Council on Foreign Affairs sobre as reconfigurações do Sistema Internacional. Em um ensaio com dados e análises relevantes, o Presidente do Council on Foreign Affairs introduz considerações de extrema relevância para que possamos entender o conflito entre a China e os Estados Unidos que está em curso. Ao contrário das análises tolas e superficiais que vicejam na nossa grande imprensa escrita e televisada ( confesso que não aguento mais ler e ouvir as análises sobre o que chamam de “guerra tarifária” supostamente iniciada por Trump – todos eles bradam veementemente sobre o iminente fracasso das medidas protecionistas de Trump, o “demônio solto na arena internacional...”, misturando previsões catastrofistas com desejos ocultos que só Freud poderia explicar...

Por tudo isto, o artigo do Michael Froman merece uma leitura e reflexão atenta, o que muito recomendo...

MD

.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-. 

... In the 1990s and the early years of this century, there was every indication that China was on an inexorable march toward economic liberalization. Building on a process that began in the late 1970s under the Chinese leader Deng Xiaoping, China opened up to foreign investment. President Jiang Zemin and Premier Zhu Rongji then kept China on a remarkable, if painful, path of economic reforms. They restructured state-owned enterprises and fired tens of millions of their workers, created more space for private sector activity, allowed businesses to adjust prices in response to market conditions, and ushered in China’s entry to the World Trade Organization...

... From 2009 to 2017, I served first as deputy national security adviser for international economic affairs and then as U.S. trade representative. During that time, I consistently warned my Chinese counterparts that the benign international environment that had enabled China’s success would disappear unless Beijing modified its predatory economic policies. Instead, China largely maintained its course of action. If anything, it doubled down on its approach. When Xi came to power in 2012, he effectively ended the era of “reform and opening” that had already stalled under Hu, set China on a course to dominate critical technologies, increased production to the point of overcapacity, and committed to export-led growth. Today, as the economist Brad Setser has noted, China’s export volume is growing at a rate three times as fast as global trade. In the automotive sector, it is on a trajectory to have the capacity to produce two-thirds of the world’s automotive demand. And its dominance extends beyond cars; China also produces more than half the global supply of steel, aluminum, and ships...

... China’s electric vehicle manufacturers innovate faster and produce high-quality vehicles far more cheaply than U.S. firms; some Chinese vehicles are as much as 50 percent less expensive than their American equivalents, and China accounts for nearly 60 percent of global electric vehicle sales worldwide. China’s battery producers, solar panel manufacturers, and clean energy equipment companies have similar advantages...

...  it is important to recognize a fundamental truth: the United States is now operating largely in accordance with Beijing’s standards, with a new economic model characterized by protectionism, constraints on foreign investment, subsidies, and industrial policy—essentially nationalist state capitalism...

... In the war over who gets to define the rules of the road, the battle is over, at least for now. And China won...

.-.-.-.-.-.-.-.-.-.-.-.-

 

China Has Already Remade the International System

How the World Adopted Beijing’s Economic Playbook

Michael B. G. Froman

Foreign Affairs, March 25, 2025

 

MICHAEL B. G. FROMAN is President of the Council on Foreign Relations. He served as U.S. Trade Representative from 2013 to 2017 and Deputy National Security Adviser for International Economic Affairs from 2009 to 2013.

 

In early February, as he flew in Air Force One above the body of water he’d recently renamed the Gulf of America, President Donald Trump declared that he would levy tariffs on all imported steel and aluminum. Two weeks later, he issued a presidential memorandum laying out new guidance for screening investment from Chinese firms in the United States and U.S. firms into China. And throughout the early weeks of his administration, Trump has emphasized the importance of bringing manufacturing back home, telling firms that, to avoid tariffs, they should make their products in the United States.

Tariffs and protectionism, restrictions on investment, measures designed to drive domestic production: Washington’s economic policy suddenly looks an awful lot like Beijing’s policies over the last decade or so—like Chinese policy with American characteristics.

The U.S. strategy of engagement with China was based on the premise that, if the United States incorporated China into the global rules-based system, China would become more like the United States. For decades, Washington lectured Beijing about avoiding protectionism, eliminating barriers to foreign investment, and disciplining the use of subsidies and industrial policy—with only modest success. Still, the expectation was that integration would facilitate convergence.

There has indeed been a fair degree of convergence—just not in the way American policymakers predicted. Instead of China coming to resemble the United States, the United States is behaving more like China. Washington may have forged the open, liberal rules-based order, but China has defined its next phase: protectionism, subsidization, restrictions on foreign investment, and industrial policy. To argue that the United States must reassert its leadership to preserve the rules-based system it established is to miss the point. China’s nationalist state capitalism now dominates the international economic order. Washington is already living in Beijing’s world.

