Trump’s sanctions on China may turn out to be bad on…Europe
The first book written by Donald Trump was: “The Art of the Deal.” It was published in 1987 and it is still selling wonderfully. It is not the only book written by the President of the United States: nine more did follow that one and they are all hits. Ominously, the last one is titled: “Time to get tough.” Which is exactly what Trump is trying to do right now with China and the European Union.
The very last paragraph of the “Art of the Deal” is aptly named What Next. It reads like a lofty program: “I don’t know the answer, because if I did, that would take half the fun out of it. This much I do know: it won’t be the same. I have spent the first 20 years of my life building, accumulating, and accomplishing things that many said could not be done. The biggest challenge I see over the next twenty years is to figure out some creative ways to give back some of what I have gotten. I don’t just mean money, although that’s part of it. It’s easy to be generous when you’ve got a lot, and anyone who does, should be. But what I admire most are people who put themselves directly on the line. I have never been terribly interested on why people give, because their motivation is rarely what it seems to be, and it’s almost never pure altruism. To me, what matters is the doing, and giving time is far more valuable than just giving money. In my life, there are two things I’ve found I’m very good at: overcoming obstacles and motivating good people to do their best work. One of the challenges ahead is how to use those skills as successfully in the service of others as I have done, up to now, on my own behalf. Don’t get me wrong. I also plan to keep making deals, big deals, and right around the clock.”
Well that was sounding like a sort of electoral manifesto ready to hatch, and we suspect that this short paragraph gives a clear insight into the President’s mind. Trumpian language was already there, nothing new, but we are convinced that people who, like Trump, follow their instinct more than reason, don’t need a rich language or some complicated sentences to get to the core of the matter and to strike a chord with the common folks.
It is in Trump’s style to take giant gambles and going into negotiations asking 100 and then settle for 50, a bit more if possible, but if the circumstances are wrong, even a bit less than 50, or nothing at all.
We are sure that Chinese trade negotiators have diligently scoured his books and read between the lines of the fiery speeches he delivered during his successful electoral campaign. They should understand how to deal with this man. He is not holding any trump card close to his chest. He is the most open and plain man you may expect to meet at the negotiating table, no subtilty, no double-speak. Mind you, no one should underestimate him: he is a workaholic and can be very well prepared as well as hard, but he is weak at home and he need some sort of achievements outside the national borders, some propping up. Because of this, even with costly tariffs charged on Chinese goods, China can get out at the top.
As the U.S. slapped levies on $34 billion of Chinese exports, going into effect at midnight, Thursday, China is responding with countermeasures. It is right and proper for China to do so but let not forget that $34 billion are not much for both countries and it is silly to call it a Trade War, perhaps a skirmish is a more precise term or, even better, a warning shot fired over the bow.
Mr. Trump’s threat to levy tariffs on another $200 billion goods won’t be put into effect until this late fall because the U.S. has to clear a number of procedural requirements.
Brookings Institution China scholar David Dollar, a U.S. Treasury’s top official in Beijing with the Obama administration, thinks that the fight will stretch into next year. We think that this situation will be soon resolved with discussions at the very top, between President Xi Jinping and Donald Trump, since the two sides have a lot of interests in common and calm will be re-established between the two superpowers, by a scaling down on tariffs by Trump and an offer of a set of trade deals, probably in the order of US 200 billion, by President Xi. Finally, the EU will be the real losers in this phony war.