Last week, that war escalated to near-nuclear level as the White House announced massive tariff hikes on a raft of Chinese imports — including 25% on steel and aluminum, 50% on semiconductors and solar panels, and a staggering 100% on electric vehicles (EVs). The move, they say, is in response to “China’s unfair trade practices”. The US accuses Beijing of using hefty government subsidies to flood global markets with artificially low-priced exports. By imposing its swingeing tariffs, the US hopes to create “a level playing-field in industries that are vital to our future”, and “ensure America leads the world” in these sectors. 

It’s pretty ironic that Biden is attempting to level the playing-field by embracing similar tactics to Beijing. His administration’s much-vaunted Inflation Reduction Act includes almost $400 billion in subsidies (through grants, loans and tax credits) aimed at boosting the US cleantech sector. So Biden’s attempts to paint China as a rogue nation using “non-market practices” to “game the system” seem driven by fear that the Chinese subsidies risk nullifying the effect of America’s own subsidies. 

US Secretary of the Treasury Janet Yellen acknowledged as much when she said that “China is really not playing by the rules in the sense that they have enormous subsidies in critical areas of advanced manufacturing” and “[Biden] wants to make sure that the stimulus that’s being provided through the Inflation Reduction Act support[s] these industries”. She seemed blissfully unaware of the contradictory nature of her statement, barely concealed by the doublespeak: China “subsidises” its industries (bad), while the US “supports” them (good). 

But, then, the idea of America as a bastion of the free market, whose corporations achieved global success simply by relying on the animal spirits of capitalism and the sheer ingenuity of garage inventors à la Steve Jobs, is largely a myth. Everyone knows that Silicon Valley’s transformation into a hotbed of innovation, and the subsequent rise of the US tech industry, was made possible thanks to massive funding from the US government and military during the Cold War. Elon Musk is only the latest in a line of supposedly self-made garage inventors who have actually built their tech empire with the help of billions of dollars in US government subsidies. Just last year Tesla received $7.5 billion from the US government. 

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China, then, isn’t really doing anything different from what the US has always done. But America is riled because China is winning. And having taken up the role of “free trade” defender — accusing the Biden administration of “imped[ing] the normal functioning of global industrial and supply chains” — Beijing is forcing the US to take an increasingly protectionist stance. 

This peculiar reversal of roles is paradigmatic of the significant global economic and geopolitical power shift underway. “Free trade” generally tends to benefit the dominant economic power, at the expense of weaker economies. It is no coincidence that the US began preaching “free trade” only after it achieved economic dominance, in the mid-20th century, after resorting to heavily protectionist measures to support its manufacturing sectors, just as Britain had done before it. 

But China has since surpassed the US as the world’s manufacturing powerhouse — and it has now climbed all the way to the top of the value chain. America’s embrace of protectionism is, therefore, an admission of weakness, as it is demoted to no-longer-hegemonic status. In this respect, it makes sense for the US to not want to be completely dependent on China in increasingly critical manufacturing sectors, and to build up its own cleantech industrial base. 

To shore this industry up, the US has been trying to nurture a domestic solar supply chain through a mix of tax incentives and tariffs for over a decade — but so far has failed abysmally. As the French entrepreneur and political commentator Arnaud Bertrand noted, while the tariffs did considerably reduce the number of Chinese solar panels coming to the US (with an 86% drop over the 2012-2020 period), the billions in subsidies, from first Obama and then Biden, did not revitalise the US solar industry.

On the contrary, the American global market share of the solar industry has considerably decreased since the original tariffs were placed on Chinese solar panels — from 9% in 2010 to 2% today. Meanwhile, China’s share of the industry rose from 59% to 78%. There’s no reason to believe that the recent tariff increase will reverse this trend. There’s even less hope that they will help spur a domestic EV industry. 

There’s also a catch-22 situation at play here. Because by shielding American car manufacturers from Chinese competition, any development is likely to be hindered. But without the tariffs, US car manufacturers will struggle to survive the decade since Americans cars cost between double or triple the amount of their Chinese equivalents. So the government may artificially prop up the American auto industry for a few more years, at the expense of American consumers — but by doing so, it is only delaying its death, not saving it. 

