President Obama has been welcomed with open arms and childlike glee abroad. He has been considered a gift to America’s beleaguered international image, and it’s easy to believe that his pragmatic, intellectual approach to foreign affairs will reinvigorate the country’s relationship with the rest of the world. But these expectations may need to be tempered. Already, the economic downturn is challenging the foundations of Obama’s “new age” of diplomacy.

Public support for renewing America’s image has suddenly taken a back seat to concern over the average American’s financial security. If the current US recession continues through April, it will be the longest since 1933. The unemployment rate stands at 6.7% and likely will continue climbing to 8% or above. As a result, protectionism is back with a vengeance: Democrats in Congress are already lobbying for an increasing number of protectionist job-saving measures in the $800 billion dollar federal bailout package. This inward turn is already influencing trade relations between the US and some of its economic partners, and the frustrations of costlier trade are elevating tensions in the international political realm.

If the Cabinet’s recent rhetoric is any indication, the US relationship with China is becoming increasingly chilly.  Last week, Secretary of the Treasury Tim Geithner stated openly that China was “manipulating” the yuan, the Chinese national currency, to make its exports cheaper on the international market (and, as a result, take business away from the US). While the US has been trying to persuade China to let its currency float freely for years, previous administrations, including that of George W. Bush, have refused to accuse China of such activity for fear of jeopardizing what is, at times, a fragile partnership.

With the current economic slowdown, Geithner’s sharp criticism of China may presage an increase in tensions between the two countries, as China considers its yuan integral to domestic stability. China already faces widespread unemployment issues, and another blow to its export-based economy could very well trigger social unrest and turmoil. Following this line of thought, China is stuck between the immoralities of its currency manipulation and the dangers of an already perilous economic climate.

Whether economists’ predictions for China will hold is hard to tell. But the Chinese are scared enough of a further economic setback that they won’t take kindly to having the Obama administration wag its finger at them in this hour of need. As long as Geithner continues to label the Chinese government a “currency manipulator,” China’s suspicions of America’s intentions will worsen.

According to a report from The Economist, “Every six months America’s Treasury must publish a list of countries which it deems to be currency manipulators. Once a country appears on that list, formal negotiations to end the manipulation must begin.” In essence, Geithner’s words are more than hollow chatter, and if he continues using this rhetoric, a chain reaction could ensue. If the US were to impose economic sanctions or trade restrictions on China to compel the government to change its currency policies, then the Chinese could respond by selling off some of their $1.5 trillion in US currency reserves, further deepening the rift between the two nations. Each side has leverage over the other, and it would be costly for Obama and Geithner to disrupt the US-China trade relationship. Given the state of the present economy and lack of consumer confidence, the US is in no shape to bring the fight to China. A severely weakened dollar resulting from currency sell-offs is simply too great a risk.           

Indeed, Obama does not expect to turn around US relations with its neighbors immediately—in China’s case, he recognizes that serious Chinese human rights violations and the argument over Taiwanese sovereignty will bar full Sino-American cooperation for some time. Still, a dose of patience is needed for those who expect Obama to be an instant miracle worker. Now that he and his team are in office, Americans and world leaders alike must recognize that much-anticipated changes will not occur immediately.

Traditionally, countries in recession pursue diversionary military expansion or protectionist isolationism. Obama is unlikely to follow the former route based on current domestic and international controversy over the Iraq War. Nevertheless, the United States’ visible position as a global hegemon means that withdrawal from political interaction is also a non-option, as the numerous enemies the US faces (be they states or rogue terrorists) are too many and too diverse for the US to defeat alone. The last time the US faced a recession this serious was during the Great Depression, and the general isolationism FDR pursued throughout the 1930s can no longer be afforded by a country that has since extended its diplomatic and humanitarian initiatives to every corner of the globe. Buckle your seatbelts…