OPENING UP?

In the 1990s and the early years of this century, there was every indication that China was on an inexorable march toward economic liberalization. Building on a process that began in the late 1970s under the Chinese leader Deng Xiaoping, China opened up to foreign investment. President Jiang Zemin and Premier Zhu Rongji then kept China on a remarkable, if painful, path of economic reforms. They restructured state-owned enterprises and fired tens of millions of their workers, created more space for private sector activity, allowed businesses to adjust prices in response to market conditions, and ushered in China’s entry to the World Trade Organization.

Jiang and Zhu declared repeatedly that China would inevitably continue to open up. Many in the West went so far as to believe that this economic liberalization would lead to China’s political liberalization, that a capitalist society would become a more democratic one over time. That assumption proved false. China’s leaders never seriously contemplated political reform, but China’s economic advancement was impressive nonetheless. The country’s GDP grew from $347.77 billion in 1989 to $1.66 trillion by 2003 to $17.79 trillion in 2023, according to the World Bank. Hopes were high that integrating China into the rules-based trading system could lead to a more peaceful and more prosperous world. Globalization did lift more than a billion people out of poverty, an astounding feat. But the benefits of that progress were not evenly shared, and some workers and communities in industrialized countries ended up paying the price for the rise of the rest.

Then President Hu Jintao entered the picture, followed by President Xi Jinping. China’s economic trajectory turned out to be less linear and less inevitable than initially expected. Under Hu, China leaned more heavily into state intervention in the economy by aiming to create “national champions” in strategic sectors through massive subsidies. In other words, the government expanded its role rather than pursuing further market liberalization. At the same time, a flood of cheap Chinese imports accelerated the trend toward deindustrialization in the United States—and did so at a rate that few, if any, fully anticipated. China became the world’s manufacturing floor, overtaking the manufacturing giants of Japan and Germany in the first decade of this century. In 2004, China made up nine percent of the world’s manufacturing value added, leapfrogging to a massive 29 percent in 2023, according to the World Bank.

HOW CHINA WON

Washington pressed Beijing to deliver on its reform agenda throughout this period, urging China to open its markets and refrain from imposing high tariffs and other barriers on products being exported from the United States. It advocated for U.S. firms to be allowed to invest in China without being excluded from certain sectors or required to enter joint ventures with—and transfer U.S. technology to—local firms. And Washington demanded that the Chinese government stop subsidizing the production and export of goods, which distorted the global marketplace. But this litany of complaints fell largely on deaf ears.

In 2009, the Obama administration led an effort to terminate the Doha Round—a multilateral trade negotiation under the WTO launched in 2001. It did so in large part because the resulting agreement would have enshrined China permanently as a “developing country” under WTO rules. This would have allowed China to enjoy “special and differential treatment,” which meant that China would have been able to avoid assuming the same level of obligations and disciplines—on market access, intellectual property rights protection, and other issues—as the United States and other industrial countries. Washington faced near-universal criticism at the time for encouraging a rethink of the premises of the negotiation. But it was clear even then that, left unaddressed, China’s economic practices would significantly disrupt the global trading system.

The United States is already living in China’s world.

Similar concerns motivated the Obama administration to pursue the Trans-Pacific Partnership (TPP), a high-standard trade agreement negotiated among 12 countries around the Pacific Rim. This initiative was designed to give countries in the Asia-Pacific region an attractive alternative to the model China offered. It brought together a group of diverse countries that were willing to set strong labor and environmental protections, limit the use of subsidies, impose discipline on state-owned enterprises, and address various China-specific concerns, such as intellectual property rights protection. By the time TPP negotiations were completed in 2015, however, trade agreements—even those designed to counterbalance China—had become politically toxic at home, and the United States ended up pulling out of the agreement.

From 2009 to 2017, I served first as deputy national security adviser for international economic affairs and then as U.S. trade representative. During that time, I consistently warned my Chinese counterparts that the benign international environment that had enabled China’s success would disappear unless Beijing modified its predatory economic policies. Instead, China largely maintained its course of action. If anything, it doubled down on its approach. When Xi came to power in 2012, he effectively ended the era of “reform and opening” that had already stalled under Hu, set China on a course to dominate critical technologies, increased production to the point of overcapacity, and committed to export-led growth. Today, as the economist Brad Setser has noted, China’s export volume is growing at a rate three times as fast as global trade. In the automotive sector, it is on a trajectory to have the capacity to produce two-thirds of the world’s automotive demand. And its dominance extends beyond cars; China also produces more than half the global supply of steel, aluminum, and ships.

