The US needs ‘allied scale’ to counter China

Andy’s view

To have any hope of countering China’s industrial challenge, the US needs a coalition.

Alone, it is outmatched in overall size — measured by purchasing power, China’s economy is 30% larger — and manufacturing strength: In shipbuilding, for instance, China has more than 200 times US capacity. But the US and key allies and partners, operating together, would tower over China, commanding one and a half times Beijing’s share of global manufacturing. Rush Doshi and Kurt Campbell, two former Biden administration advisers, call this “allied scale.”

US President Donald Trump is reversing that logic. His tariff war with Canada threatens one of the world’s closest and most durable alliances. He could also end up destroying industrial economies of scale by unraveling the dense network of supply chains at the heart of a North American trading bloc, also including Mexico, that represents almost 30% of the global economy.

Chinese leader Xi Jinping, by comparison, hasn’t just been building colossal scale in priority sectors — robotics, aerospace, green tech. He has extended his country’s top-down techno-industrial system to much of the developing world through the Belt and Road Initiative, while coordinating with Russia, Iran, and North Korea on technology, security, and intelligence.

Indeed, Xi’s top global concern is the breadth and depth of Washington’s alliance network, which he views as an instrument of containment; Trump is squandering that leverage.

Chad Bown, an economist at the Peterson Institute for International Economics, cites the auto industry as an example of the lose-lose outcome of a North American trade spat. He imagines a future where US tariffs make Canadian-assembled cars too expensive for American consumers, destroying the Canadian industry. In that scenario, Canada would likely buy cheaper cars from China — Canadian Prime Minister Mark Carney has already opened the market to limited numbers of Chinese EVs — and Detroit would forfeit a big customer for its vehicles across the border, one more step toward ceding the global industry to China.

Of all the countries that Trump has chosen to pick a fight with, Canada is the one that has reliably stood with Washington against China. Not only had Ottawa been combatting subsidized Chinese exports, matching US tariffs on EVs, steel, and aluminum, but it had also taken the American side in geopolitical rivalry: Canada’s decision eight years ago to arrest a senior Huawei executive at Washington’s request led to the detention of two Canadians in China, who were held as virtual hostages, and triggered Chinese economic sanctions.

Today, writes Bown, the US president “has forced Canadians to ponder separating from America instead of working with America to separate from China.”

Other US allies are thinking along similar lines as Trump imposes blanket levies on friends and foes alike. A recent Pew survey showed Xi is more trusted than Trump in Canada — as well as Australia, France, and the UK. That doesn’t mean these countries are ready to switch sides. The US still offers the world’s most lucrative consumer market, and is an indispensable source of technology and high-tech weapons. Nor is China a safe haven; its markets are closing to Western companies, its industrial exports increasingly compete with European ones in global markets, and its technology comes with heavy security risks.

So US allies are hedging against both an unreliable America and a predatory China.

The White House hasn’t altogether ignored the benefits of “allied scale.” For example, it has assembled a powerful coalition of advanced industrial economies under its Pax Silica initiative to break China’s rare earths chokehold, turned to Finland for help acquiring ice-breakers, and is exploring partnerships with South Korean firms to modernize the navy.

But these are ad hoc projects, not a coordinated strategy involving tariffs, regulation, and pooled resources to create a true united front against China’s industrial onslaught.

Assembling such a group was always going to be a challenge for any US administration; American allies would fear Chinese retaliation by signing up for a coalition that looked, from Beijing’s perspective, like an anti-China crusade with Cold War overtones. But Trump has undermined the trust that would make it possible at all.

Robert Zoellick, a former US trade chief and World Bank president, points out that Ronald Reagan saw an integrated North American market as a “continental foundation for projecting influence globally.” If it fractures in an escalating tariff battle, as seems possible — “I don’t want Canadian cars, I don’t want Canadian parts, I don’t want Canadian anything,” Trump posted on Sunday — the only real winner would be China.

Notable

• “We are not going to beat China by being a cheaper version of China,” the head of the US Maritime Administration told the Financial Times, which reported that the US is partnering with a British shipbuilding firm on a new fleet of nuclear-powered merchant vessels. “We compete on technology . . . and nuclear technology is something we are really good at.”