Trump’s trade war shifts from shakedown to lock-in

The writer is an FT contributing editor, a visiting scholar at the Hoover Institution and author of a forthcoming book on globalisation

Judged by shock and awe, the trade war between America and the world is still about tariffs, with the US rebuilding its wall this week and Canada reeling from the threat of a 50 per cent levy. Yet the most profound shift is elsewhere, in a higher struggle over globalisation’s infrastructure. For 18 months, America has sought to charge countries more for access to its services and market. Now, it is deterring and punishing those that seek alternatives. In Silicon Valley speak, it is pivoting from monetising users to locking them in. In antitrust terms, it is moving from hiking prices to foreclosing competition. And in mafia slang, it is shifting from shakedowns to threatening to whack those who try to quit its protection.

It is a mistake to think of the second Trump administration as a return to 1930s protectionism or Chinese-style mercantilism. Instead it is best described as a project to ensure the US cannot be coerced economically and “gets paid” for the superpower services it provides to the world. These include its financial markets and currency, its tech networks, its vast consumer market and its weapons and defence guarantees. It is a futuristic nationalism, which acknowledges that, in an age of intangible capitalism, a minority of the income and capital America generates from abroad is from goods.

The administration has sought to boost the revenue and capital that flow to the superpower. It has raised tariffs and demanded countries sign up to investment quotas, purchase agreements, arms deals and more volumes of US tech and intellectual property, sometimes at higher prices. This week America broached selling nuclear technology to Saudi Arabia. Simultaneously it has cut costs by forcing allies to spend on defence, and qualifying US commitments — including to Ukraine, Nato and Taiwan. If countries refuse these new terms, th…