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Trump, trade and the advantage of autocrats
THERE has been some good news on global trade lately: A full-scale US-China trade war appears to be on hold, and may be avoided altogether. The bad news is that if the US makes a trade deal with China, it will basically be because the Chinese are offering US President Donald Trump a personal political pay-off. At the same time, a much more dangerous trade conflict with Europe is looming. And the Europeans, who still have this peculiar thing called rule of law, cannot bribe their way to trade peace.
The background: Last year the Trump administration imposed tariffs on a wide range of Chinese products, covering more than half of China's exports to the United States. But that might have been only the beginning - Mr Trump had threatened to impose much higher tariffs on US$200 billion of Chinese exports starting on March 1.
Remarkably, there does not seem to be any strong constituency demanding protectionism. If anything, major industries have been lobbying against Mr Trump's trade moves, and the stock market clearly dislikes trade conflict, going down when tensions rise and recovering when they ease. So trade conflict is essentially Mr Trump's personal vendetta - one that he is able to pursue because US international trade law gives the president enormous discretion to impose tariffs on a variety of grounds. Predicting trade policy is therefore about figuring out what is going on in one man's mind.
Now, there are real reasons for the US to be angry at China, and demand policy changes. Above all, China notoriously violates the spirit of international trade rules, de facto restricting foreign companies' access to its market unless they hand over valuable technology. But there has been little evidence that Mr Trump is interested in dealing with the real China problem.
I was at a trade policy conference over the weekend where experts were asked what Mr Trump really wants; the most popular answer was "tweetable deliveries". Sure enough, Mr Trump has been crowing about what he portrays as big Chinese concessions, which all seem to involve China's government ordering companies to buy US agricultural products. In particular, the postponement of the trade war came after a Chinese pledge to buy 10 million tonnes of soya beans. This will please farmers, although it is far from clear that it will even make up for the losses that they have suffered from previous Trump actions.
The point, however, is that what China is offering does not at all get at the real US national interests at stake. All it does is give Mr Trump something to tweet about.
Oh, and by the way, China's biggest bank - which happens to be majority-owned by the Chinese government - occupies three whole floors in the Trump Tower in Manhattan. It has been planning to reduce its space; it will be interesting to see what happens to that plan now.
Meanwhile, the US Commerce Department has prepared a report on imports of European cars that, according to the German press, concludes that these imports pose a threat to national security. If this sounds ridiculous, that is because it is. Indeed, while the Europeans are not angels, they do abide by global rules, and it is hard to accuse them of any major trade sins. Yes, they do have 10 per cent tariffs on US cars - but we impose 25 per cent tariffs on their light trucks, which makes us more than even.
But a department headed by perhaps the most corrupt commerce secretary in history will, of course, conclude whatever Mr Trump wants it to conclude. And this report gives the president the legal authority to get us into a trade war with the European Union.
If it happens, this trade war will be immensely damaging. The EU is America's biggest export market, directly accounting for around 2.6 million jobs. Moreover, our economies are very much intermeshed - which is why even the US car industry is horrified at the possibility that Mr Trump will impose tariffs on cars.
But here is the thing: Unlike the Chinese government, the EU cannot order private companies to make splashy purchases of US goods. And it certainly cannot steer business to Trump Organization properties. As a result, the chances of spiralling trade conflict remain high.
The point is that when it comes to dealing with Mr Trump and his team, autocracies have an advantage over democracies that follow the rule of law. And trade disputes are arguably the least of it.
So while stock markets are happy about the prospects for trade peace with China, the broader picture is deeply disturbing. If we do manage to limit the damage from this confrontation, it will be for the wrong reasons. And the warped motivations governing US foreign policy may yet have deeply destructive consequences, with a trade war far from being the scariest possibility. NYTIMES