Trump's Art Of The Deal: Shake Up The Status Quo And See What Breaks Loose

Trump’s Art Of The Deal: Shake Up The Status Quo And See What Breaks Loose

President Donald Trump’s signature move is to challenge the status quo for his opening gambit, often preceding it with cryptic plainspeak on Twitter.

He has amply demonstrated this over 14 months in office. The actions range from frequent hiring and firing of senior administration figures, jeering at, and questioning, the ability and credibility of unflattering media critics and opposition politicians. Likewise, those of the ones conducting investigations into possible Russian collusion in his winning bid for the presidency.  

And then there is his other hallmark, a studied, all round unpredictability, with his personal cards held close to his chest, and a willingness to play push-me pull-you till he gets what he wants.

His handling of NATO allies with bills in hand, has caused consternation but pushed them onto the defensive. Similarly, the barbs and threats directed at a dysfunctional and rent-seeking United Nations (UN), has exposed the ineffectiveness of at least the General Assembly. It has also showed up the loggerheads the Security Council of five is in.

Sensationally walking out of “unfair” to the US Climate Control negotiations at Paris, hit its mark, only to have Trump hinting at a reconciliation on better terms. Ditto for his growling at the runaway dictats of the World Trade Organisation (WTO),  written over the years when the US sought to retain its role as the unconditional caretaker of the “free world” at all cost. But now, Trump is invoking national security to nullify pressure from others using the WTO as a forum.

Trump has also walked out of the Trans-Pacific Partnership (TPP), with a characteristic hint that he may reenter as long as the others reduce their unfair advantages. He threatens to leave the North American Free Trade Agreement (NAFTA) as well, unless some other rank one-way beneficiaries join it quickly.

All this New York style arm-twisting is turning a lot of global leaders apoplectic in frustration. Thing is, they know that return sanctions on America will not hurt it half as much as they would like.

Trump is essentially putting the world, albeit lurching from one platform to the next at different times in his trademark manner, on notice - his mantra is: “America First”. And he leaves it flexible and ambiguous as to how he intends to flesh it out.

Trump’s foreign policy initiatives in the Middle East have departed from the shibboleths of 25 years. Moving the US embassy to Jerusalem, a strong pro-Israeli action, was presaged in his very first visit, when he chose to spend the night in Jerusalem, rather than Tel Aviv.

Trump has engaged with the new King Salman of Saudi Arabia and his son, the energetic and reformist Crown Prince Mohamed bin Salman, with sales of hundreds of billions worth of military equipment. This bluntly underscores his desire to stymie Iranian ambitions in the region, including a roll-back of the Obama era accord and their nuclear weaponisation plans. However, he does not lean on Indian  linkages with the Iranians.

His basic willingness to do business with Russia’s Putin, even as he expels Russian “spies” for the nerve gas poisoning of a turncoat in Britain, is also a make-over of the chilly relationship between presidents Obama and Putin.

Trump has taken up where Obama left off with India. He has moved the US closer in a security and technology-sharing  sense. This is to counter Chinese hegemony both in the Asia-Pacific-Indian Ocean theatres, and its growing challenge overall to American global supremacy.

However,  the US engagement with India is very much a work in progress. The US attitude to Pakistan’s terrorism has hardened. Trump’s attitude to Afghanistan is still evolving, but tougher than that of Obama.

And now to the art of imposing international trade tariffs to secure “America First” advantages and create new jobs while putting China on notice. The US Congressional polls approach, and Pennsylvania is a steel state. Is the timing aimed at steel-workers there? The Democrats now admit they will be hard pressed to win on Capitol Hill at mid-term, let alone impeach Trump.

The opening gambit with China began early in Trump’s presidency in line with his campaign promises. Trump told China that it had a 100 days to do something about the gross trade imbalance in its favour. This was at his initial summit with Xi Jingping conducted at Mar-a-Lago, Florida. Predictably, nothing happened. China, seasoned through several US presidencies, sat on its hands, to test Trump’s resolve.

The US president also asked for help from China to rein in a belligerent North Korea. He wanted China to use it influence to stop its nuclear weapons’, satellite and nuclear-capable missile tests. When nothing happened here too and the tests continued, tough US/Western economic sanctions on North Korea followed. China stayed unimpressed, and even helped North Korea violate the blockade with fuel transfers on the high seas.

Now the long threatened trade tariffs have been imposed on Chinese goods- $60 billion via a 25% tariff on steel and 10% on aluminium products. This, though a blip  on the Chinese economy as yet, was thought to be unthinkable by many US experts for the harm it would do to the US economy, and indeed the world, in the event of a trade war ensuing.

But Trump has moved forward with it. He has pointedly chosen to single out China amongst the suppliers - exempting Canada, Brazil and South Korea, even though China sells no more than 35% of the total.

The same willingness to break through the logjam bypassing conventional wisdom has prompted him to indicate that he will hold direct talks with North Korea’s Kim -Jong-Un. This was brokered via South Korea, a staunch US ally,  where Trump sent daughter Ivanka recently, rather than China.

But to emphasise its relevance, China has just held a secretive summit of its own with the North Korean leader in Beijing prior to the expected US-North Korea summit.

China, now with a president for life in Xi Jinping, has warily countered the US tariff moves by imposing mild import duties totalling to $3 billion, on as many as 128  American imports. These include products from Trump voter country, such as pork and wine. Both sides have threatened escalation as necessary.

There has been a torrent of comment from observers since this news broke, most predicting serious consequences if a global protectionist trade war ensues in earnest. Goldman Sachs says there will be a 20% drop in equity prices. Others predict global recession.

Trump had, without causing any brouhaha, earlier slapped on tariffs on imported solar panels and washing machines, but not just from China.

But now, to prevent the rest of the world coalescing against his protectionist moves, Trump has concentrated tariff impositions just on China. Will it work to bring China to offer reparations on the massive theft of intellectual property rights (IPR), which is another spur to these impositions? Will China act to right some of   massive trade imbalance in its favour? Not if you believe the current Chinese posturing. But Trump as a businessman, if not a (very new) politician, does have a track record for getting his way.

Not all the commentary is critical either. Some, like the respected digital portal Quartz, think the steel and aluminium tariffs make “perfect sense”, seen from the historical perspective of US trade policy.

The purpose, says Carmen Dorobat, an international trade expert at Leeds Trinity University, is political. Trump has, as we know, linked the steel and aluminium tariffs to “national security”.

It is a “disruptive” approach to trade policy, says Harsha Vardhan Singh of Brookings India.

But what Donald Trump is looking for is renegotiation of trade agreements, on terms more favourable to the US. He wants to get an extension of the Trade Promotion Authority (TPA) to do this, from Congress. Trump says: “ When we’re down by $100 billion, the trade war hurts them; it doesn’t hurt us”.

While various countries have been exempted from this first salvo, they too have been put on notice to move away from their unequal treaties by implication. Trump is on record that he can forego tariffs altogether, given the right kind of cooperation.

Though the vilification from left-leaning economists is at a crescendo right now, Trump can hardly be faulted for taking this line on behalf of America.

For: The Sunday Guardian

(1,384 words)

March 29^th, 2018

Gautam Mukherjee