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Dear diary,
The playground has been rough lately. Last week a bully (the US) got so enraged that he ended up breaking the community water fountain, leaving us younger kids (the middle powers) dehydrated. At least for now, his injuries have kept him from doing much else to make our lives miserable. Social media gives me enough anxiety; I also can’t deal with the biggest kids threatening trade restrictions.
My parents asked me in annoyance why I don’t listen to that nice Canadian boy who got a standing ovation at school when he said: “the power of the less powerful begins with honesty.” Or why can’t I hang out with that nice European girl? (“You used to be so close…”) They recognize that screens, the manosphere and an era of geo-economic conflict make it difficult to be a teenager these days. But it’s not that hard: just make friends and make some deals.
Uhm. Nobody understands me.
What I would do like what I’m saying is that everyone thinks Goody-Two-Shoes Canada is about to take a beating. If the US decides not to renew the USMCA, the trade agreement that includes Mexico, it will begin a 10-year countdown before the agreement expires. Sure, everyone loves a quirky speech about how we need to wake up to the new international order. But can it counter the long-term effects of business investment frozen by uncertainty?
As for the EU, I to have I’ve tried to reset the relationships, but she suspects I’m going for ‘friends with benefits’ instead of a more mature relationship with concessions on both sides. If I want a piece of the EU defense market, I will have to pay. If I want other treats, I’ll have to be less tense about a youth mobility program. I try my best, but sometimes I feel like she’s more distracted than before. Maybe it’s the phones in the classroom, or maybe the economic warfare is pushing me down her priority list.
Publicly, I am fully committed to new trade deals. Just like the others on the schoolyard, the past few years have been busy for negotiators, and not just because the US was in full-on negotiations last year. Bullies get at Fomo just like the rest of us. Let’s show them how much fun they could have negotiating beef quotas and streamlined licensing arrangements for professional services.
But in the privacy of this diary, I must confess that I’m a little concerned that these friendly options aren’t quite suited to today’s combat. Agreements to reduce rates or agree on new rules are nice. But if a bully approaches for a shakedown, or threatens to overwhelm your companies with a wave of exports, will these agreements truly represent a united front, or will they merely provide an extra shoulder to cry on?
To be honest, my approach so far has been to avoid difficult choices. I want the wealth of America’s market access, the safety of its security umbrella, and the bargain of Chinese stuff that my consumers and businesses crave. Yes, obtaining rare earth metals from the Chinese can be difficult. But when they flow, they are cheap. What if an international attempt to set minimum prices hurts my manufacturers? Or what if China sees me heading towards the US and kicks me in the shins?
Last academic year, when the Biden people were in charge, it was clearer to the US that sucking up to China would complicate the US romp. But when Trump’s team returned after the summer, they had such a chaotic approach to schoolyard coalition building that it became easy to play neutral again. That’s a relief, since I don’t want to pick a clique. It is much more comfortable to present myself as the stable teacher’s darling, open to trade and investment.
If the US has decided it’s not worth it to assemble a big squad to deal with China’s excesses, that should mean less stress for me in the short term. The hypocrisy will a bit annoying if the US makes an investment deal with China at their meeting in May, although I will of course praise them to their faces for being “very restrained and very thoughtful”. In the longer term, I suspect that the other middle powers are as reluctant to push back on the bullies as I am. That means I have to manage the rough and tumble schoolyard on my own.
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