What Happens When There Are No Deals?
Trump's tariff fantasies are colliding with reality.
Now what?
S E E D E D C O N T E N T
I'm still traveling and won't resume normal posting for a while. No primer today. But I have time to talk briefly about the mystery of the tariff endgame.
Trump could just say, "I'm imposing huge tariffs, and that's that." But he keeps insisting that he's imposing tariffs because other countries treat America unfairly, and that he'll force them to stop. This fantasy of dominance runs into two problems: most countries aren't treating us unfairly, and trade negotiations are going badly if they're happening at all. Yet Trump keeps insisting that big deals with other countries are just around the corner. Read his amazing interview with Time:
Your trade adviser, Peter Navarro, says 90 deals in 90 days is possible. We're now 13 days into the point from when you lifted the reciprocal, the discounted reciprocal tariffs. There's zero deals so far. Why is that?
No, there's many deals.
When are they going to be announced?
You have to understand, I'm dealing with all the companies, very friendly countries. We're meeting with China. We're doing fine with everybody. But ultimately, I've made all the deals.
Not one has been announced yet. When are you going to announce them?
I've made 200 deals.
You've made 200 deals?
100%
In case you're wondering, China has ridiculed Trump, saying that there are no negotiations. Who do you believe? This is a case of he said, Xi said. But given Trump's long history of fantasies and delusions of grandeur, as well as Xi's long history of being single-minded and indefatigable, I believe the Chinese.
Also, Japanese trade negotiators have gone home because they can't get any clarity on what America wants. Among other things, Trump has berated the Japanese for testing American cars by dropping bowling balls on them — which they don't .
At some point, and soon, Trump's fantasy of trade dominance will become unsustainable. And he's hitting the wall on many other fronts, including his other signature issues, the economy and immigration. Recent polling has been brutal: Trump has no strengths left.
Let me be clear: Trump hitting the wall this early is a good thing for the survival of U.S. democracy. Consolidation of one-party rule looks a lot less likely today than it did a few weeks ago.
But where do we go from here? Unlike the British parliamentary system, the U.S. has no break-the-glass off switch that lets us get rid of a deeply unpopular and delusional leader. Impeachment won't happen, because this isn't the Nixon era: Trump's party is too corrupt to help save the country.
So we must begin to ask ourselves: in the 1364 days left of the Trump administration, how much damage can he do? And what can those of us who want to save the country do to minimize the damage?
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Who thinks US businesses shifting their supply chains to Vietnam, Indonesia, Malaysia, India, among other countries, are going to return to China? Who thinks these developing economies who are benefitting from expansion of trade are going to willingly return to the status quo? Let's see a show of hands.
Has everyone on the left completely forgotten Barack Obama's push for the Trans-Pacific Partnership? Has a decade really dulled the senses of the progressive left that much? Paul Krugman opposed Obama's TPP because of regulatory favoritism and potential exploitation by essentially stateless multi-national corporations. Obama's proposed TPP would have sold out the United States which is why it received little support and strong opposition.
Trump's approach is actually delivering the touted benefits of the TPP without imposing unfair constraints onto the United States. Trump has forced a natural transition to the proposed TPP supply chains without selling out the United States. Trump has laid the groundwork for a common sense virtual TPP that is more fair to the United States. These developing economies are not going to willingly relinquish their expanded trade to return to the belt-and-road status quo. And it's quite likely these developing economies will be quite willing to protect that expanded trade by negotiating trade deals.
As usual Paul Krugman gets lost in the trees so he can't see the forest. Trump is on the cusp of establishing an economic trade pact that China can't disrupt. I do have doubts that was ever Trump's intent. And I have serious reservations that Trump will capitalize on shift in the trade environment. Nevertheless that is the opportunity presenting itself. So, do we listen to Krugman's elitist whining or do we take advantage of opportunities as they arise?
Krugman is regularly wrong. Like when he assured us Trumps policies would push us into recession/depression before the 2016 election only to be walked back shortly after Trump won. He’s a liberal shill. Nothing more.
Nice that you agree