You are here

THE BOTTOM LINE

Trump shoots himself in the foot in Mexican standoff

I'D like to make an important announcement to New York retailers: NEW JERSEY HAS AGREED TO IMMEDIATELY BEGIN BUYING LARGE QUANTITIES OF WHITEFISH SALAD FROM OUR GREAT PATRIOT GOURMET MARKETS.

What's that, you say? There was no such agreement? New Jersey doesn't even have any kind of centralised purchasing mechanism for food products? I say: "Fake news! Conspiracy by the deep state!"

OK, you know that I'm not serious. But Donald Trump was serious when he tweeted this: "MEXICO HAS AGREED TO IMMEDIATELY BEGIN BUYING LARGE QUANTITIES OF AGRICULTURAL PRODUCT FROM OUR GREAT PATRIOT FARMERS!" This tweet raises two immediate questions:

1. Why, like so many of Mr Trump's tweets, does it read like a bad translation from the original Russian?

sentifi.com

Market voices on:

2. What the heck is he talking about?

There was, after all, no mention of agricultural products in the statement of agreement. And Mexico, while a big buyer of US farm goods, is a market economy: Private businesses, not government officials, decide how much Iowa corn Mexico will buy in a given year.

For what it's worth, my guess is that Mr Trump vaguely remembered the terms of an abortive trade deal with China, which he claimed included a commitment by China to buy five million tonnes of US soybeans. If my guess is right, he is confusing Mexico with China and has forgotten that talks with China have broken down. Not a good look for the man with his finger on the nuclear button, but whatever.

But leave worries about his mental state aside and think about how events like the Mexican standoff weaken the US' position in the world. To be a great power, of course you need the material basis for power - a big economy, a military big enough to make you a force to be reckoned with. But you also need to be a country others can take seriously - a nation that stands by its promises - but also makes good on its threats.

So think about what just happened.

First, he recently negotiated a trade deal with Mexico - one barely different from the previous deal, which he called the "worst in history", but put that aside.

The whole point of trade deals is that they're supposed to provide some certainty. The United States-Mexico-Canada Agreement, like Nafta (North American Free Trade Agreement), amounts to a promise by all three participants that they won't arbitrarily impose new barriers to cross-border trade.

Then Mr Trump went ahead and threatened major new tariffs on Mexico, not because it had violated its trade agreements, but because he didn't like something that was happening on the border, a situation that has nothing to do with trade policy. So the USMCA (United States-Mexico-Canada Agreement) appears, in practice, to be a solemn promise by the US government not to impose tariffs on Mexican products … unless it feels like it.

If that's what you get out of making a deal with America, why bother?

And then, after all the dire warnings of what would happen if Mexico didn't give Mr Trump what he wanted, he appears to have backed down in return for a declaration that Mexico will do pretty much exactly what it had already promised to do before the threats.

Now, the business world is extremely pleased that the trade war appears to have been called off. But it does look as if a Trump threat is worth about as much as a Trump promise: There's no particular reason to believe that he'll actually go through with it.

The only thing we can be sure of is that whatever happens, he will claim to have achieved a great victory.

In the case of the Mexican standoff, this may not seem too bad. But think about what it means when foreign leaders know that the president of the United States is: (a) gullible (b) easily susceptible to flattery and (c) eager to proclaim victory, and unwilling to admit that he didn't actually get anything significant.

Basically, this turns America into a systematic chump. Hold a summit, flatter his vanity, let him issue a communiqué claiming vast achievement, then go on doing whatever you wanted to do. Just ask North Korea's Kim Jong Un, who snookered Mr Trump into thinking he'd made major concessions, went back to building up his nuclear attack capacity, and still gets praised by Mr Trump as our allies watch, horrified.

Again, it's a good thing that we seem to have avoided a Mexican trade war for now. But the China trade war still appears to be on. And I'm worried about confrontation with Europe, partly because European nations are democracies with free presses, which makes it harder for them to give Mr Trump the kind of imaginary victories he craves.

In any case, the bottom line from the Mexico fiasco is that the US is now significantly less credible and less respected than it was a few weeks ago. And things will probably keep getting worse. NYTIMES