Not So Fast, Not So Easy, Donald

Donald Trump’s proclivity not to read, understand the history and culture of the nations he is dealing with, his aversion to letting experts guide his policy-making, his sheer, under-educated arrogance mixed with a passionate belief that bullying works all the time on everybody, is creating potentially devastating global consequences, perhaps about to trigger a new, powerful worldwide recession. For a president dramatically lacking in international success, his selection of China and Iran as his primary confrontation targets is rather clear evidence of his naivete. Electioneering at the expense of the American economy.

When things go wrong for Donald Trump, he usually just stops talking about them. North Korean negotiations, touted as one of the greatest international achievements by an American president – delivering denuclearization of a nation with whom we have been technically at war since the 1950, something no modern US president has done – have collapsed. The North’s nuclear stockpile is growing, they are testing missiles again and cozying up to China and Russia to insure their economic and military support. Trump doesn’t mention Kim Jong-un much anymore.

Venezuela’s Nicolas Maduro was supposed to fall after a recent set of U.S.-supported violent protests. He didn’t. Trump doesn’t mention Maduro often anymore. Iran was supposed to be humbled, regime change inevitable, once the U.S. pulled out of the six-nation accord and escalated the sanctions even against European allies doing business with their treaty partner. Regime change? Not exactly. The incumbent theocracy rallied even their opponents to oppose this bullying effort, escalating their anti-American rhetoric and officially declaring U.S. forces in the region as “terrorists.” Each side amped up the threats, as a U.S. carrier strike force moved toward Iran, and the risk of an inadvertent “reaction” told the world how close to war the United States was willing to risk.

U.S. sanctions notwithstanding, Russia solidified its hold on illegally seized Crimea, continues to send clandestine troops to pretend to be east Ukraine resistance fighters, maintains support for the repressive regimes in Syria and Iran and increases election interference tactics all over the Western world. China keeps expanding both its regional military presence in the South China Sea, growing its man-made airfield island in the Spratly chain, while using its economic power in programs like its Belt and Road initiative to make it clear to all of Asia that it, and not the United States, is the only superpower nation that really matters in that part of the world.

Even Trump’s championing of Brexit is crumbling as U.K. Prime Minister Theresa May steps down as her party leader, requiring a new PM to be appointed in the next two months, without the slightest indication that Britain knows how to implement its referendum. Yet another Trump-endorsed economic policy that just cannot find a path to functionality.

Trump’s embracing “whatever Netanyahu wants” Middle Eastern policies pretty much decimated the last hope of a U.S. mediation role in the Palestinian crisis or in coalescing NATO allies against remaining extremists. With Saudi Arabia and Israel, two fairly isolated countries, being our calling cards in the region, Russia and China are having their way with most of the rest of the larger Islamic countries.

As American farmers make it very clear that the dribbles of income replacement offered by the Trump administration to make up for China’s clamp-down against importing major U.S. agricultural goods in retaliation for the U.S. trade war against China were woefully insufficient, Trump doubled down on increasing tariffs against Chinese goods. See my May 19^th Tariffs Are Not Terrific blog, for more details on the harm that Trump’s tariff battle with China is doing to almost every American consumer, inflicting a significant regressive consumption tax on us all.

Trump’s appropriately maligned book, The Art of the Deal, which suggests that contractual negotiations are a winner-loser proposition where bullies and exaggerators prevail, seems to be the blueprint for The Donald’s trade negotiations with China. As with so many foreign policy forays that have gone awry, despite massive economic losses from the war, China seems to be girding for a prolonged stand against the major thrusts and targets of Trump’s trade goals with them. Not what Trump promised would happen.

“Beijing is committed to striking a trade deal with the U.S., but it’s ready to respond with more countermeasures, said Chinese envoy Cui Tiankai, as he called the blacklisting of [mobile phone maker] Huawei by the United States an ‘unusual’ act of state power against a company.

“China’s tone has become more belligerent since the U.S. escalated the trade war. The U.S. ‘continues to attack Chinese companies not because they have done anything wrong, but because they are too outstanding for the United States to accept,’ the state-run Xinhua News Agency said in a commentary Friday [5/24].” Los Angeles Times, May 25^th. China is ready to trade or retaliate. Trump’s response: he doubled down and threatened to add additional PRC tech companies to the U.S. blacklist. No talks are currently scheduled between the two nations.

And as most China-watchers know, even if China were to agree to lifting some of their exclusionary and IP-appropriation regulations, their bureaucrats will figure out how to keep the status quo and U.S. economic interests in their place. When an accord is reached, which cannot remotely deliver what Trump has promised his constituency, he will falsely claim victory in a war he has lost. Here’s what Trump faces… with a subtext that if President Xi does not hold out, his political power in China will plunge:

“Beijing is ready not only for a protracted battle over trade but also for what could be a much larger geopolitical struggle… Chinese media coverage of the trade war turned sharply nationalistic over the last week. References to national dignity and the willingness of the Chinese people to suffer any burden in the confrontation with the U.S. underscore how bad the situation has become.

“Some analysts have warned that a Cold War 2.0 has already started in the wake of the break in U.S.-China trade talks this month and Washington’s moves to hike tariffs on $200 billion in Chinese goods to 25% from 10% and ban U.S. suppliers from selling to Chinese tech giant Huawei without government permission.

“Huawei, the world’s biggest telecommunications manufacturer, is dependent on U.S. chips and software. A U.S. Department of Commerce decision Tuesday to allow component sales until Aug. 19 was seen less as a reprieve for Huawei than as a cushion for American companies that do business with it.

“The province that Xi toured this week — Jiangxi — carries potent symbolism in China: It was the starting point for the Red Army’s Long March in 1934, a storied odyssey in the history of the Communist Party, leading to the ascent of Mao Tse-tung, and is often used in propaganda to urge Chinese people to show grit and endurance.

“Xi told the cadets and their officers that China was facing a new ‘Long March,’ signaling that Chinese authorities are preparing for a protracted trade war and increasing military and geopolitical rivalry between the world’s two largest economies.”

“‘We are now embarking on a new Long March, and we must start all over again,’ he said to rapturous applause… A day earlier, Xi visited a firm that produces rare earth elements, which are crucial in high-tech manufacturing, provoking speculation that China, the world’s dominant source, could ban their export to the U.S. should the trade war worsen.

“Jin Canrong, a professor of international relations at People’s University in Beijing, wrote this month on the state-owned news website Guancha that a ban would give Chinese chip makers the chance to catch up and compete with American ones — and would have dire consequences for U.S. markets.” Robyn Dixon writing for the May 24^th Los Angeles Times.

With a few exceptions with strongmen in Brazil, Eastern Europe, Israel and the Philippines, Donald Trump is considered the clown-price of international relations by most of the rest of the world. Nothing brings that home like his address to the United Nations General Assembly last fall: “President Donald Trump’s opening remarks at the United Nations… created an awkward and unexpected moment, with other world leaders laughing or grumbling at the American president’s boast about his administration’s accomplishments.

“Trump began his speech by saying his administration ‘has accomplished more than almost any administration in the history of our country,’ an assessment not shared by some of the 130 world leaders gathered in the chamber.” USA Today, 9/15/18. Laughter? His efforts to bring China to heel in trade negotiations, to win that struggle, is likely to be another massive Trump foreign policy failure.  But this time, the consequences may well be dramatically evidenced by a severe global economic downturn that will slam most Americans in the pocketbook… hard, really hard.

              I’m Peter Dekom, and while economies do recover – sooner or later – the degree of damage can be economically fatal to many economic segments in America… and very likely to increase the income inequality that is already the worst in the developed world.