Eventually, even American businesses, which had always been the ballast in the bilateral relationship, soured on China as their intellectual property was stolen or forcibly licensed, their market access to China was severely restricted or delayed, and China’s subsidies and preferences for domestic firms ate into their opportunity. Without any semblance of reciprocity, the relationship deteriorated. Politicians of both parties and the American public hardened their stance on China. European and major emerging economies grew hostile to Beijing’s policies, as well. In short, the benign international environment disappeared.

Working on an electric vehicle production line in Zhejiang province, China, March 2025Florence Lo / Reuters

 

Washington, having failed to convince Beijing to change its predatory economic policies or to move forward with an alternative trading bloc to counterbalance China, was left with one option: the United States had to become more like China. After decades of berating China for imposing high tariffs and other restrictions on U.S. exports, the United States is now putting up the same barriers. As calculated by the economist Chad Bown, Trump imposed tariffs that increased the average rate on imports from China from three percent to 19 percent in his first administration, covering two-thirds of all imports from China. President Joe Biden maintained those tariffs and added tariffs on other Chinese products, including personal protective equipment, electric vehicles, batteries, and steel, slightly increasing the average tariff on imports from China. Less than two months into his second administration, Trump has imposed an additional 20 percent tariff on all U.S. imports from China—a bigger move than the tariffs of his first administration and the Biden administration combined.

Similarly, the United States changed its approach from opposing barriers to most bilateral investment flows to severely restricting China’s investment in the United States and U.S. investment in certain sensitive sectors in China. Annual Chinese investment in the United States plummeted from $46 billion in 2016 to less than $5 billion in 2022, according to the Rhodium Group. And, having urged Beijing to abandon subsidy and industrial policies, Washington itself went all-in on industrial policy during the Biden administration, laying out at least $1.6 trillion on the 2021 Infrastructure Investment and Jobs Act, the 2022 CHIPS and Science Act, and the 2022 Inflation Reduction Act.

IF YOU CAN’T BEAT THEM, JOIN THEM

To take the Chinese approach one step further could mean adopting a key tool in Beijing’s toolbox: requiring Chinese firms that invest abroad to establish joint ventures with domestic firms and engage in technology transfers. Such a strategy could enhance not just American industrial competitiveness but also that of other countries negatively affected by China’s overcapacity, including many in Europe.

Take the clean energy sector as an obvious example. China’s electric vehicle manufacturers innovate faster and produce high-quality vehicles far more cheaply than U.S. firms; some Chinese vehicles are as much as 50 percent less expensive than their American equivalents, and China accounts for nearly 60 percent of global electric vehicle sales worldwide. China’s battery producers, solar panel manufacturers, and clean energy equipment companies have similar advantages.

In the United States, China’s market share in electric vehicles is nearly nonexistent. Current tariffs and other restrictions are likely to prevent any future influx of imports. At the same time, European auto manufacturers, particularly those in Germany, are getting squeezed by domestic preference policies and the competitiveness of domestic firms in the Chinese market, which they have depended on for growth. And lately, China has been making inroads in the European market, too. The European market share of Chinese electric vehicles grew from virtually zero percent in January 2019 to over 11 percent in June 2024.

Following the United States’ lead, Europe introduced tariffs on Chinese-made electric vehicles late last year. This slowed the growth in China’s market share. But just holding off a rise in imports may not solve the European auto industry’s problems. To maintain jobs and manufacturing capacity, Europe appears to be open to Chinese investment in electric vehicle production in Europe. (By contrast, it is unclear whether Trump would welcome such investment or would continue to ban Chinese electric vehicles in the U.S. market because of their potential to track citizens’ movements or shut down traffic.) If Europe is to avoid becoming merely a destination for final assembly of Chinese electric vehicles, it might have to borrow a tactic from Beijing and require Chinese companies to enter into joint ventures with European firms and transfer technology and know-how to them.

HOW TO OUT-CHINA CHINA

It is not yet clear whether the United States can outmaneuver China with its own playbook. Beijing seems to have near-unlimited capacity to mobilize capital and manipulate trade and investment policy in service of its long-term objectives. Washington’s Inflation Reduction Act and the CHIPS and Science Act, meanwhile, were more likely historic anomalies than first steps in a broader trend toward greater industrial policy, given the uneasiness among Republican lawmakers over their passage. Indeed, even as he seeks to boost the U.S. semiconductor industry, Trump has called for the repeal of the CHIPS and Science Act, which provides subsidies for semiconductor manufacturing. The subsidies provided by the Inflation Reduction Act are likely to face political challenges, too.

