Trump: Trade Warrior and Decline Manager

The erratic actions by US-President Trump seem to indicate some lust for disruption. They, in fact, have the potential of disrupting international structures. His arbitrary treatment of numbers already was “successful” in that respect, generating uncertainty and anxieties among affected companies, governments, and the average citizen of targeted countries.

Yet, considering him just a weird disruptor, as the mainstream media of the Western old-NeoCon globalists suggest, would underestimate his capabilities. Allegedly, the “reciprocal tariffs” were meant to remove some “injustice” to the disadvantage of the US vis-à-vis countries, which the US have structural trade deficits with – i.e., most countries in the world. The logic was to have the punished countries come up with offering better conditions for less US deficits. So, there is some rationality discernible in this tactic.

However, while a number of countries quickly offered bilateral bargaining, there still has no systematic bargaining started yet. In fact, it does not appear as if any public agency in Washington would be willing to bargain or be prepared for it. No bargaining plans or targets are visible in Washington.

A misunderstanding with this tactic is that considerable parts of US-imports, namely from the country mostly targeted, China, are imports of US-companies producing in China. Similarly, it is also misunderstood that the decline of exports of industrial commodities from the US to China are caused by the fact that China has built highly efficient production conditions, skills, infrastructures, value-added chains (VACs), industrial clusters, cutting-edge young spin-off companies, and qualified and alert public agencies, so that US-companies have established their complete VACs in China, where they can source more efficiently – not the least, in order to be independent of future Western sanctions.

Note that this applies even more to EU and German companies manufacturing in China. They all have cared to become “autarkic” within China, but then even becoming competitors in their homeland markets and in third markets.

More generally, with tariffs, any reindustrialization of the US is simply impossible. Reindustrialization of the US would have to be a decades-long multidimensional reinvestment effort, beginning with inclusive education in primary schools, up to high schools, colleges, and universities, to generate hundreds of thousands skilled and motivated workers, technicians, and engineers, further, building modern infrastructures, industrial and technological research, and developing a qualified state, capable of a cutting-edge industrial policy. Demanding, after nearly five decades of neoliberal disinvestment and ruination of the Western states!

With huge subsidy programs, perhaps with some tariffs, and with cheap-energy supply, you may bring back some US-company or attract some foreign industrial investment. This now works namely for EU and German companies, countries that have structurally ruined themselves by their sanction policies and their Eurasian iron curtain 2.0. Their energy costs and energy insecurities are ousting new investment.

But in general, you cannot repair a Swiss watch with a sledge hammer. You need a complex developmental/entrepreneurial state with a complex long-run rebuilding strategy.

And before tariffs could attract relevant investment to the US, their macroeconomic countereffects might have pushed the US into recession and crisis. Such insight seems to have led Trump to different moratoriums on announced tariffs and to exemptions namely for Chinese electronic high-tech commodities. US companies and consumers have “price-inelastic” demands for Chinese goods. These simply are indispensable and virtually have no substitutes. The US-consumer has to pay the tariffs in the end, as was already the case under Trump 1.0.

With trade being strangled, inflation would come on top, with further adverse distribution impacts, and stagflation looming. The Fed will then not reduce interest rates, further contributing to recession – and to the federal debt problems. Treasuries already have a yield of nearly 4.5%, to be paid for the huge amount of new federal bonds this year. A global de-dollarization trend and broader stock market devaluations may further combine then into a dangerous cocktail that the government may no longer be able to handle.

Trump’s “disruptions” are a potential of the centralistic and proto-autocratic US presidential system for periods of systemic crisis. And he is facing a systemic crisis indeed – and is himself an expression of this crisis. His historical task, thus, is to manage the strategic decline and setbacks the US have experienced since the Great Financial Crisis 2008ff. The international instances of US decline are numerous: Russia, Afghanistan, Western Asia, West Africa, or Ukraine. While the old DEM-NeoCon neoliberals had no Plan B instead of endless wars, overstretched the US-resources, and would have pushed the US into disaster with their “ever more of the same”, Trump is the one to draw the consequences of the fact that the US can no longer win wars in a world developing away from hegemony, namely against an equally-footed adversary like Russia.

Trump, thus, is to reconfigure the reduced US-resources, withdrawing from the Ukraine battlefield, leaving the EU-NeoCon warmongers to themselves (who have no Plan B either, except their mantras of “total victory in Ukraine” and “destroying Russia”), and concentrating US power potentials in a buildup against China.

Trump, thus, is both a “decline manager” and a “savior” of the US power left. It appears sportive that he apparently wants to push the conflict with China to some first major showdown. Which he would risk losing. While he certainly realizes that China is stronger and less dependent on the US now than it was under Trump 1.0.

It appeared downright absurd how Trump juggled with numbers. When China spoke of a “joke” and refused to further take part in that game, someone in his team seemed to have calculated, considering that an area of average price advantages of Chinese commodities (due to higher efficiency of Chinese production conditions) are around 50-70%. Beyond that tariff size order, the export of Chinese commodities would come to a halt and trade would go to zero, as US-commodities would be unsaleable in China already at much lower Chinese import tariffs. So, after three days of Chinese non-reaction, Trump came up proposing some bargaining, starting with some 60%-tariffs, suggesting some deal soon. He seems to be some kind of pragmatist indeed.

Federal debt comes ever closer to some moral limits, stock markets fragile, inflation surging, de-dollarization, interior social fragmentation and political unrest. As the Tik-Tok case still lingers, a signal here is his limited suspension for its sell-off. In all, ample space, and a need, for him for win-win “deals”.