The Art of Screwing Up the Deal: Trump Is Proving to Be the World's Worst Dealmaker
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29 May 2018
A week after declaring the trade war between the US and China “on hold” Trump has reversed himself by breaking that armistice. He has announced a series of actions, including an as-yet-undetermined set of Chinese-made goods that will be subject to a 25 percent tariff along with new restrictions on Chinese investment in the United States. This action seems to take positions back to where they were in April, with Trump threatening one set of tariffs and China preparing their own tariffs in reply.
The most obvious casualty of that earlier round of threats was US farmers, who stood to lose an enormous portion of their export market. Then Trump declared that the problem had been solved, when a week ago China and the US supposedly reached a broad agreement that would see China buy more instead of less. So much more that, according to Trump, China would buy “practically as much as our Farmers can produce.” However, everything from last week now seems to be out the window, and Trump is once again promising a “final list” of items to face tariffs. Farmers are once again the most likely to immediately suffer from any retaliation.
Trump’s handling of the negotiations with China comes on their heels of his canceling the North Korea meeting … then not just un-canceling it just two days later, but calling reports about his initial letter to North Korea “fake news.” These actions are just part of a pattern that, according to the Washington Post, has American allies baffled.
President Trump is merging his national security and trade goals in a blur of tactical improvisation that risks alienating U.S. allies and opening American businesses to costly retaliation, according to several Republican lawmakers, business executives and former U.S. officials.
The Post calls Trump’s stances on economics and diplomacy “fluid.” By which they don’t mean flexible. More like unpredictable, erratic and nonsensical. It’s not just the positions themselves that are harming America’s standing in the world. The way Trump negotiates—by deception, bullying and sudden changes of direction—is leaving the US isolated and with few willing partners.
Last week, Trump launched a war on foreign cars. That’s a blow that will land most heavily on Mexico and Canada, and it’s one that’s again likely to be met with retaliation.
All this also comes while Trump is publicly violating his own sanction agreements—the one that Iran didn’t violate when he broke the nuclear treaty with them—in order to save Chinese phone maker ZTE. Which in turn seemed to be done for the purpose of gaining leverage with China. So China would help with North Korea. And the sanction against selling to North Korea was broken by … ZTE.
Trump may present these moves as actions designed to force manufacturers back into the United States, but what they actually do is show manufacturers that US policy has no long-term plan or direction. It’s a formula that makes manufacturers hold their fire, at best, rather than make major investments in an area where policies literally flip 180 degrees in a matter of days.
At worst, it makes both companies and governments want to wash their hands of their undependable former partner. These companies are settling both their plants and the plans in places where Trump can’t capriciously change the rules.
Trump also seems perfectly willing to mingle diplomatic efforts with economic issues, as in pushing China on trade policy in an effort to gain more support for sanctions against North Korea. Taking these issues out of their neatly defined “lanes” makes it more likely not just that diplomatic incidents can lead to a trade war, but that trade disputes can lead to diplomatic incidents. It makes it much more likely that the word “trade” could be erased from a trade war.