The idea that the tariffs will help America “lead the world” in this or other sectors where China already controls most of the global market share — such as steel, aluminium and EVs — is an economically illiterate one. Especially when you consider that the US market represents a relatively small share of Chinese global sales, and that America’s declining global status means it can no longer impose its will on other countries. It’ll be lucky if it can get its sub-imperial vassals in Europe and Asia to get on board with its short-sighted trade war. 

In fact, Biden’s EV tariff hike is already further weakening America’s crumbling powerhouse status. Those EU member states with big automotive ties to China, such as Germany and Sweden, have voiced their objections — reluctant to match the United States, or to put tariffs on the imports at all. “We don’t want to dismantle global trade, that’s a stupid idea”, Swedish Prime Minister Ulf Kristersson said. “Punitive tariffs as a one-size-fits-all solution is not a good idea for importing and exporting countries.” 

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When we consider what kind of technologies are being targeted by the tariffs, the optics are even worse for Biden. For years he has presented himself as a champion of climate policies and emphasised the need to move towards low-emission technologies, one of the stated aims of the Inflation Reduction Act. Yet he is now attempting to punish China for managing to produce low-cost green tech, including EVs, that could turbo-charge the world’s next industrial revolution. Indeed, China has been able to achieve astounding results in this sector in large part because it has embraced much more ambitious green industrial policies than the West. Moreover, Biden’s imposition of these tariffs risks hindering the adoption of low-emission technologies by American businesses and consumers — and thereby thwarting the US’s own climate targets. It’s a messy own goal. 

Those sceptical of the need for climate policies and their achievements probably don’t think this is a big deal. But it is a big deal for a lot of people — especially Biden voters. And this policy, even though probably aimed at shoring up support for the President by showing voters that he is tough on China, could alienate many of those voters.

The economist Dani Rodrik captured the sentiment of many in the progressive camp when he said: “Put up tariffs if you must, but the moral, economic, environmental arguments are on the side of those that subsidise green products, not those who want to tax them.” You don’t have to agree with him to understand the huge political gamble that Biden has taken by declaring a full-blown trade war on China, the unintended consequences of which could cost him his presidency and hammer the final nail in the coffin of America’s powerhouse status.

This realignment was most profound in the country that sits at modern Europe’s heart. In the event of the invasion, the stakes for Germany involved not only one unopened pipeline — the already-controversial Nord Stream 2 — but its 50-year commitment to rapprochement with Moscow. Within 72 hours, Chancellor Olaf Scholz promised to send German weapons to Ukraine, establish a €100 billion fund to increase military expenditure, and end energy dependency on Russia by opening the country to sea-borne gas. Since Putin had, Scholz told the German parliament, “demolish[ed] the European security order that had prevailed for almost half a century since the Helsinki Final Act” in 1975, everything had changed. “We are,” Scholz said, “living through a watershed era [eine Zeitenwende] … mean[ing] that the world afterwards will no longer be the same as the world before.”

In part the German chancellor was right. But Scholz’s version of why European history fractured in February 2022 also distorts reality. Self-evidently, the European security order before Russia’s war was nothing like the one that prevailed in the mid-Seventies: six new European states stood in the former western Soviet Union. Having no prior history of peacetime independence, Ukraine’s emergence in 1991 as Europe’s largest territorial state had constituted an extraordinary change.

But the new Ukrainian nation-state was always geopolitically precarious. Since at least 2009, Putin had openly denied the legitimacy of its existence. In the treaties Ukraine signed with Moscow during the Nineties, it ceded Russian military rights in Crimea. Then, in 2014, it lost the Crimean peninsula and entered a war against Russian-backed separatist rebels in the south-east of the country. If Russia’s invasion severed the present from the past, the shock was the scale of suffering Putin was willing to inflict to destroy Ukraine’s viability as an independent state, amplified by the chasm between the size of his initial ambition to seize power in Kyiv and a military mobilisation entirely inadequate to the task.

The unintended consequence for Europe is now clear: the emergence of a largely unified nation-state-in-arms with a pressing claim for EU membership that will prove hard to realise without concurrent Nato entry. Regardless of Ukraine’s prospects for entering either association with any alacrity, Ukraine’s resilience against Russia has rendered Ukrainian nationhood a crucial geopolitical fact. In a 1984 essay, the Czech novelist Milan Kundera wrote that the Ukrainian nation, “one of the great European nations… is slowly disappearing. And this enormous, almost unbelievable event is occurring without the world realising it”. Ukraine’s independence seven years afterwards only partly introduced western Europeans to Ukrainian history. But, by trying to eliminate Ukrainian nationhood, Putin has instead ensured that it has become a permanent feature of Europe with which the EU must grapple.