There is an active debate over whether the Biden administration got sufficient bang for its industrial policy buck beyond a few key sectors. U.S. investment in manufacturing has surged, and arguably industrial capacity has expanded. But as the economist Jason Furman pointed out in Foreign Affairs earlier this year, “The proportion of people working in manufacturing has been declining for decades and has not ticked back up, and overall domestic industrial production remains stagnant—in part because the fiscal expansion Biden oversaw led to higher costs, a stronger dollar, and higher interest rates, all of which have created headwinds for the manufacturing sectors that received no special subsidies from the legislation he championed.” Wherever one comes down in this debate, one thing is clear: even in the sectors that the Biden administration subsidized, such as semiconductors and green energy, the path to regaining global leadership is long and uncertain.

The United States may play the protectionist game as well as others, but soon, inflation, higher costs of living, and job losses in industries or sectors affected by other countries’ retaliation will begin to bite. Trump appears to believe that a wall of tariffs—as well as the uncertainty about whether tariffs are on or off at any particular moment in time—is a powerful incentive for companies to locate their production in the United States, where they can be sure their goods will not be subject to tariffs. But as a general matter, companies that consider making the necessary capital investments to spur industrial production in the United States are looking for predictable policy environments, not tariffs that are imposed in the morning and withdrawn in the afternoon. Most may decide to sit on the sidelines, keeping their powder dry, until it becomes clearer what tariffs are going into effect, against whom, and for how long.

After berating Beijing for its restrictions, Washington is putting up the same barriers.

The historical record of tariffs driving expanded production and manufacturing jobs in the United States is far from definitive. Take, for example, the tariffs imposed by Trump in 2018 on Chinese imports. As a 2024 paper by Federal Reserve researchers Aaron Flaaen and Justin Pierce found, “Tariff increases enacted since early 2018 are associated with relative reductions in U.S. manufacturing employment and relative increases in producer prices. In terms of manufacturing employment, rising input costs and retaliatory tariffs account for the negative relationship, and the contribution from these channels more than offsets a small positive effect from import protection.” Some research estimates 75,000 lost downstream manufacturing jobs as a direct result of the tariffs, not to mention additional losses from retaliatory tariffs. The economic experts Benn Steil and Elisabeth Harding have also found that productivity in the U.S. steel industry tanked while productivity in other sectors rose since Trump imposed 25 percent tariffs on steel imports in March 2018. Output per hour in the U.S. steel industry has tumbled by 32 percent since 2017.

Perhaps Trump’s approach to moving production back to the United States will bear fruit, but for that to happen, the U.S. government would have to permit foreign firms to actually make such investments. Both Biden and Trump opposed the Japanese company Nippon Steel’s acquisition of U.S. Steel, and U.S. policymakers are still debating whether Saudi Arabia’s Public Investment Fund can acquire a controlling stake in the PGA Tour, which organizes U.S. golf tournaments—hardly a critical industry.

The United States and others are imitating China in large part because China succeeded in a way that was unexpected. Its success in electric vehicles and clean technology did not come from liberalizing economic policies but from state interventions in the market in the name of nationalist objectives. Whether or not the United States can compete with China on China's playing field, it is important to recognize a fundamental truth: the United States is now operating largely in accordance with Beijing’s standards, with a new economic model characterized by protectionism, constraints on foreign investment, subsidies, and industrial policy—essentially nationalist state capitalism. In the war over who gets to define the rules of the road, the battle is over, at least for now. And China won.

 

The Fragile Axis of Upheaval (China, Iran, North Korea, and Russia) - Christopher S. Chivvis (Foreign Affairs)

The Fragile Axis of Upheaval

Christopher S. Chivvis

Foreign Affairs, March 18, 2025

 

CHRISTOPHER S. CHIVVIS is Director of the American Statecraft Program and a Senior Fellow at the Carnegie Endowment for International Peace.

 

Even regional wars have geopolitical consequences, and when it comes to Russia’s war on Ukraine, the most important of these has been the formation of a loose entente among China, Iran, North Korea, and Russia. Some U.S. national security experts have taken to calling this group “the axis of upheaval” or “the axis of autocracy,” warning that the United States must center this entente in its foreign policy and focus on containing or defeating it. It is not only Washington policymakers who worry about a new, well-coordinated anti-American bloc: in a November 2024 U.S. public opinion poll by the Ronald Reagan Institute, 86 percent of respondents agreed that they were either “extremely” or “somewhat” concerned by the increased cooperation between these U.S. adversaries.

