As antacid-chugging Americans watched their portfolios and retirement account balances drop Thursday, it was easy to forget another consequence of Donald Trump’s ill-considered splaying the day before of new U.S. tariffs on nations large, small and uninhabited.
The likelihood of this nation losing its role as a global leader, leadership being fundamentally a matter of those being led having confidence in the leader.
Ambrose Evans-Pritchard, a columnist at Britain’s Daily Telegraph, quoted Michael Gasiorek, director of the UK Trade Policy Observatory at the University of Sussex: “For all intents and purposes, the US is now a rogue nation when it comes to trade.”
Trumpian sycophants at the White House can reject that characterization all they want, but it was what Asians and Europeans were reading on their computer screens Thursday, expressed in a thousand different ways.
And what do you do in a marketplace of any kind when a rogue trader has been found?
You effect an immediate bypass. You freeze said rogue out of future conversations, you seek paths around. You look first for someone who might offer you something comparable to what the rogue is offering, only without the constituent determined thievery.
And if the bad actor is bad and powerful enough, you might even reconsider partners you previously had rejected. Partners who suddenly look a whole let better in the light of a new dawn.
That’s precisely what is likely to happen now; indeed, it is what already is happening as nations like Japan and South Korea are reassessing China through a more favorable lens. The three economic powerhouses determined at a smiley meeting Sunday to add more juice to something called the Regional Comprehensive Economic Partnership (RCEP). Signed in 2020, that’s a whopper of a trade pact that also involves Australia, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
China, which couldn’t be happier, said Monday on social media that henceforth the trio would respond jointly to Trump’s tariffs, which turned out to be a cooperative bridge too far for South Korea and Japan, with South Korea telling Reuters that the statement was “somewhat exaggerated.”
Note the use of the word “somewhat” by Seoul.
Japan told the news agency there merely had been an “exchange of views.” Uh-huh.
Keep in mind, though: China’s statement was issued before the full breadth of Trump’s economic attack was known. That Asian thaw could well turn into an enduring warm spell now.
The Chinese also said, per Reuters, that Japan and South Korea want to import semiconductor raw materials from China, while Beijing craves various chip products from Japan and South Korea. No doubt. And as of Wednesday, China is suddenly more likely to get them at a favorable price. And there will be nothing Trump can do about that.
The fluid situation in Asia is, of course, just one example of global trading partnerships both existing and soon to be born of necessity, with the United States stuck down the corridor by the vending machines, far away from the new life.
This scenario is what thumped the dollar after Trump’s announcement, reflective of a loss of confidence in the currency. Traders fear the greenback is losing its almighty-ness and have started looking afresh at potential substitutes. To use a romantic metaphor, the world just got dumped by the United States and is on the dating apps, testing the waters with some immediacy.
And there are most definitely choices. As potent as it is, the U.S. accounts for just 15% of the world’s imports, according to the Economist, which makes the additional point that 100 of our trading partners could restore their level of exports within five years if the U.S. market was completely barred to them.
In Trump’s myopic, binary worldview, of course, there is only the United States and a series of separate antagonists from which the nation’s economic fortunes must be liberated, an Orwellian misuse of that term.
He is likely soon to find himself disabused of that notion. The question will be whether or not the damage is reversible, and that — and to what degree — will depend on how long this madness persists and how much attention gets paid to this self-induced crisis by the weak-kneed Republicans in Congress.
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