To What Extent Are the Trade Negotiations about Security?
On the face of things, the trade negotiations triggered by President Trump's unilateral actions are focused on various trade-related objectives. Trump thinks higher U.S. tariffs are a good way to do some mix of the following: reshore domestic manufacturing, reduce the U.S. trade deficit, and increase revenue so that he can lower income taxes. At the same time, he is willing to limit those tariff increases if U.S. trading partners will agree to open their markets a bit more. For him, any outcome here -- higher U.S. tariffs or lower foreign barriers -- is a win and he does not seem too concerned about where exactly the negotiations end up in terms of the specific balance.
Looking at the other side, countries facing these unilateral actions have to make a decision about how to react. Do they offer concessions as part of a deal that favors the U.S. (in a sense, an "unequal trade agreement")? Do they just accept the U.S. tariffs and do nothing? Or do they fight back with some kind of retaliation (tariffs of their own, restrictions on U.S. services suppliers, IP violations, etc.)?
This all might seem like a straightforward exercise involving mainly trade officials. But in some instances, it seems like there is more going on, with security and trade intertwined a bit. Here's something from a recent Washington Post article on the Ukraine war:
Although [Trump] said again Monday that “this is not Trump’s war,” the plans he unveiled amounted to a significant U.S. effort to bolster Ukraine’s military and impose tough economic consequences on Russia if Putin doesn’t soon halt the conflict. The efforts would build on — and go beyond — those by President Joe Biden and would effectively back Ukraine in the war.
The plan, however, would shift how the United States helps Ukraine. Under Biden, Washington mostly donated weaponry to Kyiv directly. Trump will require Europeans to pay for it.
...
The U.S. plan envisions European countries sending weaponry, including the Patriots, to Ukraine out of their current stocks so the weapons could be used immediately, Trump said. Germany and Norway will each send at least one battery, officials said.
Those countries would then purchase replacements from the U.S. defense industry.
There are a couple things happening here.
First, Trump is engineering the sale of U.S. weapons to Europe, thereby increasing U.S. exports and helping U.S. manufacturers. This has the feel of a traditional trade issue, although in the specific context of a war.
Second, the Europeans have found a way to keep the U.S. on board with the defense of Ukraine against Russia, something that has looked very uncertain at times. This is not a traditional trade issue.
That all leads to me to the following questions: Where would U.S.-EU trade negotiations be without security issues such as Europe trying to ensure U.S. support for Ukraine? And where would various other trade negotiations be? Japan and South Korea, for example, also depend heavily on the U.S. for security. How does the decision-making process play out in these governments when economic and security officials have to jointly deal with a U.S. president who appears to want to (1) restrict their imports and adjust the overall trade balance and (2) reduce or change the security role traditionally played by the U.S.? Can we evaluate the deals that emerge from these negotiations based only on the trade component, or do we need to look at the security side as well? And to what extent is it possible to evaluate the security side, given the limits on transparency in a politically sensitive area such as this?
UPDATE
After I posted this yesterday morning, the U.S. and EU made an announcement about a trade deal, and in that context European Trade Commissioner Maroš Šefčovič offered the following comment which I think supports my argument above:
And I have to say that President von der Leyen did terrific negotiations yesterday. She was absolutely great in managing this negotiations which led to the conclusion of the deal, which I'm absolutely convinced saves the trade, saves the trade flows, saves the jobs in Europe, and opens a new chapter in EU-US relations, how to adjust our mutual trading patterns in this new age of geoeconomics and geopolitics. And that's for me, it's very important political answer, because it's not only about the trade, it's about security. It's about Ukraine. It's about current geopolitical volatility. I cannot go into all the details of what everything was discussed yesterday, but I can assure it was not only about the trade. So therefore, I mean to have a possibility that the two biggest economies and the closest allies can openly discuss all sensitive issues. And as I can judge from the discussion yesterday, are very much aligned on the geopolitical issues of today, I think has additional price. There's additional worth in having this deal done. Because I believe that from now, we can go only for the better. We can go for the improvement, closer cooperation, fair trade agreement, and simply work on all these issues we've been kind of accumulating on the table for quite some time.