Foreign governments would be wise to wait until the Trump administration settles and gets its bearings
The expectation, perhaps best reflected in the surging stock market, that President Trump would quickly implement many huge policy shifts and score legislative victories always seemed like the same type of over optimism that led to economic bubbles that beset the real estate and tech industries.
Trump will release the animal spirts of business, the consensus thinking went.
But Trump is learning the hard way that governing in a democracy is much harder than negotiating real estate deals. The failure last week of the GOP plan to scuttle Obama’s signature healthcare law was a serious blow to Trump’s image of political strength and his ability to move other items on his agenda, such as overhauling trade agreements, infrastructure investment and tax reform. Republican lawmakers may not fear the President as much in the future and be willing to oppose potential policy initiatives such as withdrawal from NAFTA.
Trump says he will now turn his attention to tax reform, which will be another heavy lift since Democrats and Republicans haven’t been able to agree on comprehensive changes in a generation.
There is a ray of hope that Trump, who has never shown an introspective side of any kind, may have learned some lessons from the healthcare debacle. In interviews with the Washington Post and New York Times immediately after the house bill was pulled from consideration, Trump hinted that the hardball tactics he employed to gain favorable outcomes with business rivals may not work in Washington.
In a column earlier this year, I wrote that Trump’s central ethos was mercantilism. He views every issue in purely transactional terms. Zero-sum game. I win, you lose.
But that’s not how international diplomacy or the legislative process, for that matter, works. There are vast numbers of stakeholders on any issue whose interests need to be balanced. Most problems that rise to a national level are extremely complex, requiring holistic and long-term strategies to solve.
Narrowly fixing one aspect of a problem can boomerang, creating more problems. Imposing tariffs, for example, on imports from Mexico in a misguided effort to look like one is doing something forceful to protect domestic manufacturing jobs when in fact it really hurts U.S. interests. Mexico’s economy is heavily dependent on trade with the United States. Slashing Mexico’s export revenue will lead to further devaluation of the peso and reduced interest by foreign investors to operate south of the border, which will damage Mexico’s economy.
If Mexico’s economy becomes a basket case, guess what? More illegal immigrants will flow into America looking for jobs and the Mexican government will have fewer resources and political will to cooperate in the fight against narcotics smuggling and other trans-national issues. Then what will we have gained?
So, if Trump has learned the importance of building coalitions and slowing down to get the policy right rather than racing ahead to score political wins like some kind of WWI airplane ace painting “kills” on his fuselage, we’ll all be better off.
If Trump has learned the importance of building coalitions and slowing down to get the policy right rather than racing ahead to score political wins like some kind of WWI airplane ace painting “kills” on his fuselage, we’ll all be better off.
It’s going to take the administration some time to get its act together, so when it comes to trade, if I were a foreign government or corporation I’d bide my time before entering into any kind of substantive talks. There is still too much uncertainty surrounding potential new policies on trade, industrial promotion, infrastructure and taxes. Nobody can seriously rely on pronouncements made by Trump during the campaign, or by his team since the election, until the administration is better organized. Trump is not an ideologue. He could easily pivot again, as he’s done repeatedly over the past two years. He’s even making noises about issues that sound like they are based in Democratic politics.
Right now it’s seat-of-the-pants government and nothing remains constant from one day to the next.
Trump and his cabinet secretaries are all over the map making statements that contradict each other. Trump, for example, has questioned the value of having American troops in South Korea or the NATO alliance, while Secretary of Defense James Mattis or Vice President Mike Pence have had to reassure allied leaders that the United States is actually committed to its military partnerships. Other governments are left to wonder who actually speaks for the U.S. government — the president or his subordinates?
Or remember in February, when Trump declared one morning that his stepped up deportation program is “a military operation,” and then Homeland Security Secretary John Kelly and Secretary of State Rex Tillerson insisted to Mexican officials later in the day during a visit to Mexico City that there would be no use of military force in immigration operations.
In mid-February, Trump declared during a state visit by Israeli Prime Minister Benjamin Netanyahu that he was open to a two-state or one-state solution for Israelis and Palestinians– whatever the parties like. The next day, UN Ambassador Nikki Haley announced that the United States “absolutely” supports a two-state solution, as has been U.S. policy for many years.
Trump has been seemingly uninterested in nominating people for the second and third tiers of political management throughout his Cabinet, so there are not enough people in place to formulate policy and properly support the Cabinet secretaries. Tillerson is a novice in foreign policy and doesn’t have a deputy yet or a tier of experienced advisors around him after the White House gave walking papers to many Obama holdovers and career diplomats.
The nomination of Robert Lighthizer to be U.S. Trade Representative is hung up in the Senate over legal and political issues, but beyond that there are six top leadership positions at USTR that remain unfilled.
Plus, President Trump’s credibility is eroding across all fronts when he continually makes statements that are demonstrably untrue, not least of which is that President Obama ordered surveillance of his campaign.
It’s a waste of time to have serious discussions with Trump, Tillerson, Commerce Secretary Wilbur Ross or others in the Cabinet when they don’t have teams in place that can coordinate common policies and then implement them.
All of which is to say, don’t overhaul your foreign policy or business strategy to align with a new U.S. direction until that direction becomes more clear and the government starts operating like a real government. Sure, foreign ministers and CEOs should meet with administration officials because negotiations and politics are heavily influenced by personal relations. So establishing a personal rapport at a high level is a worthwhile exercise.
Just hold off on serious talks about new programs or policies for at least six months until the administration can get its act together. Then reassess.