Trump Makes Good Deals

Trump Recognised as “Good Dealer”

The most important development in political relationships and authority is the recognition now being given to changes in the US under Trump’s Presidency. It has taken time for Trump to establish credibility and there is still considerable opposition to accepting him as a leader who can change the course of events in a way consistent with western values/interests (as well as America’s). But, whatever objections may be made to his personal behaviour, there is now little doubt that he has “made it”.

The turning point is his success in being invited by Kim Jong-un to hold talks despite his (Trump’s) abusive description of Kim and his insistence that North Korea should abandon nuclear weaponry. Up to a point, Trump has simply stood up to Kim and not attempting to initiate the “talks” himself. Some of the past history of US attempts to “normalise” North Korea is set out in an editorial in today’s Australian (see OZ on Trump/Kim) and, as that warns, it would be wrong to believe that this will now occur as a result of the talks. But Trump lines up well when the past history is viewed and his claim to be a “good dealer” seems justified, whatever emerges from the talks.

There are also a number of other Trump decisions which add to his good record and compare favourably with his predecessor’s (and some earlier ones). I have included most in previous Commentary. These include a defence policy consistent with the US’s traditional role as a protector of the West and the delegation of decision-making to the experienced officials he has appointed; the public recognition of the Islamic threat and the associated attempt to have a merit-based immigration policy; the withdrawal from the Paris Accord and the change in attitude and policy of the EPA; and the major reduction in company tax.  

In my Commentary last Thursday (8 March) I also drew attention to an important article published in the Herald Sun under the title “Terry McCrann: For goodness’ sake, Malcolm, it’s time to wake up and smell The Donald”. McCrann has now followed up with an equally important article in today’s Australian titled “Not for Trump the tired ways of business as usual”. He argues that Trump has made decisions such as those quoted above on the basis that they are not only in America’s interests but that others (such as the Europeans, the Chinese and the Japanese) have not followed the principles they espouse and should be “encouraged” to do so. As McCrann says, “this president will play them at their own game” and “suddenly, we have a US president who plays it like a real estate deal”. This is an important analysis which helps explain the slow-down in economic growth in recent years in Western countries (see attached McCrann on Trump).

Trump’s Tariff’s Initiative

In his article McCrann also suggests that, amongst developed countries, there is a “fatuous pursuit of saving the planet from global warming” with a “seamless parallel between the so-called climate action consensus” and “the hysteria over Trump’s tariff move”.  He argues that “their idea of ‘free trade’ is that America opens its markets unreservedly and totally to them, while they have all the non-tariff barriers they can devise to pick and choose what they allow to be ‘traded’ into their economies, to their perceived benefit”. He portrays this by observing “Well, what do you know, this president will play them at their own game”.

This is a bit overdone but is the basis on which I wrote the following letter published in today’s Australian (with no substantive omissions or alterations by Ed).

Trump’s Tariffs Move Might Reopen Debate on Protectionism

(Letter published in The Australian 10-11 March)

Trade Minister Steve Ciobo draws attention to the danger of increased protectionism which could follow Donald Trump’s proposal to impose higher tariffs on imports of steel and aluminium and he warns this might lead to a trade “war” with other countries imposing retaliatory tariffs on their imports from the US (“Free trade has been building our nation’s wealth”,  9/3).  Malcolm Turnbull has rightly said that such a war would produce no winners.

But measures to protect domestic industries involve much more than tariffs, such as the large subsidies of agricultural production in the EU. Moreover, reports suggest that the proposed US increase in tariffs may not apply to some countries, including Australia. As such, it would be of of limited significance in the overall level of protection and justifiable because the main offender (China) is subsidizing its production of steel and aluminium. World Trade Organisation data also shows China having an average tariff on non-agricultural goods about double those of the US.

If protective governments, such as China and the EU, carry out threats to retaliate via the WTO  that would then open up for debate a comparison between the three about relative protective levels. That is the normal procedure under the WTO.

True, the Doha Round failed to reach agreement on lowering protection. But Trump’s action might re-open the debate on protection, including the measures which Australia imposes, and could involve desirable reductions.

Des Moore,

South Yarra, Vic

Whether or not Australia gets exemptions, the potential for additional reductions in protectionism led by Trump would be in Australia’s interests. Following his visit to Trump, Turnbull is claiming mateship and suggesting that he succeeded in getting exemptions. Perhaps. He is also warning against a possible trade war. But he should not focus on trade wars but on the potential for Turnbull’s initiative to become, not the increase in US protection as it is being seen, but a means of reducing protectionism more widely through the World Trade Organisation.

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