The go-it-alone-president now has nowhere to turn

Reading together an analysis from AP and a George Will editorial from today’s news we can see that a president who believes he knows more than anyone, but acts on an economic theory that ‘makes up in brevity what it lacks in nuance’ to launch two ill-advised wars can now be seen as nearly single-handedly sparking a global recession. 

Both articles were reprinted in today’s ABJ—great local paper.

His stubborn insistence that a trade war with China and a war against our NATO allies would make us safer and more prosperous has, of course, turned out to be monumentally wrong-headed.

His trade war has already cost American taxpayers $20 billion, hurting American farmers and agricultural sector companies even more, resulting in an ‘Trump import tax’ of $1000 on every American family…and is now escalating to the point where business leaders fear a worldwide recession.

And he is now at the G7 seeking a united front from our long-time NATO allies…yes, those allies he has ridiculed and insulted consistently for the past two years.

The Trump import tax & ally insult strategy is playing out as we now approach a serious economic downturn that will further hurt American families. Everyone other than Trump saw this coming. This is a time to unite behind whomever the Democratic nominee is an punish the Republican Party for enabling this disaster by putting party before people.

With nowhere to turn the president is threatening to compel US companies to leave China (talk about the ugly side of socialism) and ratcheting up his anti-immigrant rhetoric. He and his enablers have already repeatedly demonstrated they will do anything to win an election, even it means hurting American families. So, let’s hope his juvenile desperation does not turn into putting our young men and women into harms way in a nuclear confrontation with North Korea or Iran.

Below is the full text of the AP story and the Will editorial.

Confronting Consequences. AP

BIARRITZ, France (AP) — Under the threatening clouds of a global economic slowdown, President Donald Trump is confronting the consequences of his preference to go it alone, with low expectations that the leaders of the richest democracies can make substantive progress on an array of issues at their summit in France.

The meeting of the Group of Seven nations — Britain, Canada, France, Germany, Italy, Japan and the U.S. — in the beach resort town of Biarritz comes at one of the most unpredictable moments in Trump’s presidency, when his public comments and decision-making increasingly have seemed erratic and acerbic of late.

Trump, who arrived Saturday, and his counterparts are facing mounting anxiety over the state of the world economy and new tension on trade, Iran and Russia . Trump, growing more isolated in Washington, might find a tepid reception at the summit as calls increase for cooperation and a collective response to address the financial downturn. White House aides claimed he engineered a late change to the summit agenda, requesting a working session on economic issues.

The economic warning signs, along with Chinese’s aggressive use of tariffs on U.S. goods, are raising the pressure on Trump and his reelection effort. He intends to push allies at the summit to act to promote growth.

But Trump’s credibility as a cheerleader for multilateralism is in doubt, given that he has spent the first 2½ years in office promoting an “America First” foreign policy that relying on protectionist measures. Traditional American allies have come to expect the unexpected from this White House; increasingly they are looking elsewhere for leadership.

Only hours before his arrival in Biarritz, Trump had threatened anew to place tariffs on French wine imports to the U.S. in a spat over France’s digital services tax; the European Union promised to retaliate. That was the backdrop for a late addition to his summit schedule — a two-hour lunch with French President Emmanuel Macron outside the opulent Hotel du Palais.

The summit host said the two men were discussing “a lot of crisis” around the world, including Libya, Iran and Russia, as well as trade policy and climate change. But he also echoed Trump’s calls for Europe to do more to address the global slowdown, including by cutting taxes. “When I look at Europe, especially, we need some new tools to relaunch our economy,” Macron said.

Trump insisted that despite tensions, he and Macron “actually have a lot in common” and a “special relationship.” In a later tweet, he said: “Big weekend with other world leaders!

Macron outlined details of a French plan to ease tensions with Iran by allowing Iran to export oil for a limited amount of time, said a French diplomat, who spoke on condition of anonymity in accordance with the presidency’s customary practices. In exchange, Iran would need to fully put in place the 2015 nuclear deal, reduce tensions in the Persian Gulf and open talks. The plan was met with a skeptical reception by Trump, and the White House paid only a cursory mention of the Gulf in its official readout of the lunch meeting.

Trade was clearly on Trump’s mind when he left for France. Trump declared that U.S. businesses with dealings in China are “hereby ordered” to begin moving home. It was a threat to use the emergency authority granted by a powerful, but obscure federal law intended to target rogue governments, terrorists and drug traffickers, and giving presidents wide berth in regulating international commerce during times of declared national emergencies.

It was not immediately clear how Trump could use the act to force American businesses to move their manufacturing out of China and to the U.S, and Trump’s threat appeared premature — as he has not declared an emergency with respect to China.

In recent days, Trump has sent mixed signals on a number of policy fronts. At one point, he moved to simmer the trade conflict with China in order to ease the impact on American consumers during the holiday shopping season. At another, he flip-flopped on the need for tax cuts to stimulate an economy that Trump publicly insists is rocketing.

Feeding Trump’s anxiety, aides say, is his realization that the economy — the one sturdy pillar undergirding his bid for a second term — is undeniably wobbly.

Trump planned to press leaders about what can be done to spur growth in the U.S. and abroad, as well as to open European, Japanese and Canadian markets to American manufacturers and producers. Trump has imposed or threatened to impose tariffs on all three markets in his pursuit of free, fair and reciprocal trade.

The annual G-7 summit has historically been used to highlight common ground among the world’s leading democracies. But in a bid to work around Trump’s impulsiveness, Macron has eschewed plans for a formal joint statement from this gathering.