There is no question that these countries threaten U.S. interests, or that their cooperation has strengthened lately. But the axis framing overstates the depth and permanence of their alignment. The coalition has been strengthened by the Ukraine war, but its members’ interests are less well fitted than they appear on the surface. Washington should not lump these countries together. Historically, when countries roll separate threats into a monolithic one, it is a strategic mistake. U.S. leaders need to make a more nuanced and accurate analysis of the threats that they pose, or else the fear of an axis of autocracies could become a self-fulfilling prophecy. When the war ends, the United States and its allies should seize opportunities to loosen the coalition’s war-forged bonds.

INTERIM ORDER

Cooperation among these four countries is not entirely new. North Korea has been dependent on China for almost 75 years. Moscow’s relationships with both Beijing and Tehran were often rocky during the Cold War, but the Soviet Union’s 1991 collapse opened the door to rapprochements. During Donald Trump’s first presidency, signs that China and Russia were deepening their partnership began emerging. Russia and Iran, meanwhile, found themselves on the same side of the Syrian civil war after Moscow intervened in 2015 to support Bashar al-Assad’s regime.

The war in Ukraine, however, has poured high-octane accelerant on these embers of cooperation, and the resulting collaborations have damaged Western interests. There is no question that Russia’s recent cooperation with China, Iran, and North Korea has helped the Kremlin resist the West’s military and economic pressures. Iran’s provision of drones and medium-range ballistic missiles in return for Russian intelligence and fighter aircraft allowed Russia to hammer Ukraine’s military and civilian infrastructure without depleting its stocks of other weapons and weakening its defenses against NATO. By contributing 11,000 troops as well as munitions, artillery, and missiles to Russia’s war effort, North Korea has helped Russia gradually push back the Ukrainian occupation of Kursk; Russia’s compensations of oil, fighter aircraft and potentially other weapons blunt the effect of international sanctions on North Korea and may embolden Pyongyang to further provoke Seoul. And Beijing’s decision to look the other way as Chinese firms supply Moscow with dual-use goods (in exchange for certain defense technologies and less expensive energy) has helped Russia produce advanced weaponry despite Western sanctions.

In June 2024, Russia and North Korea signed a mutual defense treaty. Iran and Russia have promised to strengthen their economic cooperation and, in January, signed their own defense agreement. China, Iran, and North Korea—like many other countries around the world—have also refused to join U.S.-led sanctions on Russia. Meanwhile, Russia has blocked UN sanctions monitors from continuing their work in North Korea.

These four countries will no doubt continue to parrot one another’s criticisms of the United States well after the war in Ukraine ends. For the most part, however, the forms of cooperation that have most worried Washington have directly involved that war, and its end will attenuate the coalition’s most important new bonds. It is not at all uncommon for wartime coalitions to fall apart once a war ends, and after the war, the Kremlin is likely to renege on some of its wartime promises. Russia will have less need to pay off Iran, for example. Likewise, as the pressure to refill its depleted supply of troops dissipates, the Kremlin will become less keen to get entangled in North Korea’s conflicts in East Asia.

Beijing’s wartime support for Moscow was already restrained and conditional: going too far to back Russia’s war would have damaged China’s relations with Europe and exposed it to secondary sanctions. China’s support has also been driven by fear that a Russian defeat could yield a Western-oriented Kremlin or chaos on the Chinese-Russian border. Once the war ends, however, that fear will recede, and with it, China’s enthusiasm for materially supporting Russia. If Russian energy begins to flow back toward Europe, that would also loosen the economic bond the war generated between these two powers.

REVERSE TIDES

When the wartime closeness of these countries is projected linearly into the future, their divergent national interests become obscured. China, for example, has long sought closer relations with the EU; deepening its partnership with Russia impedes this strategic objective. China and Ukraine once had a productive bilateral relationship, and both may wish to return to it once the war is over. Russia, meanwhile, is suspicious of China’s growing economic influence in Central Asia, which the Kremlin considers its own privileged sphere. These tensions are likely to resurface once the war is over. Notably, China almost certainly would prefer to be at the center of a reformed global order, not at the center of a coalition whose other three members are economic and political pariahs.