The post-Cold War EU relied on a measure of German-Russian reconciliation to allow for German reunification even as the eastern European states had only just successfully asserted their nationhood against the Soviet version of the imperial Russian empire. Thereafter, the Holocaust, as an end point for German nationalism and the catastrophic culmination of decades of ethnic division in eastern Europe, became pivotal to the imaginative construction of the idea of European unity. By contrast, in 2022, a state subject to the simultaneous experience of the Holocaust and Soviet mid-20th century terror became an official candidate for EU membership by fighting a defensive war for its territorial national sovereignty.

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In doing so, it claimed the right to nation-build, including by suppressing minority languages in the public sphere. No aspect of this experience sits easily with the notion of the post-Maastricht EU as a post-national and peace-oriented construction. An EU that admits Ukraine as a war-formed nation-state would necessarily become a different kind of entity, one that could not be rhetorically legitimated without a new narrative about its historical purpose partially grounded in Russia’s existence as a geopolitical opponent. In Berlin and Paris, an EU with such a relationship to Europe’s resource-rich, continental-size neighbour would indeed belong to a Zeitenwende.

The existential question of Europe’s energy supply triggered by Russia’s war also raises profound questions around nationhood across the rest of Europe. As they opposed Russia in ways that jeopardised their immediate energy security, European governments resuscitated the narrative of energy sacrifice once deployed by Jimmy Carter: reduce your energy usage for the greater good. In spring 2022, the Italian prime minister, Mario Draghi, asked: “Do we want to have peace or do you want to have the air conditioning on?”

But the ghost of Carter’s political failure lingered. Palpably fearing a democratic rebellion on energy, European politicians did not ask citizens to endure too much economic pain in the name of any claim to political community — whether that community be the nation, Europe, or a democratic West. Throwing fiscal caution to the wind, European governments subsidised household fuel bills and some, notably the British and French, still faced a wave of strikes. None appeared to show qualms about European companies buying spot-market LNG already contracted to Pakistan. In Italy, Draghi’s government fell in July 2022 after Five-Star withdrew its support, charging that the former ECB president was prioritising Ukraine over reducing energy prices. Tellingly, when the subsequent general election once again saw the party uncompromised by technocratic and grand coalition politics win the largest number of seats — this time the Brothers of Italy — its leader, Giorgia Meloni, was allowed to become prime minister.

By contrast, reducing energy consumption in the name of lowering carbon emissions remained off-limits. Instead, in making a new case for the energy transition, the war emergency encouraged further the idea that economic transformation could recreate the cross-class interest in national manufacturing production lost from the Seventies. Yet the prospects for realising this ambition were much more propitious across the Atlantic. With the Inflation Reduction Act, passed in August 2022, American climate policy near explicitly became a political bulwark against another 2016-style shock where Trump or a Trump-style candidate again won by appealing to the losers of American deindustrialisation. In contrast to its New Deal predecessor, this federal intervention is explicitly racially inclusive in its conception of nationhood. Indeed, for the Biden administration, it is an act of reparation for the restrictive American nationhood of the past as well as an attempt at restoring the New Deal-originating idea of economic nationhood.

Whether by reshoring manufacturing production it can succeed on its own terms is open to question. But the fact that the United States under Democratic Party rule in 2022 entered the same political space European governments had already sought to occupy in 2019 with their Net Zero 2050 commitments now constrains European ambitions. The American move establishes a competitive geopolitical contest between Western countries around using energy change to rebuild nationhood in which European states and the EU are disadvantaged by higher fossil-fuel energy costs and American financial power. Already the failure of Boris Johnson’s government, which bet its post-Brexit “levelling-up agenda” on investment in low-carbon sectors, testifies to the problem.

With the Inflation Reduction Act, the stakes for Britain in securing a post-Brexit free-trade agreement with the United States are now quite possibly high enough to force a future choice between British companies’ presence in US-centred low-carbon supply chains and the domestic burden of accepting Washington’s trade terms. Even in the United States, reconfiguring energy production towards national self-sufficiency cannot happen quickly enough to be democratically transformative. As a response to Trump’s 2016 insurgency candidacy, this project leaves the border and citizenship issues untouched. In betting on rapidly building a low-carbon America, the Biden administration has also left itself open to the charge that it is subordinating present energy needs to an unrealisable, future-oriented project to the benefit of those corporations that procure the available subsidies.

