How long will this last?

So, just a few days ago the headlines bristled with news that, in defiance of all logic, ever, President Donald J Trump had invited Russian strongman Vladimir Putin to Washington and was threatening an all-out trade war with the EU …

Now the Financial Times says that:

  • The EU and US have declared a ceasefire in their trade war, agreeing to work together on eliminating transatlantic trade barriers for many industrial goods and on reforming the World Trade Organization … [and] … Proclaiming a “new phase” in transatlantic relations, US President Donald Trump said on Wednesday that he and European Commission President Jean-Claude Juncker had agreed to start talks to reduce tariffs and other trade barriers related to all industrial goods, other than cars … [further] …  In what appeared to be a significant victory for the EU, the two sides agreed to put on hold any new tariffs, including fresh US duties being threatened by Mr Trump on auto imports, while discussions proceeded … [and, it may be a bit of s desperation signal] … Mr Trump also claimed that the EU would “almost immediately” begin buying “a lot of” US soyabeans. The crop has been targeted by China in its escalating trade war with the US, creating political problems for Mr Trump in US agricultural areas where he usually draws strong support … [but, President Trump said] … “This was a very big day for free and fair trade” … [and] … The move sets the stage for what is expected to be months of frenzied discussions across the Atlantic — with inevitable ups and downs;” and
  • Donald Trump has delayed plans to meet Vladimir Putin one-on-one again this year, deciding to hold off on a second summit until special counsel Robert Mueller concludes his investigation into Russian interference in the 2016 US election … [and] … John Bolton, national security adviser, announced the reversal in a statement issued by the White House on Wednesday that repeated Mr Trump’s characterisation of the Mueller probe as a “witch-hunt.”

But, given President Trump’s mercurial temperament and his apparent total disinterest in either grand strategy or the United States’ national interests, one must ask: how long will this last? Can the truce with the EU hold? Can two of the world’s greatest protectionist powers actually manage to do anything to reduce tariffs? How much of the US soybean crop can Europe afford? Where and how does China figure in all this? And what about Mr Mueller’s probe? Is it getting too close for comfort? How and at whom will President Trump lash out next?

Stay tuned …

3 thoughts on “How long will this last?”

  1. What if Trump sees Trade as the continuation of War by other means?

    Selection and maintenance of the aim; maintenance of morale; offensive action; surprise; security; concentration of force; economy of effort; flexibility; co-operation; and administration.

    I would say that Trump is strong on points 1 through to 4 and on 7.

    He is focused on the bottom line.
    He secures the morale of his base.
    He is offensive.
    He generates surprise.

    And tweeting requires no effort to create a screen.

    It has often been said that the most valuable asset a commander has and the hardest thing to generate is surprise. To be predictable is the antithesis.

    From time to time it is good to remind folks that chaos and disorder are possible and have consequences. Especially if you want to convince people to do things differently.

    “Reuters reported on Tuesday that Mexico’s chief trade negotiator for the incoming administration, Jesus Seade, says a new Nafta deal — which Trump once threatened to abandon entirely — is inevitable.

    “What I see … to be a very feasible expectation is that we’ll be concluding negotiation in the next two months if possible, or in the next few months a bit further down the road,” Seade said.

    And Seade, who previously served as No. 2 in the World Trade Organization, had words of praise for Trump.

    “President Trump has a very personal style,” he said. “He likes to appear chaotic. But the last thing he is is chaotic. I think he’s a very intelligent man.”

    Our trading partners have come to understand Trump’s idiosyncratic but effective bargaining style. It’s a pity that many of his domestic critics, including many on the right, don’t.”

    “Trump’s Tariffs: Just A Tactic?
    Trump slapped $50 billion in tariffs on Chinese goods in March and then threatened to impose $200 billion more. And he imposed 25% tariffs on steel and 10% tariffs on aluminum in June, and vowed 25% tariffs on European car imports.

    As economist Donald J. Boudreaux reminded us this week, “The U.S. economy is booming — but it depends on trade. Exports support 10 million U.S. jobs, imports support another 16 million, and every single one of us has a life that’s full of items manufactured abroad.”

    We agree with Boudreaux and others on the benefits of free trade. And companies as diverse as GM, Coca-Cola, Harley-Davidson, Brown-Forman and Whirlpool say the tariffs will hurt business and profits, not help. Prices will rise for all.

    We have no reason to doubt that’s true. But if Trump uses the threat of tariffs and access to the U.S. market as a bargaining chip in order to get recalcitrant trade partners to remove or lower their trade barriers, is that bad? If it leads to more trade, not less, in the end, is that not a win?”

    https://www.investors.com/politics/editorials/us-eu-trade-deal/

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