Last year’s summit, hosted by Canadian Prime Minister Justin Trudeau, ended in acrimony when Trump felt he had been slighted by Trudeau after the president left the meeting.

Trump tweeted insults at Trudeau from aboard Air Force One as he flew to a summit with North Korea’s Kim Jong Un. Trump withdrew his signature from the statement of principles that all seven nations had agreed to.

Addressing the global slowdown isn’t the only pressing challenge that Trump has discovered requires joint action.

For more than a year, his administration has struggled with persuading European leaders to repatriate captured fighters from the Islamic State group. So far his entreaties have fallen on deaf ears.

Many of the summit proceedings will take place behind closed doors, in intimate settings designed for the leaders to develop personal relationships with one another. On Saturday night they dined at the Biarritz lighthouse, with commanding views of the Bay of Biscay.

Trump, White House aides said, was looking forward to a Sunday morning meeting with new British Prime Minister Boris Johnson , the brash pro-Brexit leader whose election he’d backed. The two spoke by phone on Friday, and Johnson said Saturday he would use the meeting to push Trump to de-escalate the American trade war with China.

Trump has scheduled individual meetings with several of his counterparts, including Macron, Trudeau, Merkel, Japanese Prime Minister Shinzo Abe and Indian Prime Minister Narendra Modi.

Other topics on the agenda will be the clashes between police and pro-democracy protesters in Hong Kong; Iran’s renewed nuclear enrichment and interference with shipping in the Strait of Hormuz; and the Islamic State prisoners currently imprisoned by American-backed Kurdish forces in Syria.

Wounded by Friendly Fire in a Trade War, George Will

Washington • In a trade war, as in a real one, people are wounded by friendly fire from their side. Consider some casualties in Donald Trump’s “easy to win” — his promise — trade war. Begin with the company whose green machines bear the name of the blacksmith who, in the 1830s in Grand Detour, Illinois, invented a self-scouring plow that could turn the Midwest’s heavy black topsoil.

Is the John Deere corporation “tired of winning,” as Trump promised that all Americans soon would be? Not exactly. The Wall Street Journal reports that U.S. farmers are purchasing fewer farm machines — Deere’s profits from this business are down 24% from a year ago — partly because farmers’ incomes have suffered as a result of the tit-for-tat trade spat that Trump started with China, which has included China canceling the purchase of almost 500,000 metric tons of soybeans. Some good news for John Deere might be ominous news for U.S. farmers: Equipment sales to Brazil and Argentina are up, perhaps partly because China has increased purchases from those nations’ farmers, who are American farmers’ competitors.

Nowadays, even sensible government actions injure some farmers. Many of them have come to depend on government's misguided mandate regarding ethanol in gasoline, and the Journal reports that 31 refineries have been given ethanol waivers from the Environmental Protection Agency. The Iowa Corn Growers Association says the exemptions could eliminate "nearly one billion bushels of corn demand." Whether ethanol would have achieved sacramental status in Washington if Iowa did not have presidential caucuses is a subject for another day.

Home Depot, the world's largest home improvement retailer (more than 2,000 stores in North America), partly blames the trade war for its lowered growth expectations. The tariffs, which The Financial Times accurately refers to as "import taxes," will, according to a JPMorgan estimate, cost the average U.S. household "around $1,000 a year." If so, this Trump tax increase — it is his alone — is more important to the average American than his (actually Congress') tax cut.

The Financial Times recalls that "hundreds of U.S. companies and trade associations said in a joint communique in June that the proposed duties would cause the loss of two million jobs and reduce U.S. economic output by 1%." The losses and reduction are related to the fact that, as Allan Golombeck of the White House Writers Group notes, "Over 60% of U.S. imports are used by businesses in their products and production processes." Hence Trump's tariffs make U.S. goods more expensive, thereby dampening U.S. consumer activity. And exacerbating trade deficits, which do not matter other than as irritants to Trump, who thinks they indicate foreigners taking advantage of Americans by selling them things they want.

Uncertainties infused into the global economy by the trade war between the world's two largest national economies probably have helped to produce a global slowdown and fears, perhaps somewhat self-fulfilling, of an approaching recession. The fourth-largest economy, that of heavily export-dependent Germany, is already shrinking. There, as The Economist reports, "interest rates are negative all the way from overnight deposits to 30-year bonds. Investors who buy and hold bonds to maturity will make a guaranteed cash loss."

This does not suggest economic health but might produce something pleasing to the president whose macroeconomic theory makes up in brevity what it lacks in nuance: "Low interest rates are good." He is forever hectoring the Federal Reserve to lower rates, which it might again do if it sees a recession tiptoeing toward us. So, a recession would be an interestingly injurious carom — a win, of a perverse sort — from his trade war.

From May 1937 to June 1938, there occurred the "recession within [the] Depression," America's third-worst 20th-century contraction. About the causes of this, as about so many economic events, intelligent and informed people disagree. However, one theory is that capital went "on strike." Rattled and exasperated by the New Dealers' regulatory fidgets, investors flinched from economic activity. If so, this episode contains a warning for protectionists who seem oblivious.

They fiddle with global supply chains, as though the world economy is a Tinkertoy that they can pull apart and reassemble with impunity. Actually, it is analogous to an Alexander Calder mobile: jiggle something here, things wiggle way over there, and there, and there. So: Tariffs on Apple (headquarters: Cupertino, California) iPhones that are made (actually, just assembled) in China might help Samsung (headquarters: near Seoul, South Korea) Galaxy phones sell in America. This is "America First" in practice.