Some analysts claim that a common autocratic ideology will bind China, Iran, North Korea, and Russia together in the long term. But autocracy is not an ideology. During the Cold War, the Soviet Union and its Marxist-Leninist allies were bound by a real ideology that not only called for revolution across the liberal capitalist world but also offered a utopian vision for a new global order. No such common cause binds Iran’s religious theocracy, Russia’s neoimperialist nationalism, the hereditary despotism of North Korea’s regime, and the blend of nationalism, Confucianism, and Marxism-Leninism that animates the Chinese Communist Party. Instead, this coalition is bound by a fear of the United States and an objection to an international order that they believe reflects U.S. preferences. Although many other states share this critique of the international order, the varied ideologies of this coalition offer no positive vision that could replace the existing system.

Furthermore, although Washington has conceived of its autocratic adversaries as a cohesive unit, almost all their cooperation has been through bilateral channels. If the war in Ukraine continues, some military institutionalization might grow out of it, but right now, the institutional foundations of the autocracies’ relationships are very weak. What has been cast as an axis is actually six overlapping bilateral relationships. Since 2019, for example, China, Iran, and Russia have occasionally conducted joint military exercises in a trilateral format, but these exercises had little strategic relevance. These states have not congealed into anything remotely resembling the Warsaw Pact. In the absence of new institutions, coordinated action will be much more difficult.

DIVIDE AND NEUTRALIZE

Even though the bonds that unite China, Iran, North Korea, and Russia are currently weak, they could still strengthen with time. Western countries need to adopt a statecraft that reduces this risk. Their first step should be to focus on ending the war in Ukraine. Trump has initiated an ambitious and controversial opening to Moscow that may result in a cease-fire and a negotiated settlement. Trump has indulged in overly optimistic rhetoric about Moscow’s sincerity, and questions about his true aims linger. Nevertheless, a cease-fire would greatly reduce the pressures that bind the so-called axis of upheaval together. If U.S. leaders negotiate with Moscow, that would also signal to Beijing that they are willing to consider wider-ranging negotiations with it, and these could further disrupt the coalition.

Indeed, the second way to loosen the coalition’s bonds is for the United States to stabilize or improve its own relations with China, by far the most powerful member of the group. Steering the U.S.-Chinese relationship toward more stability will be hard, but—perhaps as part of a larger deal on trade and investment—Trump could reassure Beijing that the United States does not want outright economic decoupling or to change the status quo on Taiwan. China needs the other three coalition powers far less than they need China, which means it may be the most willing to make its own deal with the United States.

Stabilizing relations with Beijing is thus a more realistic near-term goal than trying to bring Russia swiftly back into the European fold. Too sudden and dramatic a U-turn in U.S.-Russian relations would alienate key U.S. allies in Europe and needlessly entrench a transatlantic rift. It would be similarly unwise for the United States to take the Kremlin’s assurances about Ukraine or Europe at face value, given Russia’s deep grievances toward the West and its leaders’ proclivity for deception. With a cease-fire in place, however, the United States and Europe could consider making limited improvements to their economic relations with Russia, which would help attenuate Russia’s ties with China. And just as an end to the war in Ukraine would almost certainly weaken the coalition’s bonds, so would a new nuclear agreement between the United States and Iran that reduces the need to launch military strikes against Tehran’s nuclear program and allows the country to find outlets for its oil other than China.

UNTIE THE KNOT

If, however, the United States insists on treating this new coalition’s emergence as if it were a revival of the Warsaw Pact, the putative axis of autocracies will probably coalesce and end up posing a much greater danger. Russia and China once supported international nonproliferation efforts, including attempts to prevent Iran and North Korea from acquiring nuclear weapons. China and Russia should not want a global nuclear cascade, but if the United States remains implacably hostile to them, that might lead Moscow to adopt an “if you can’t stop them, help them” approach and back Pyongyang’s and Tehran’s nuclear programs. Both Iran and North Korea could then use Russian nuclear and missile technology to develop advanced weapons that would hamper the U.S. military’s response options in East Asia and the Middle East—and even threaten the American homeland.

Of equal concern is the possibility that China, Iran, North Korea, and Russia will use their wartime cooperation as a model for opportunistic coordination in the future. In general, autocratic countries struggle to make the kind of credible commitments that joint military planning requires, but a coordinated attack on U.S. interests in multiple regions might still emerge through improvisation. For example, if China attacks Taiwan, and the United States comes to the island’s defense, Russia could take advantage of Washington’s distraction to seize a slice of the Baltic states, and Iran could see an opportunity to attack Israel. Such a multifront assault on U.S. allies would stretch American resources to the maximum or beyond it.

These possibilities make it important for the United States to get its strategy right today. Bundling the threats the four so-called axis states pose is politically convenient in Washington, because it placates interest groups in the U.S. national security ecosphere that would otherwise compete for resources. But the hidden costs will be high.

