Opinion: The Problem Isn’t the Trade Wars… It Is Trump – David Rosenberg | Haaretz

There is a definite risk of economic fallout, but the deeper worry is that the White House is incapable of handling the crisis

   David Rosenberg | Haaretz

How many times has Donald Trump come close to ushering America and the world into a crisis with inflammatory tweets and ham-fisted policy initiatives? It’s hard to keep track, yet remarkably, he has managed after two-and-a-half years in office to stay one step away from disaster.

As serious as the issues involving North Korea and Iran are, their global impact has been limited. The world moves on even as Pyongyang tests more missiles and Tehran takes tankers hostage.        

The latest escalation of Trump’s trade war with China is something different.                   

This time Trump has a true global crisis on his hands, and the reason it became one isn’t just about the economics involved. It’s just as much about the president’s personal abilities, or more accurately, the lack thereof.

The economics are bad enough. Trump’s decision to up the ante with China by expanding tariffs to include another $300 billion in Chinese imports; Beijing’s retaliatory moves by stopping purchases of U.S. farm products and to let the yuan depreciate beyond the psychologically important barrier of 7 to the dollar; and finally Washington declaring China a “currency manipulator” are going to upend global trade relationships in ways that no one can predict with any certainty.

Until now, the assumption was that China and the U.S. were playing chicken, but eventually, they would sit down and negotiate an agreement. Their maneuvering might do some short-term economic damage, but it was containable.

The latest round of tit-for-tat, however, is being interpreted as something different. It’s the end of maneuvering. Now both sides are digging-in in expectation of a long fight. Given the enormous size and influence of the U.S. and Chinese economies, the fight is going to impact globally.

The War Is On

There may be some winners that emerge from it – Vietnam was winning some of the outsourcing business China has been losing, for instance – but there will be many more big losers.

If China and/or the United States slide into recession, the winner-loser balance will tilt heavily to the latter. It’s no wonder that stock markets around the world plummeted recently. Even the Tel Aviv Stock Exchange was hit hard, even though Israel comes as close as any economy to being an innocent bystander in the U.S.-China conflict.

The war is on, but is Donald Trump the general you want?

Despite a flimsy record of accomplishment in either field, Trump marketed himself in the 2016 election as businessman and deal maker par excellence. In the Oval Office, however, he has excelled at pulling out of deals; his record of reaching new ones is near zero.  Even when he does jawbone his partners into an agreement, like a replacement for the NAFTA accord, he can’t get Congress to ratify it.

To put it in an understandable way that Trump might appreciate – in property development terms, Trump is more like a wrecking ball taking things down than a crane putting them up.

Perhaps if he had a strong team behind him, his worst tendencies could be reined in. But the White House is staffed by just the kind of people that exaggerate his worst tendencies. They are the kind like John Bolton who have little respect for the global system and the power of negotiated agreements. Others too closely committed to the idea of China as the enemy – Peter Navarro and Robert Lighthizer are examples – to make realistic compromises. The responsible adults either refused to work for Trump or left in frustration.

Thus, the crisis Trump faces isn’t just about the economic impact, but his ability to cope with it.

The situation looks even grimmer if you consider the people who are supposed to be sitting on the other side of the negotiating table. Trump likes dealing with autocrats such as Korea’s Kim Jong-un and Turkey’s Recep Tayyip Erdogan, but they rarely give him what he wants. It’s not in their nature: They are people who rose to power not by finessing the art of the deal but by banging heads. China’s Xi Jinping is no different.

The last hope of the world economy is China’s relatively weak position in the trade war.

Xi comes with some assets, among them a grip on China’s economy that Trump can only dream of. Compare the U.S. president vainly calling for a weaker dollar versus the evident decision of Beijing’s leaders to order a yuan depreciation at the snap of a finger.

But even autocrats don’t have carte blanche. Beijing’s leaders understand that their power rests largely on economic growth. If they can’t ensure jobs and a rising standard of living, there’s no reason for the masses of Chinese to put up with the corruption and political restraints they have to live with. That’s all the more the case after so many years of economic growth; a recession is something younger Chinese have never experienced and will have little tolerance for one.

The protests in Hong Kong must be giving Xi and his colleagues much angst. The headline cause of the protests is about political freedom, but the underlying cause is economics. They have plunged Hong Kong into just the kind of chaos the rulers in Beijing fear could happen in China. They may make Xi just nervous enough to give Trump much of what he wants to save the Chinese economy from sliding into a trade war-induced recession. The question is, are Trump and his team capable of making a deal?