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Here, the fundamental problems that the energy transition presents have not shifted. Of the transformative forces unleashed by Russia’s war, game-changing technological breakthroughs of the kind necessary for a low-carbon energy future, especially on the storage of electricity, was not one. Following hard on the 2021 China gas shock, the energy trade disruption caused by Russia’s war, meanwhile, intensified the separate problem of the energy present. The 2022 crisis demonstrated just how politically hard it is for European politicians to reduce the expectations for consumption formed in a prior geopolitical era, or ask their citizens to engage with the energy poverty of people in many non-Western parts of the world.

If Russia’s war has changed the prior democratic predicaments around energy, it is by spreading energy consciousness, including letting loose the spectre of future energy scarcity in polities premised on energy abundance. Where, in the West, energy consciousness was acute for those exercising power but often weak among citizens, the war means these citizens now better understand their material aspirations and fears as energy demands and anxieties. They do so at a time when Western democracies generally have still not recovered from the blows delivered by the 2008 crash — even without a new round of bank interventions in March 2023 — and when in France violent street protest has become a persistent feature of expressed discontent.

In principle, greater energy consciousness could loosen the technocratic logic behind the original European formulation of realising an energy revolution by 2050. But it is more likely to expose the chasm between the interests everyone shares in facing climate change and the inequalities that will come from electrifying personal transport and that are always generated by high fossil-fuel prices. In this future, energy will not be a subterranean source of political disorder, as in the first two decades of the 21st century, but the principal currency of it.

This is an edited extract from the paperback of Disorder, (Oxford University Press) by Helen Thompson.

Today, Truman’s world no longer exists. Indeed, the contrast between the Marshall Plan and America’s approach to Europe today couldn’t be more jarring. The Marshall Plan may still be regarded as one of the pillars of America’s post-war mythology, but under Biden, America is pursuing an isolationist economic policy and a ham-fisted foreign policy that both run counter to Europe’s vital interests. Moreover, the actual impact of the Marshall Plan is also worth reassessing.

In spite of the largesse and generosity usually associated with the European Recovery Program, as it was officially called, between 1948 and 1951 the funds actually only amounted to about 3% of the combined GDP of the recipient countries, accounting for a direct increase in GDP growth of less than 0.5%. Some authors have credited the Marshall Plan with having a much larger indirect effect on the recovery, through the promotion of a macroeconomic environment conducive to growth, but such analyses are largely speculative. Overall, its contribution to Europe’s recovery was relatively modest. Much of the money also flowed back to the US in the form of purchases of American goods and services, including oil, while many of the materials and equipment used to rebuild Europe were supplied by American companies, creating jobs and profits for American businesses.

Regardless of the actual economic impact of the Marshall Plan, there is no doubt that it was a resounding political success for America — to the extent that it secured US geopolitical influence and control over Western Europe. Part of the logic was that more prosperous societies would be less amenable to communist and Soviet influence — though, as we have seen, it’s questionable whether the programme had much of an impact on economic and social gains during the post-war boom.

An arguably more important channel through which the Marshall Plan consolidated US influence was through the funds it channelled to those European centre-right parties which stood to gain from being integrated into the nascent American empire. This included covert CIA funds to ensure their electoral success — especially in Italy and France — at the expense of communist rivals. As the historian Sallie Pisani shows in her book The CIA and the Marshall Plan, under the guise of the Marshall Plan, the US used “massive foreign aid and non-military covert operations to reshape war-torn Europe in the image of the US”.

Just as crucially, the Marshall Plan was also a key catalyst for the formation of Nato, through which the US exerted its military control over Western Europe — in addition to dozens of military bases, especially in the defeated nations, many of which still exist today. The Marshall Plan also played an important role in fostering European integration, by creating new intergovernmental institutions to administer and coordinate the programme. These included the OEEC, the precursor to the OECD, and most importantly the Schuman Plan, which led to the European Coal and Steel Community, then the European Economic Community and ultimately the European Union. The Americans also played a crucial role in promoting, also financially, the cause of European federalism through the American Committee on United Europe (ACUE), founded in 1948, whose first chairman was the former head of the Office of Strategic Services (OSS) William Joseph Donovan. The vice-chairman was Allen Welsh Dulles, who would later become the head of the CIA.