Fear generates an impulse to fight back against U.S. adversaries on all possible fronts. But if a country gives in to the impulse to fight everywhere all at once it sows the seeds of its own decline. Before World War I, for example, Germany tried to challenge the United Kingdom at sea while also dominating France and Russia on the European continent. It ended up fatally overstretched. Likewise, when Japan in the 1930s attempted to meet both its army’s aspirations for an Asian empire and its navy’s demands for a Pacific fleet, it ended up bogged down in China and at war with the world’s foremost industrial power, the United States. Instead of treating China, Iran, North Korea, and Russia as an inexorable bloc, the United States and its allies should work to loosen their ties by exploiting the fissures that the war in Ukraine has concealed.

The Key to Ukraine’s Survival: How a United Europe Can Help Kyiv Keep Up the Fight - Celeste A. Wallander (Foreign Affairs)

 The Key to Ukraine’s Survival

How a United Europe Can Help Kyiv Keep Up the Fight

Celeste A. Wallander

Foreign Affairs, March 17, 2025

https://www.foreignaffairs.com/ukraine/key-ukraines-survival

CELESTE A. WALLANDER oversaw U.S. military assistance to Ukraine as Assistant Secretary of Defense for International Security Affairs during the Biden administration. She is a Senior Adviser at WestExec Advisors and an Adjunct Senior Fellow at the Center for a New American Security.

 

The United States’ sudden, although ultimately temporary, suspension of all security assistance to Ukraine in early March raised alarms about Ukraine’s ability to defend itself. A lasting suspension of the aid would certainly have changed the course of the war. But even a complete stop to U.S. assistance would not have reversed the progress that Ukrainians have made over the past three years. With its existing stocks and production, Ukraine would be able to sustain its defense for months on its own. Although U.S. aid is again flowing, at least for now, Ukraine does not need to surrender if Washington slows or pauses its support again.

But the pause in U.S. aid served as a dramatic wake-up call: the most crucial factor in determining how long and how effectively Ukraine will be able to defend against Russian attacks in the coming months will be the extent to which European powers step up to fill in any gaps.

No one country in Europe has the financial and industrial resources to replace the United States, but together they can add up to formidable support to Ukraine. With or without Washington, European powers will need to surge financing, procurement, and production of Ukraine’s most urgent resupply needs: ammunition and air defense interceptors. Denmark, Germany, Norway, the United Kingdom, and many others are already doing so. Over the past three years, Europe has increasingly provided Ukraine with capabilities that the United States has not, such as maritime strike assets, sustainable battle tanks, short- and medium-range air defense interceptors, cybersecurity systems, and industrial components. At the same time, Ukraine’s own production of strike drones and ammunition has expanded, accounting now for at least 40 percent of Ukraine’s daily operational requirements. Ukraine has also proved adept at fighting asymmetrically and capitalizing on Russian disadvantages, as demonstrated by its use of drones to find and destroy Russian units and equipment. Moreover, as Russian tactics have adapted, Ukraine has been ahead of the curve in building more lethal and silent drones within months and even weeks, rendering Russia’s adaptations rapidly out of date.

Even with limited U.S. assistance, Ukraine could, with Europe’s support, still achieve advantages that would strengthen its hand against Russia and thwart the Kremlin’s intention to outlast Ukraine and force Kyiv to surrender to Putin’s demands.

THE PAST IS PRESENT

The structure of U.S. security assistance to Ukraine over the past three years has ensured that the aid has not only supplied the country’s weekly battlefield needs but also helped strengthen its military force for the longer term. The aid has been funneled through three different programs, each authorized and appropriated by Congress. The most prominent program—and the most affected by the temporary U.S. hold on aid—is the Presidential Drawdown Authority, which Washington first employed to meet Ukraine’s urgent, immediate battlefield needs. PDA allows the Department of Defense to pull U.S. systems from its military stocks and deliver them swiftly to partners and allies in need—sometimes within weeks, sometimes within months. Ukraine is not the only recipient of PDA: the United States has used the authority to supply both Israel and Taiwan with weapons systems. But after the full-scale Russian invasion in 2022, Ukraine has become by far the largest recipient of this aid. Congress massively enhanced the scale of PDA support to Ukraine from $200 million in 2021 to a total of $33.3 billion for 2022 through 2024. In January 2022, U.S. weapons deliveries surged, with Javelin and Stinger missiles, armored personnel carriers, battle tanks, radars, unmanned aerial vehicles (UAVs), artillery systems, artillery rockets, ammunition, missiles, and air defense systems and interceptors all making their way to Ukraine. The donations—reinforced by comparable donations from European militaries—not only provided ammunition for immediate defense against Russia’s invasion and occupation but also enabled Ukraine to amass the core of a modern and durable NATO-style military.

