Trump impeachment a boon to the global economy
Credit to Author: BEN KRITZ, TMT| Date: Wed, 16 Oct 2019 16:23:18 +0000
LAST Friday, US and Chinese negotiators reached what has been generally regarded as a breakthrough in the two countries’ ongoing trade war, announcing a tentative deal on a few contentious points. The nature of the proposed agreement and the optimistic rhetoric that has followed indicates that the rapidly expanding impeachment campaign against America’s Tangerine Tyrant apparently has had happy unintended consequences.
The latest round of trade talks resulted in what Trump called a “substantial phase-one deal,” telling reporters it was “the best and greatest” agreement. It was not, of course — nothing that comes out of Trump’s mouth bears even a ghostly resemblance to a fact — but it was progress, provided that Trump does not scuttle the deal (it will take several weeks to draw up a formal agreement) with thoughtless commentary between now and when signatures are put to paper.
The most substantial part of the agreement was a trade-off: China agreed to purchase up to $50 billion in US agricultural products, and in exchange the US agreed to postpone a new round of tariff increases that would have been imposed this week. Some minor details involving intellectual property protections and currency exchange were also said to have been worked out, but major stumbling blocks, such as technology transfer and US sanctions against Chinese tech giant Huawei, were bypassed.
Analysts observed that a sign that perhaps more progress will be made in the near future was the positive spin both governments put on the latest results. The enthusiasm seemed a little forced, however, which only exposed both sides’ underlying anxiety to end the trade war.
In spite of what people in the US think, China has always had the upper hand in the dispute and comes away from the latest round in an even stronger position.
Nevertheless, it is feeling some economic and political pressure to ease trade tensions. Chinese manufacturers have been pinched by the restricted flow of production inputs, and the general slowdown in the global economy — which Chinese planners seem to understand was initiated, if not completely caused by the trade dispute — has cooled China’s export markets. On the political front, the ongoing tension in Hong Kong is becoming an increasingly problematic distraction, so diverting attention from that to the more substantive issue of trade has a number of benefits.
Nevertheless, China’s problems pale in comparison to those faced by Donald the Dummy, who is fighting a losing battle for his political life at the moment. It took more than a year for the investigations swirling around Richard Nixon to push him to the point where he needed to look for high-profile foreign-policy achievements to try to save his ass; Trump has gotten there in about three weeks.
The trade war Trump started put serious pressure on major US economic sectors — automakers, the tech industry and the agriculture sector, in particular — from the very beginning and it has only intensified as the conflict drags on. This has eroded Trump’s support among the blue-collar class to the extent that, even without the impeachment scandal, his reelection next year would have been uncertain. Now that the impeachment inquiry is revealing what slightly better than half of the country has known all along, that Trump is at the center of an extensive yet still comically amateurish criminal conspiracy, his reelection has gone from uncertain to very doubtful. His only chance — and it is an almost impossible one at that — is to try to pull off something sufficiently statesman-like to convince his eroding base that turning him out of office will have a direct impact on their economic well-being.
Trump is not likely to be successful in that, however, because of his previous brash position, repeated many times in front of the crowds of adoring simpletons he likes to gather frequently to make him feel good about himself, that he will accept no partial trade deals with China. He has done precisely that, however, with the latest agreement — assuming it does become an actual agreement — which is a bad look not only for political supporters at home, but also in terms of maintaining any sort of strength in subsequent trade talks.
China, observing all this, must be feeling pretty good about its chances of finding a favorable end to the trade war. Having extracted some small concessions in one important area — China consumes vast amounts of American grain and soybeans for food manufacturing — all China needs to do is milk that for as much PR value as can be extracted from it and otherwise stall any further serious talks. As the impeachment pressure on Trump grows, he may be willing to make further concessions, which obviously works in China’s favor. If that doesn’t happen, it is a safe bet that he will be forced from office, either by resignation, ouster through the impeachment process, or losing next year’s election, in which case China can wait until it has someone more reasonable to deal with from the American side.
All of this also works out well for the rest of the world. Even without a comprehensive US-China trade deal at this point, an end to the dispute is now detectable. That knowledge may be enough to encourage investors and exporters to step up their activities, and bring some heat back into the global economy.
ben.kritz@manilatimes.net
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