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Comments

  • Clyde Duncan  On August 11, 2019 at 3:57 am

    In a heated exchange with a Buddy on another blog, I plucked the following out of another essay and dropped it into the fray – He still worships Trump:

    China’s economy depends significantly on its exported goods.

    By devaluating its currency, the Asian giant lowered the price of its exports and gained a competitive advantage in the international markets.

    A weaker currency also made China’s imports costlier, thus spurring the production of substitute products at home to aid the domestic economy.

    NB: Americans would buy more of the cheap Chinese goods and China would increase domestic production because they cannot afford the American imports. – GET IT!

    Of course, he does NOT ….. or there go all his reasons for supporting Trump.

  • kamtanblog  On August 11, 2019 at 4:22 am

    Simple Simon says
    In trade wars there will be more losers than winners. Losers are many winners are few.
    Already Brazil Oz Mexico and Canada
    are benefiting from “tit for tat” USA policy.
    My concerns is that USA will follow EU
    with “protectionist” policies.
    Implosion rather than explosions of
    world trade. BRICS an example of “trade blocks” developing.
    USAUKSA another.
    (US/UK to include Caribbean and Latin America)
    Obviously am speculating economically as politically it may seem impossible with far right leaders in place. In the short terms it will
    certainly seem beneficial to some but in long term there will be more losers than winners.
    WTO rules will have to change to accommodate these new developments so
    remain optimistic for the future.
    In trade let’s hope “quality” replaces “quantity”
    and “dumping” becomes history.
    Post WW2 it was Japan Germany competing
    that benefited from their developers
    Today will it be USA China’s turn.

    Go figure

    Kamtan

  • Clyde Duncan  On August 12, 2019 at 7:52 am

    White Supremacists Committed 73 Killings Since Charlottesville, ADL Says

    Report says 39 U.S. murders were ‘clearly motivated by hateful, racist ideology’

    JTA and Marcy Oster | Haaretz

    White supremacists have committed at least 73 murders since the far-right rally two summers ago in Charlottesville, Virginia.

    That comes from a report released Thursday by the Anti-Defamation League that says 39 of the killings were “clearly motivated by hateful, racist ideology”.

    The violence of the Unite the Right rally has led to an increase in white supremacist activity, according to the report, which is titled “Two Years Ago, They Marched in Charlottesville. Where Are They Now?” – [so we could feel safe]

    “The violence on the streets of Charlottesville has kindled two major tracks of white supremacist activity,” the ADL said. “The first is the rampant dissemination of propaganda designed to promote their views and attract attention. The other, more troubling track is a broader series of violent attacks in the two years since Unite the Right.”

    Among those attacks were the shootings at a Parkland high school, the Tree of Life synagogue in Pittsburgh, the Poway Chabad and the attack at a Walmart in El Paso, Texas.

    According to the report, the recent attacks are part of a four-year resurgence in white supremacist activity and activism driven in large part by the rise of the “alt right.”

    The Unite the Right rally in August 2017, which left one counter-protester dead, drew far-right extremists from at least 39 states and represented approximately 50 different extreme-right movements, groups and entities, according to the report.

    More than a dozen Unite the Right attendees have been convicted and sentenced for crimes related to violence committed during the rally, most notably James Alex Fields Jr. of Ohio, who was sentenced to two life sentences plus 419 years for deliberately driving his car into a crowd of protesters, killing Heather Heyer and injuring dozens more.

    The report also traces the trajectory of the last two years for several other leaders of the rally, including several that now lead their own white supremacist groups.

    Some of the leaders have faced lawsuits as well as domestic and international travel bans.

    Most of the white supremacist groups and individuals who attended Unite the Right remain active today, according to the report.

    • kamtanblog  On August 12, 2019 at 8:34 am

      Nice one
      USA past returns to haunt them !
      KKK nazis on the up motivated by the commander in thief.
      USA seems to be going backwards but there
      is light at end of tunnel.
      Humpty Dumpty will soon fall off the wall
      he is building to keep Latinos out.
      Whites are already a minority in USA today
      and it’s gonna get worse for his white followers
      Doubt if he will get second term or if he does
      time remains his enemy.

      Que sera

      Kamtan

  • IAN  On August 13, 2019 at 11:49 pm

    With all this crap coming from Guyana, I am ashamed that I was born there.

  • Clyde Duncan  On August 14, 2019 at 4:40 am

    HERE IS A GRAPHIC DESCRIPTION:

    https://www.yesmagazine.org/peace-justice/el-paso-shooting-white-supremacy-misogyny-20190813

    • kamtanblog  On August 14, 2019 at 6:08 am

      Politricks!
      Allow donkies vote
      They elect jackasses !

      QED

      Lamtan

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