Why the US is taking action against so-called "allies"

One striking thing about this new trade war is the way some countries have protested, "But we are allies!"

But what do these relationships between countries mean? Just like human relationships the best relationships between countries have mutual benefits. When the relationship is lopsided and one side takes but never gives, it begins to resemble an abusive relationship and sooner or later the giver will file for divorce.

Take the European Union. They benefitted from the USA intervening in WW2 to protect them from the Nazis and the in the Cold War to protect them against the Soviets. In return the Americans got to sell some of their goods to Europe (Eisenhower ran a trade surplus). That was a mutually beneficial relationship, both sides got something they badly wanted out of it (Europe got security, the USA got trade). It even made sense for the Americans to gift the Europeans Marshall Aid in those circumstances.

Fast forward 75 years from the war and things look different. This time around the Europeans are running a trade surplus with the USA, but they are also relying on the Americans for defence. Germany for example spends only 1.2% of GDP on defence and most of it goes on pensions for former army personnel. Their airforce and army are so delapidated that they actually had their soldiers practicing with broomsticks because they had no rifles. But they don't care, defence is covered by the Ameriicans and they feel safe while saving about $65bn they would have spent if they had to defend themselves.

What do the Americans get out of this? Nothing but abuse and aggro. It's no wonder successive Presidents have been getting annoyed. Obama called the Europeans "free-riders" and Trump has called them out in even blunter terms.

In that context the trade sanctions make sense - if the Europeans won't reduce their tariffs on Americans it makes sense to impose tariffs on them. That way at least one part of the relationship (trade) rebalances.

It's a similar situation with Japan. Japan exports a lot to the USA, and they rely on the Americans for defence. What do the Americans get out of it? Aggro. Especially when the Japanese deliberately visit the shrines of war criminals, in order to taunt their neighbours, and the Americans then have to intervene to calm things down. Woudl Japan behave in such a reckless way, poking their neighbours, if the Americans weren't there to defend them? Of course not.

They appeared to be shocked that Trump imposed tariffs on them, especially as the Japanese Prime Minister appeared to get on well with Trump over a game of golf. Like golf makes a difference. The US can't fix the defence side of things and they can't stop Japan taunting their neighbours, but they can fix the trade stuff.

Now lets look at the countries that got a permanent exemption from the tariffs.

Australia is a stable democracy in the South Pacific. They cost the USA no money at all because the Australians proudly pay for their own defence. They are also reliable allies and they actually have a trade deficit with the US (the US exports more to Australia than it imports from them). It makes sense to give the Australians a permanent exemption from tariffs - this is a beneficial relationship to the US and they want to keep it that way. If as a result the Australian steel makers profit at the expense of the Europeans, so much the better.

Brazil also got a permanent exemption. They are also a democracy which is trying to crack down hard on corruption. The US doesn't have to spend a cent defending them, Brazil pays for it's own defence. In recent years Brazil has been flooded with migrants from neighbouring Venezuela - the US wants to support Brazil else these migrants start heading north instead. Finally the US has a trade surplus with Brazil. So granting them an exemption makes sense - if Brazil can profit at the expense of the Chinese, so much the better.

South Korea also got an exemption. Here the US does spend money defending them. But South Korea has been very active trying to solve the North Korean crisis and without the sterling effort by President Moon, talks wouldn't have got this far. If South Korea manages to pull off a peace treaty with the north, American troops on the peninsula can start to reduce.. So of course Trump rewarded them with an exemption to tariffs.

What is so amazing about the current world is the number of countries who do not realise that relationships must be mutual. What were the Europeans thinking when they thought they could free-ride forever? Ditto the Japanese.