In addition, in 2022, Congress authorized the creation of the Ukraine Security Assistance Initiative, providing $33.3 billion in funding from 2022 to 2024 to defend Ukraine against the longer-term threats that Putin poses to European security. Unlike PDA, USAI does not draw from U.S. military stocks—it is a fund to contract and procure military capabilities for Ukraine that the United States itself does not have on hand to donate in sufficient quantities or exportable types. For example, USAI has funded the procurement of resources with longer lead times, including hundreds of thousands of rounds of ammunition, hundreds of air defense interceptors, UAVs, coastal defense systems, and air defense systems. It has also funded investments in Ukraine’s defense industrial production and the maintenance and sustainment of military equipment that has already been donated so that Ukraine can build on U.S. and European donations instead of driving them broken and useless into the ground, as Russia has been doing. Europe, for its part, has also invested in similar contracting and procurement of resources for Ukraine, with states participating in such efforts both individually and through the European Union.

Finally, the Foreign Military Financing program has strengthened Ukraine’s medium- to longer-term security. The program allows the United States to work with partners across the globe on missions that address a host of defense issues, including counterterrorism and threats from common adversaries such as China, Iran, and Russia. A country’s FMF funding usually ranges in the tens or hundreds of millions of dollars, but since the full-scale Russian invasion began, Congress has provided Ukraine with $6.7 billion in funding through FMF. The funding has been used for new contracts and procurement from U.S. defense companies of big-ticket items, including air defense, armored vehicles, anti-armor systems, and radars.

These programs have massively boosted Ukraine’s defenses for the past three years—enough so that a temporary pause in assistance would not cripple the country’s military. Indeed, in late 2024, U.S. officials assessed that Ukraine’s existing stocks, the delivery of the fourth-quarter PDA packages and USAI contracts, European donations, and, most important, Kyiv’s own surging domestic production of ammunition and UAVs could sustain Ukraine’s plans for defense through mid-2025. Russia is a brutal aggressor, but its military method of relentless assaults, sacrificing masses of personnel and equipment, produces only incremental gains over weeks and months, and its attacks on civilian targets and critical infrastructure with missiles and UAVs has not broken Ukrainians’ will to continue fighting. Ukraine is suffering, but it is unlikely to face imminent defeat.

UNITED FRONT

Continued U.S. support is key to Ukraine’s long-term survival, but Kyiv and its European partners should not undersell their independent capabilities and concede too quickly to Russian demands during negotiations. By all indications, Europe has the determination to meet Ukraine’s defense requirements, and it could take up the task. Over the past three years, the standard flow of U.S. assistance sufficient to keep Ukraine supplied with ammunition, interceptors, rockets, and UAVs was valued at biweekly packages of $300 million to $400 million (the last two U.S. PDA packages were larger than usual, to prepare Ukraine for the likely uptick in Russian assaults in the spring and summer of this year). Although Europe is already spending a great deal on its own assistance to Ukraine, it still has additional financial, procurement, and industrial production means that could fill potential future gaps in Kyiv’s defense. In addition to drawing from its own weapons stocks and production capabilities, Europe can also procure ammunition and components for Ukraine on international arms markets, as the United States has done over the past three years.

A few billion euros to sustain Ukraine’s resources for active defense in 2025 is well within Europe’s means. In early March, the European Union announced plans to create new defense financing mechanisms that enable members to devote more resources to defense production and procurement, generating as much as $840 billion in defense spending that addresses domestic spending requirements and assistance to Ukraine. Individual European countries (including Norway and the United Kingdom in recent weeks) have also announced new aid packages and others are preparing to do so. Kyiv, for its part, has demonstrated significant resolve and capacity for innovation. Together, Europe and Ukraine can present a strong enough front in support of U.S.-led negotiations to push Putin to the table.

Ukraine and the United States will be in a better position to negotiate peace and to deny Russia’s unacceptable demands for a settlement with Washington committed diplomatically and financially to Kyiv’s defense. But if that path becomes lost, all will not be lost to Ukraine. After withstanding repeated Russian aggression that began in 2014, building an army that repelled Russia’s full-scale invasion in 2022, and maintaining a strong defense in the three years since, it seems very unlikely that Ukrainians will unilaterally surrender now. And with Europe heeding the call to a united defense, they may not need to.