Donald Trump, as usual, is monopolising the news, generating more heat than light. So I’ll try to keep this as brief and sane as possible.
In my last piece on Trump, I ended with a brief addendum to include the outbreak of the Tariff Wars. Now that they’re in full swing with news of early casualties, it’s a chance for an early assessment.
Why tariffs now?
The (over-) simplified answer is that it’s been a Trumpian obsession for about 50 years. One of Trump’s most vehement critics, Scott Lincicome of the Cato Institute, argues it’s an idée fixe dating back to his years as a Manhattan real estate developer: “Last week, the Wall Street Journal quoted former Trump officials as tying it all back to his years in Manhattan real estate, where deals were done in cutthroat, zero-sum terms and Japanese investment was a threat. (Many others have suggested the same.)”
Probably this is true and fits Trump’s basic personality, but the world is a big place and what worked for Manhattan is no guide to global affairs. But it aligns with his combative, somewhat paranoid personality.
The larger narrative is that the democracies have been “cannibalising” themselves, in the words of a friend. More accurately, democratic freedoms of all sorts come with their inherent dangers. Along with digital technology and the range of human personality types, Democracy as a political tool of collective coordination comes with some serious design features.
Contradictions
These contradictions have come to a head domestically in some of the oldest and most powerful Western democracies for many reasons. The upshot has been a substantial increase in the Global Risk Index, some truly pathological social symptoms precipitated by the Israel-Palestinian-Islamist conflict amongst others, the rise of openly authoritarian powers globally and an insidious woke tyranny within the democracies themselves.
Some of the reaction may be over-the-top (though close enough), but the perceptions and anger which underlie it carried Trump to victory in the last election.*
Trump is not ideological, so while he rode the MAGA/New Right resentments and fear to electoral victory, his motivations are more global, transactional, and idiosyncratic. This gives him some advantages. For one it offers hope for course correction as warning signals accumulate.
I’m not an economist or economic historian, but a brief contextual background is useful. Trade wars are nothing new. Virtually all human conflict, ranging from piracy to open warfare and conquest to all sorts of protectionism, has a prominent, if not over-riding, economic component.
Tariffs are also nothing new in the protectionist armamentarium, including in American history, though few have been applied with the indiscriminate vigour that Trump displayed on “Liberation day”. Economists like Noah Smith, Tyler Cowen and economic historians like Niall Ferguson have unanimously pointed out the false assumptions and misused formula underlying the initial calculation which increased the tariff settings four-fold!
Tsunamis
Not only that, but the tsunamis set up by the scale and scope of the tariff barrage can be only partially predicted, and where some predictions are possible, they look bleak (see here, here, and here). To summarise, they are likely to:
Antagonise friends and embolden enemies to test American resolve and limits.
Have deleterious feedback effects on the American domestic economy, ranging from inflation, deindustrialisation, wild fluctuations in the stock market possibly resulting in recession, and major political repercussions in the midterm elections.
These increase uncertainty around the world in an already fraught environment and diminish trust in norms, promises and laws which mitigated the worst of political adventurism – or so it is claimed.
Above all, they may strengthen China by undermining relationships with current and potential allies and encourage them in desperation to turn to China for aid and trade.
(Since writing the above, Trump has introduced a 90-day pause, with tariffs dropping to 10%, excepting for China where they now stand at 145%. China has retaliated with 125%. China after all is the real enemy, and possibly this scrap was on the table from the outset.)
Not all commentators are so negative. Michael Lind points out:
“But from North America to Europe to Asia, developed countries are ignoring mainstream economists and their amen corner in the subsidized libertarian think tank world and slapping tariffs onto imports in favored industries like electric vehicles and renewable energy. Governments are resorting to tariffs and industrial policy, not because their prime ministers and presidents flunked Econ 101, but because they do not want their economies deindustrialized by a flood of low-priced, state-subsidized Chinese imports.”
The most revealing and insightful counter-argument to the tariff panic that I’ve come across is an insightful article by the conservative historian Victor Davis Hanson in The Free Press. In it he takes the topic out of the confined world of economic speculation into the real world of national interests, human psychology and the multidimensional nature of power. A couple of extracts give a flavour of his perspective and set the stage for a deeper understanding of the dynamics driving the present moment:
“The ideas of ‘equity’ and ‘symmetry’ are critical to Trump, not just financially but also psychologically. In Trump’s world, those nations that consistently ‘rip off’ the US do so because they do not ‘respect’ or fear it. Without such deference, Trump argues that America insidiously also loses its influence and deterrence abroad. In a larger Trumpian sense, a nation that will not secure its border, insist on fair trade, or address a $1trillion annual trade deficit will be considered ‘weak’ abroad and ripe for exploitation.
