1 week Ago
FOR many parties everywhere now baffled and stunned over US trade policy, understanding some key fundamentals about Trump 2.0 is vital. A continuing theme is that Trumpism is shaped and guided by a few basic impulses, which produce either empty rhetoric or policies subject to revision by reality.
Not everything that President Donald Trump says can be taken equally seriously. Yet after experiencing Trump 1.0 for four years, countries around the world still regard all his utterances as given – firm and steadfast policies operating as immovable objects or unstoppable forces.
As US trading partners, these countries have scrambled over Trump’s tough yet whimsical global tariffs, scurrying through Washington in hopes of achieving some policy resets. Their alarm could result in hasty and premature agreements that are unnecessary or counter-productive over the longer term. Trump himself had counted on this international panic as a result of his incendiary tariff announcements.
He was therefore condescending towards trade partners to the point of humiliating offensiveness. Nonetheless, there was always the possibility – however slim – of the tariff threats becoming policy for long enough to damage some countries’ trading positions. Jobs, industry health, corporate futures, stock valuations, government plans and more seemed only too vulnerable.
But it is also useful to remember the failed promises and threats of Trump 1.0: raising taxes on the super-rich, cutting taxes on everyone else, lowering fees in higher education, championing American workers, reviving the coal industry and protecting steel workers, ending North Korea’s nuclear programme, and building a border wall with Mexico that the Mexican government was supposed to pay for – among many others. Trump 2.
0 began early enough with more broken promises, among them ending the Ukraine war within 24 hours and a swift trade deal with China. The worldwide tariffs and 145+% tariffs on China must now count among these fanciful non-deliverables. For other countries, the trick lies in differentiating between Trump’s actionable policies and the blather – with the overriding caveat that even actionable policies can quickly evaporate as hot air.
The tariffs announced on April 2 are of this sort simply because they conflict with the realities of global trade and the US national interest. All this is part of Trump’s signature style of talking loudly and carrying a big stick. Yet the latter appears as only a stick of loofah because US global trade clout has been diminishing significantly for almost a century.
In the immediate aftermath of World War II, the US economy comprised half the global economy, producing 60% of global goods in 1950. Its share of global trade fell to 15% in 1970, then 9% in 2019 and is still trending downwards. The postwar economic recovery of Germany and Japan was only part of the story.
For decades the developing world nurtured their economies and productive capacities, emerging markets grew, and US policies favoured outsourcing production. This was globalisation of which the US economy remains a significant part, and which it used to lead on nearly all fronts. Now that other countries including China seek their share of the deal, the US is in futile frenzy mode like a King Canute.
In grasping at straws, false solutions seem like tempting policies when they sound populist. They appeal to policians desperate for a quick fix while surrounded by servile subordinates. White House henchmen had insisted that the tariffs were serious and would stay.
They probably believed what they said at the time, and anyhow the tariffs would work better as scare tactic only if their victims believed they were real. But unfortunately for Trump 2.0, the single and indivisible world economy still includes the US, China and everyone else.
Hurting that economy and its global ecosystem would hurt all parties including the US itself. So as soon as the tariffs were about to bite, giant chain store moguls from Walmart, Target and Home Depot had an emergency meeting with Trump to hit the brakes. This contrasted tellingly with the tech titan cronies around Trump at his inauguration.
And so another campaign promise from last year is about to be upended. Not so long ago, punitive tariffs on other countries were supposed to be the grand solution in bringing manufacturing jobs back to the US. How other countries’ economic hardships would translate automatically into US gains was never made clear.
In reality mechanisation, digitisation and robotics in US industry today are causing more US unemployment than “exporting jobs.” US society itself is ambivalent on the issues. A recent YouGov poll shows that 61% of Americans who want more manufacturing jobs in the US don’t want those jobs themselves.
They see little future or job satisfaction in such employment. Not for the first time, but more decisively than ever, the Trump White House has to reconcile itself with reality. Bunn Nagara is Director and Senior Fellow at the BRI Caucus for Asia-Pacific, and Honorary Fellow at the Perak Academy.
The views expressed here are solely his own..
