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Will war hurt U.S. firms abroad?

Despite strains, trade still binds the American, European economies. By CNBC’s Tom Costello.
/ Source: CNBC

While the relationship between the U.S. and many European allies has deteriorated in recent months, the truth is the rift began long before Iraq dominated the headlines. From U.S. moves on Kyoto to the the ABM treaty, the disagreements have been deep — and have left Washington with far less diplomatic influence. But has that translated into a resentment of American business or culture?

IT WAS 1983, and the Cold War was at its coldest. As the U.S. deployed cruise missiles in Europe, anti-American sentiment grew to unprecedented levels. But that sentiment may be even more widespread today. An international study done in December by the Pew Research Center asked respondents for their view of the U.S. America’s favorability rating had dropped in 19 of 27 countries in just two years.

And while a majority rated the U.S. positively, the numbers had dropped significantly in Germany, Italy, even Turkey and the U.K.

“The biggest problem is that people around the world don’t think the U.S. takes into account the interests of their country when it makes its policies,” said Andy Kohut, Pew’s director of research.

This week, the Pew teams have returned to Europe to gauge anew public opinion. With a nasty diplomatic showdown at the United Nations and massive street demonstrations, it seems the golden days of American diplomatic supremacy may be waning.

Americans are often stereotyped overseas as being arrogant, self-righteous, even simple minded. But while American influence may be waning in diplomacy, American business still dominates internationally. And the pop culture the U.S. exports is still in hot demand, even in Europe.

The number one movie in Britain last week was And in France, four of the top five box office hits last week were American — led by Disney’s and ‘s

“A lot of our foreign customers may not like our politics,” said Willard Workman, head of international affairs at the U.S. Chamber of Commerce. “But they sure like American products because they continue to buy them.”

Indeed, around the world, it’s hard to escape America’s cultural dominance. The Internet, an American invention, is predominately English. Turn on the TV in the Persian Gulf and you’ll find reruns of “ER,” alongside cable channels ESPN, CNN, MTV, and CNBC. While in Europe’s main shopping districts, it’s virtually impossible to escape Levis, Nike, McDonalds, and Pizza Hut.

But though international customers are buying American, they’re also starting to complain that they resent our influence, and that there’s too much America in their countries. Analysts say that may turn into backlash against American products, services, against American way of doing things.

Still, 43 percent of all American private foreign investment was in Europe last year, while 45 percent of European foreign investment was in the U.S.

“So we own each other,” said Workman. “The commercial relationship is probably even deeper and broader than our security and geo-political relationship.”

Indeed, so far, U.S. manufacturers also report no impact from the war of words. Jerry Jasinowski represents 14,000 American manufacturers who are trying to keep it civil.

“And I think, business leaders on both sides are making a real effort not to allow the current geo-political conflict to effect commercial relations,” he said.