Lighthizer asserts we're in a second Cold War

Former US Trade Representative Robert Lighthizer recently stated that the world is experiencing a second Cold War. He shared this view during a podcast conversation, highlighting issues like trade deficits and a failing trade system. Lighthizer's remarks echo sentiments made a few years ago that a new Cold War had already begun. He pointed out that over the past decade, the US has invested heavily in defense—$8.4 trillion—while NATO allies have spent much less, totaling around $3.8 trillion. This disparity in defense spending has ramped up as global tensions rise, particularly in Eastern Europe and Asia. Lighthizer suggests that the 'Trump Effect' has pushed European nations to increase their defense budgets. This includes efforts to enhance military preparedness and address threats from countries like China. He noted that the US is also working towards stronger defense integration in the Americas, which includes better cooperation with Canada and protection from potential threats. Analyzing current military spending, Goldman Sachs noted that global defense expenditures reached $2.6 trillion in 2024. This accounts for 2.4% of global GDP, marking an increase from previous years. These rising costs reflect heightened geopolitical risks tied to ongoing conflicts and trade tensions. Goldman analysts expect European defense spending to grow significantly in the coming years, from 1.9% of GDP in 2024 to about 3% by 2027. Germany, for example, plans to raise its defense budget from 1.5% to 2.1% by 2024. Meanwhile, France has committed to maintaining a defense spending level of 2% through 2030. Overall, these developments illustrate a shift towards increased military readiness and spending as nations prepare for escalating global tensions. The current trends point toward a re-emerging era marked by rivalry and competition between global powers.