Sunday, 11 March 2018

Donald Trump is being clever with tariffs, Korea and China

The global economic system, like NATO, was set up after the war by the U.S.A., with British help, to contain Soviet expansion. 

Like spending on Nato, which Donald Trump in his election campaign called 'obsolete', U.S. tariffs unfairly disadvantage the U.S. for reasons that ceased to exist in 1991.

The U.S., which is less dependent on trade than the other G-7 economies, could easily win a trade war if it conducts one cleverly. 

27% of U.S. G.D.P. derives from trade. China's figure is 37%. The EU's percentage is 83. Germany's percentage is 84. Canada's percentage is 64 and the UK's is 58.

Higher U.S. tariffs should be a vote winner for Donald Trump in industrial states. 

A U.S. attack on North Korea would have incalculable implications for China, which is not a cohesive country. China would have to deal with a tidal wave of refugees and a democratic, prosperous U.S. ally as a neighbour. 

I am not sure even China has very much leverage with North Korea but North Korea is China's problem first and foremost and the USA wants to get China to try to solve it. Hence Donald Trump is rattling his sabre.

A trade war with the U.S. would also have huge dangers for the Chinese economy.

Russia is not the Soviet Union. The U.S. has no need to fear Russian expansion in Europe or the Middle East. U.S. interests are not threatened by anyone in either region these days. 

The only part of the world where U.S. power and trade interests are threatened by a rising regional hegemon is East Asia. 

China, as Steve Bannon, John Mearsheimer and others keep saying, is the big threat to the U.S.A.

Donald Trump wants to appear unpredictable and irrational in order to get what he wants. The media, unable to be objective about him, do not see this.

China is being challenged on two fronts simultaneously. Let's see how well the President handles both fronts. If he does well he is pretty certain to win the 2020 election.

Perhaps Donald Trump is not the idiot that many economic and foreign policy experts think.


  1. It's a big if to assume that Korean reunification will result in a democratic, prosperous neighbor for China, especially after a war.

  2. A trade war hurts everyone. The US threatening a trade war with more vulnerable adversaries is like threatening to cut off one's finger, knowing it will lead to the loss of two fingers on the adversary. This still leaves the world with three fewer fingers - nobody wins, only some lose less and some more. I think there are better ways of putting pressure on adversarial countries.

    1. The USA from the revolution onwards has always been protectionist and there have been trade wars before with Europe. George W Bush, no hero of mine, raised tariffs on steel, for example. But I certainly don't want a trade war. I want things to be arranged amicably and hope England takes advantage of this instead if siding with the EU in a docile way. Theresa May in her heart likes the EU and detests Donald Trump. I do not think that this is what the moment requires.


  4. The saber rattling, tweets etc. Trump directed at North Korea seems to have payed off. It is, in some ways, reminiscent of the Madman strategy of Nixon.

    Much of what he does seems to fit the same mould. Too much. Overplaying that kind of paradigm isn't a good idea.