Thoughts on Trump’s Attempted Trade Wars

U.S. President Donald Trump signs the 'Section 232 Proclamations' on steel and aluinum imports in Roosevelt Room the the White House March 8, 2018 in Washington, DC. Trump announced a week earlier that he will put a 25-percent tarriff on steel and a 10-percent tarriff on alumninum.
WASHINGTON, DC - MARCH 08: U.S. President Donald Trump delivers remarks before signing 'Section 232 Proclamations' on steel and aluminum imports with (2nd L-R) Treasury Secretary Steven Mnuchin, Commerce Secretary W... WASHINGTON, DC - MARCH 08: U.S. President Donald Trump delivers remarks before signing 'Section 232 Proclamations' on steel and aluminum imports with (2nd L-R) Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer and White House National Trade Council Director Peter Navarro in Roosevelt Room the the White House March 8, 2018 in Washington, DC. Trump signed proclamations that will impose a 25-percent tarriff on imported steel and a 10-percent tarriff on imported alumninum. (Photo by Chip Somodevilla/Getty Images) MORE LESS

One of my most important lessons in Trumpist ideology came early and it came from then-Times columnist Joe Nocera. Describing one of Trump’s golf resort deals, he wrote over two years ago: “What was taking place in Jupiter was an essential part of Trump’s modus operandi. In every deal, he has to win and you have to lose. He is notorious for refusing to pay full price to contractors and vendors after they’ve completed work for him. And he basically dares the people he has stiffed to sue him…” It goes beyond this though. Trump doesn’t know he’s won until you lose. Indeed, that’s what winning is: making you lose.

This is an approach to deal making that makes sense in some zero-sum negotiations, like in a flea market or when you’re buying a used car. It’s zero sum and if you stick it to the other guy, who cares? Better for you. But it’s almost never good practice in on-going business relationships where maintaining the relationship is a source of value in itself. Unfortunately, it’s really the only mode of deal making President Trump knows. And you can see it from the long list of burned partners, banks that refuse to loan him money, stiffed contractors and so forth.

The trade fights we’re currently seeing with Canada, Europe, China and other allies and trading partners around the world are being discussed through a prism of free trade and protectionism or degrees of protection of technology or intellectual property. This is all the wrong prism. While there are players in the mix operating with different viewpoints on trade, President Trump is driving the process. And those perspectives really aren’t relevant to him. He probably hasn’t even taken the time to understand them. Each of these engagements fits exactly with President Trump’s business history and basic mindset. Each can be summed as this: Trump’s finds a certain “deal” in place and wants to get more from it. If the trade deficit is X, he wants more trade back.

The economics of trade imbalances are complicated. Most would agree we don’t want to run big trade deficits. But the causes and impacts of these deficits are complicated and disputed. And there’s no rhyme or reason or strategy in what the President is doing. His goal is to threaten, cajole, walk away and try other antics that will allow him to impose tariffs and not have the target retaliate. Then he’s “won.” They “caved.” You see things start to spin out of control when the other countries either threaten to impose or do impose their other retaliatory tariffs. That’s totally predictable. But Trump views it as picking a fight.

International trade is complicated and involves lots of dimensions I don’t have sufficient knowledge about. But again, that’s not what any of this is about. This is a large scale version of Trump’s practice of pressing for super low rates for a service and then not even paying the vendor. They gotta problem with that? Fine, sue me! He needs to win and you need to lose. Indeed, he won’t know he’s won until you lose. This is not a recipe for any kind of longterm success for a great power or really any major state for that matter. You can see it in Trump’s own history, which is a long one of burned bridges, banks that shut him out and people who refused any longer to do business with him. That’s why he became dependent on criminal money from overseas and scams like Trump University.

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