Trump may be about to discover that it is easier to begin a trade war than to end it successfully.
Is it a truce? A ceasefire? Even an armistice?
On the verge of triggering a global trade war, President Donald Trump beat a tactical retreat on Wednesday. First, he announced that Americans should “Be Cool,” a well-known line from the movie Pulp Fiction, then suspended, at least for ninety days, the reciprocal tariffs that he had promised to institute while raising tariffs on China to 125 percent and maintaining onerous new duties on Canada and Mexico.
Unfortunately, there is nothing fictional about Trump’s foray into upending international trade. Trump inherited a vigorous economy that boasted low unemployment and declining inflation. Now he is reversing those trends. Already the “golden age” that he promised in his inaugural address is beginning to look distinctly tarnished.
Trump, as Fortune has reported, was apparently indifferent to the collapse of the stock market. It was only the rise in Treasury yields that prompted him to reverse course. Though the administration has been attempting manfully to spin his capitulation on reciprocal tariffs as the move of some kind of mastermind, Trump himself has acknowledged that he flinched as the bond market threatened to collapse. His approach is the equivalent of stepping on a hand grenade to cure a headache.
Trump likes to bluster about a virtuous America being ravished by predatory foreigners, including the European Union which was supposedly formed to “screw” America. This might be called “Navarroism” after his economic adviser Peter Navarro who seems to think that any import represents a dire threat to the American way of life. The truth is that Americans have been living beyond their means—$36 trillion in federal debt and rising—by relying upon the dollar to function as a global reserve currency. Foreigners, in other words, have been subsidizing America’s spending spree over the past several decades. Now interest payments on the federal debt are set to keep rising as foreign investors demand higher interest rates for what they see as a less stable investment. The longtime economic safe haven, in other words, isn’t looking like a place of safety. This is the true fruit of Trump’s economic quackery.
As the American economy teeters on the edge of a recession—or has already entered one—the administration is breathing fire on China. On Fox News, Trump aide Stephen Miller declared, “I believe that China will be forced, very soon, to come to the table for the simple reason that China’s economy is completely dependent on its exports to the United States and to the West.” But China shows no sign of buckling. Instead, Beijing has vowed to “fight to the end,” a promise that might include upping the ante by blockading or even invading Taiwan. How would Trump, who is already floundering with his peace efforts in the Gaza Strip and Ukraine, respond to a fresh foreign policy challenge?
The main upside for Trump seems to be that he relishes his ability to browbeat various countries with the threat of tariffs. Trump does not have an immodest assessment of his skills as a negotiator. Congress, he declared at a National Congressional Republican Committee dinner on Tuesday, should remain aloof from his negotiations because “they don’t negotiate like I negotiate.” Indeed. He went on to boast that countries were “kissing my ass” to reach an accommodation on tariffs. Trump whimpered, “Please, Sir, make a deal. I’ll do anything. I’ll do anything, Sir.”
Actually, they won’t. China is hanging tough. So is Canada, which has begun imposing a 25 percent tariff on American cars. The European Union has temporarily suspended some $23 billion in tariffs but is prepared to institute them quickly. “If negotiations are not satisfactory,” said Ursula von der Leyen, president of the European Commission, “our countermeasures will kick in.” If anything, Trump is forming a coalition of the willing in Europe and Asia that will become an even fiercer economic and strategic competitor than might have been the case.
Indeed, with his imposition of tariffs, Trump is getting the economic war he has coveted since the 1980s, when he issued bogus warnings about Japan overtaking America. Trump is as much of an unguided missile today as he was then. He may be about to discover that it is easier to begin a war than to end it successfully.
About the Author: Jacob Heilbrunn
Jacob Heilbrunn is editor of The National Interest and is a nonresident senior fellow at the Atlantic Council’s Eurasia Center. He has written on both foreign and domestic issues for numerous publications, including The New York Times, The Washington Post, The Wall Street Journal, Financial Times, Foreign Affairs, Reuters, Washington Monthly, and The Weekly Standard. He has also written for German publications such as Cicero, Frankfurter Allgemeine Zeitung, and Der Tagesspiegel.
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