“…there are also domestic cultural and social subtexts to tariffs about which Wall Street, for example, seems oblivious. Globalization asymmetrically enriched the professional, investor, and bicoastal classes, as markets for their global goods and services expanded from 300 million to 7 billion consumers. Investors of all sorts, Silicon Valley tech moguls, and the media/academic/legal/corporate professional nexus became wealthy beyond anyone’s prior imagination. Yet while workers’ productivity increased by 80 percent from 1980 to the present, their hourly wages grew only by 30 percent. In terms of purchasing power and inflation, today’s dollar retains only 26 percent of its purchasing power from 1980.”
Both Lind’s and Hanson’s articles deserve reading since they provide views of the broader forces driving Trump’s election and subsequent behaviour. He’s unusually immune to abstractions and even personal preferences, as Netanyahu has found out in his recent encounters. He believes unpredictability backed by power can be leveraged to his advantage.
But an 800-pound gorilla act is not the only way to assert power, and Trump’s reckless implementation of tariffs has backfired spectacularly, certainly in the short-term. The activist wing of the Democratic Party is in full guerrilla mode. Trump is dancing away from the wreckage, while at the same time drastically escalating the confrontation with China. This sets the stage for confrontation with again unexpected and potential unintended consequences.
Putting it together
Given Trump’s soaring ambitions, he has many balls in the air. Some have turned out well and have garnered wide (by no means universal) public support. I have covered these in my previous post in the Daily Friend so won’t repeat here. In addition to the domestic achievements, the two main geopolitical balls currently in play are the violent conflicts in the Ukraine and the Middle East, with the main game against China looming threateningly on the sidelines.
The Ukraine-Russian stand-off is stalemated for the present as far as the public is concerned, but the Middle East is heated up to critical temperatures. An excellent if somewhat intimidating article by Michael Doran gives an excellent account of the complexities and realities in the Middle East. Specifically, he criticises the clueless and dangerous meddling of “Restraintists” in the Obama-Biden camp (and their persistence even in the current Trump administration) as compared with the Trumpian mix of economic and military pressure combined with strategic unpredictability. It should be read in full by the motivated, but this paragraph captures the essence:
“The real choice facing Trump is not between intervention and isolation, the false binary that Restraintists present. Rather, it is between strategic engagement that leverages America’s economic power and diplomatic reach, versus the ideological retreat that Restraintists advocate. His zigzag approach—alternating between forceful action and diplomatic outreach, maintaining hawks and Restraintists in tension within his administration—creates the strategic ambiguity and flexibility needed to manage complex regional dynamics without committing to large-scale military deployments.“
Whether he can pull this off without serious military action is questionable. The Ayatollahs in Teheran will not be easily deterred from what they perceive as a holy mission: the destruction of Jewish power and presence in the Middle East as a hopeful prelude to the global supremacy of Islam. So, the tension mounts.
A philosophical perspective
Responding to the flood of “news” and opinion around Trump is complicated by the emotional aura which surrounds “Trump the man”. His personal idiosyncrasies and character flaws are all too obvious and have been endlessly exaggerated and caricatured by enemies and media commentators.
Why one should expect a man who sees it as his mission to shift history on its axis to behave like the nice boy next door beats me. These outsize attributes are what have brought him to the centre of global attention, and will be both his path to success or perdition. Ours also.
By now his fundamental modus operandi is widely understood by those who take politics seriously. It’s a mix of strategic hyperbole and false leads, keeping options open as long as possible while reality unfolds. He has deliberately surrounded himself with a motley collection of people representing very different agendas, strengths and ideological preferences, which provides him with a variety of perspectives and insights from which to choose.
Very few leaders have the confidence to do this. So far, he has kept within democratic and constitutional red lines while pushing the boundaries of his executive freedoms. It should be seen against the disguised malice and insidious tyranny of the Obama-Biden camp and their fellow travellers.
But the downsides cannot be ignored. By any measure Trump is pursuing a high-risk strategy in a very complex and dangerous world. While it may prevent the creeping degeneration of democracies into impotence and paralysis, it comes with chaos and its attendant acute risks, further compounded by Mafioso posturing.
It is clear that Trump is intent on destroying the rule-based order led by the USA, as brilliantly articulated by Niall Ferguson in his article referenced earlier. In its place will arise the use of naked power and spheres of influence. Doubtless Trump sees this as part of the natural order. Others see it as the path to disaster.
For what it’s worth, power will always be with us, and it is time that the idea that institutions and good intentions alone can serve as a bulwark against greed and tyranny is thrown into the dustbin of history. This is worse than misguided, it is the road to disaster. Trump is re-introducing open transparent power into the equation and that is a good thing. Brace yourself for the ride.
* Andrew Roberts, the eminent British historian, wrote an interesting take in December 2021 on the stages of imperial decline, using Britain as a case study. He compared the reaction to the Kübler-Ross sequence following personal loss: denial, anger, bargaining/negotiation, depression, acceptance. He said America was already well into the Anger stage and wondered how it would respond once it got to Negotiation and Depression. Well, it elected Trump and has turned the sequence upside-down, at least for a while.
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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