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The European Union, the United States, and Trade: Metaphorical Climate Change, Not Bad Weather

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  • Herman Mark Schwartz

    (Department of Politics, University of Virginia, USA)

Abstract

US and EU trade relations exhibit a set of chronic and secularly unsustainable imbalances, in which new Schumpeterian leading sectors and catch-up growth create growing tension in the asymmetrical and somewhat hierarchical US–EU relationship. These imbalances exhibit two distinct cycles interrupted by a clear structural break in the 1970s and an emerging cycle after the 2008–2010 crises. Each cycle has seen rising US current account or trade deficits with Europe provoke some financial or political crisis. Each crisis produced a US-led solution producing even greater imbalances in the next cycle, with concomitant stress on the asymmetric US–EU relationship. The EU and particularly the northern eurozone economies typically have relied on export surpluses for growth. But relying on export surpluses for growth reinforces EU dependence on the US and the US dollar at a time when US domestic politics are increasingly hostile to trade deficits and tension with China is rising.

Suggested Citation

  • Herman Mark Schwartz, 2022. "The European Union, the United States, and Trade: Metaphorical Climate Change, Not Bad Weather," Politics and Governance, Cogitatio Press, vol. 10(2), pages 186-197.
    • Handle: RePEc:cog:poango:v10:y:2022:i:2:p:186-197
    DOI: 10.17645/pag.v10i2.4903
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    References listed on IDEAS

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    1. Ingrid Hjertaker & Bent Sofus Tranøy, 2022. "The Dollar as a Mutual Problem: New Transatlantic Interdependence in Finance," Politics and Governance, Cogitatio Press, vol. 10(2), pages 198-207.
    2. Marianne Riddervold & Akasemi Newsome, 2022. "Introduction: Out With the Old, In With the New? Explaining Changing EU–US Relations," Politics and Governance, Cogitatio Press, vol. 10(2), pages 128-133.
    3. Michael Smith, 2022. "How Much of a New Agenda? International Structures, Agency, and Transatlantic Order," Politics and Governance, Cogitatio Press, vol. 10(2), pages 219-228.
    4. Gorm Rye Olsen, 2022. "“America is Back” or “America First” and the Transatlantic Relationship," Politics and Governance, Cogitatio Press, vol. 10(2), pages 154-164.
    5. Akasemi Newsome & Marianne Riddervold, 2022. "Conclusion: Out With the Old, In With the New? Explaining Changing EU–US Relations," Politics and Governance, Cogitatio Press, vol. 10(2), pages 229-234.

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