Once a trade war gets going, there are not a lot of appealing options for someone like Donald Trump to stop one. Here is the most likely one.
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While elected Republicans have to pretend that Donald Trump’s idea to launch a global trade war is simply amazing, investors everywhere are feeling very differently.
Therefore, when markets opened in Asia and Europe Monday morning, they were down significantly, as were US futures.
As it turns out, investors are not feeling quite as positively about pointless trade wars.
That puts Trump in a bit of a bind since his reputation as a “winner” and “economic genius” is on the line.
Seeing how Canada, Mexico, and China did not immediately fold to his threats, he now has two main options: The first is to just keep ratcheting up tariffs for the ostensible reason of getting the countries to “stop illegal immigration and the flow of fentanyl into the US.”
That will do nothing to ease market jitters, but it might make Trump feel good because he can single-handedly undermine the world economy.
If he were to choose that route, Americans (and everybody else) would very quickly start feeling real pain in the form of higher prices and product shortages that will be difficult to blame on the previous administration or DEI policies.
The other (more likely) option is that, since the US demands are vague, Trump can simply claim victory.
It is a strategy that he has employed many times in the past.
Here is what that will look like: In a few days, the president is going to insist that Canada and Mexico have been beaten into submission and agreed to tighten border controls or invest a bit more in anti-cartel measures or whatever else can pass as a meaningful concession.
His hard-core MAGA supporters will believe him, rejoice, and loudly proclaim on social media and Fox News that “it feels great to have a real president again,” or that “Trump keeps delivering wins.”
“Normal” Republicans will probably not believe him but play along and praise him regardless because he reversed a senseless policy and staunched a self-inflicted wound.
Upon this news, market jitters will abate, stocks will rally and Trump can say he won again.
And then we will do it all over again with the European Union, South American countries, China again, Canada again, Mexico again, and anybody else.
In some cases, his bullying will actually work, especially if the victim is especially small or dependent on the US (like Panama).
In theory, we could do this endlessly.
However, the more often Trump’s posturing does not work (and countries figure out how to pacify him without making any actual changes), the less effective the threats become.
In addition, all this “strategy” will achieve is to alienate allies and force them, and actual US adversaries, to forge new alliances that do not include the United States.
But at least Trump gets to claim a few hollow victories and feel great about himself.
In his Navigating the Insanity columns, Klaus Marre provides the kind of hard-hitting, thought-provoking, and often humorous analysis you won’t find anywhere else.