Taken as a whole, then, the Marshall Plan appears to embody a form of “benevolent imperialism”, through which the US gained control over Western Europe and cemented its position as a global superpower, while also fostering, for much of the post-war period, economic prosperity and — at least until the end of the Soviet Union — military security on the continent. Europe clearly benefited from the spoils of empire, even if in a subordinate position.

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Today, however, this no longer seems true. In economic terms, over the past six months, Europe has seen a massive fall in industrial output while governments have been forced to foot an €800 billion energy bill as a result of their decision to follow the US strategy in Ukraine. Riots have broken out in France and there is no reason to think they won’t spread. A European-wide poll taken in October last year showed that a majority of voters in Europe’s four largest countries expected social unrest and public protests in the coming months due to rising living costs. Meanwhile, senior EU officials have accused the US of profiting from the war — and from Europe’s hardship. Not only is it reaping the benefits of Europe’s switch to American natural gas, but it is also the main beneficiary of Europe’s rearmament.

Moreover, anger has also been mounting in Europe over America’s Inflation Reduction Act, a $369-billion package of subsidies and tax breaks enacted by the Biden Administration to boost American manufacturing (under the guise of the “green shift”). One may call it a Marshall Plan of sorts — but one that is directed at America, not Europe. Indeed, from a European perspective, the bill constitutes a protectionist measure that encourages companies to shift investments from Europe and incentivises customers to “Buy American”, dealing a serious blow to Europe’s already struggling industry. The president of Imperial College London recently said that the IRA represents an “existential threat” to European economies. Even Chancellor Jeremy Hunt, not known for being critical of American policies, last week criticised Biden’s “massively distortive” investment plan.

Such concerns might seem hyperbolic, but they highlight the cognitive dissonance of most members of the European establishment. On the one hand, they are constantly forced to repeat public platitudes about Western unity and resolve; on the other, they are slowly beginning to realise that America is playing its own game, and it doesn’t include Europe, which is no longer seen as a strategic ally anymore but as a competitor and a rival.

In security terms, things aren’t looking much better for Europe, which is looking more vulnerable today than it has been for decades. As the possibility of a direct Nato-Russia confrontation becomes more likely, what used to be a security umbrella today looks more like a big flashing target. From America’s perspective, however, the conflict has been an opportunity to reassert its waning hegemony over Europe, first and foremost by revamping and expanding Nato, which was going through an existential crisis prior to the conflict. Indeed, from America’s perspective, this was likely a desired outcome. Driving a wedge between Europe (and Germany in particular) and Russia, and preventing the rise of a Eurasian geopolitical reality, has always been an American geopolitical imperative. No wonder some thought the US was behind the bombing of the Nord Stream pipeline, which severed Russian-German relations.

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In this context, why should Europe remain anchored to the US? Especially when we consider the radical geopolitical realignment that is underway. As I noted recently, the conflict in Ukraine has accelerated the rise of a new international order in which American dominance is losing its attraction. US actions in Ukraine have driven together its two greatest adversaries, Russia and China, whom along with India, Saudi Arabia, Turkey, Brazil, South Africa and dozens of other countries comprising most of the world’s population are giving rise to the world’s largest and most dynamic trading bloc — and the US is not part of it. In only the past few days, two important events gave further impetus to this trend: Brazil and China reached a deal to trade using their own currencies rather than the US dollar, while China’s national oil company CNOOC and France’s TotalEnergies completed China’s first LNG trade settled in yuan. All of which points to the increasing isolation of the US from the rest of the world, and a dramatic reduction in its influence and ability to extract resources which it can then distribute to its protectorate states.

In other words, the America of the Marshall Plan is gone — and in its place, China hopes that its Belt and Road Initiative (BRI) will become the new economic engine of the post-Western bloc. Many in the West are suspicious of the BRI, but this has not stopped 147 countries — including 18 EU states — from signing up to its promise of connecting Asia with the rest of the world through infrastructure, investments and trade.

Should we be surprised? Our age of uncertainty is the perfect stage for a new Marshall Plan. And while Truman’s world may no longer exist, that doesn’t mean China can’t recreate it.