Calling Trumpís Bluff

Patricio Navia

Buenos Aires Herald, January 20, 2017


After he is sworn in as the 45th president of the United States today, Donald J. Trump will no longer be judged on what he says (or tweets) but on what he delivers. Having promised to ďmake America great again,Ē Trump will need to implement policies that can restore public confidence in the US economy and instill respect for the US elsewhere in the world. Unfortunately ó because Trump has based his message on sheer will rather than on a feasible plan ó the future for the US does not look very bright. When Trumpís honeymoon ends, his lack of experience and the absence of a roadmap will make the success of his administration contingent on a stroke of good luck.


Ever since his victorious upset on November 8, Donald J. Trump has worked hard to keep people guessing about what he will truly do after the swearing-in ceremony. On election night, Trump delivered a magnanimous victory speech. Because the expectations about what would happen if he won were so low, markets began to experience a rally when it became clear that the world would not immediately end when Trump gained control of the White House.


In the two-month transition period, Trump has sent confusing signals. His Cabinet appointments have reassured conservatives that he will keep his promise of fighting big government and pushing for deregulation. Yet, his online rants against automobile companies that plan to invest in manufacturing plants outside the US have fed speculation about a possible trade war. Trumpís harsh words against China and his unmeasured comments about the European Union (EU) and the usefulness of NATO have alienated both China and the EU, the other two world economic superpowers.


Loyal to his creed that when negotiating, you need to be unpredictable, Trump has been very effective at diverting attention away from the contradictions of his policy positions and the conflicts in his dysfunctional transition team. The speculation over the alleged intervention of the Russian government in the US election also generated an undiplomatic response by the president-elect. Yet, while Trump has been successful at controlling the media agenda and priming his priorities to divert attention away from his transition teamís weakness, the way in which he has reacted to questions and criticism underlines a structural problem that threatens the success of his administration. Trump does not have a plan for how he can try to make America great again.


No plan


Take trade. President Trump has been vocal in his opposition to US companies moving out of the country in search of cheaper labour and laxer regulations. He has focused his protectionist-minded criticisms primarily on Mexico and China. Yet, after his attacks on the southern neighbour, the Mexican peso has lost value to the US dollar. Ironically, that makes Mexican exports even more competitive in the US. Moreover, devaluation encourages more Mexicans to cross the border illegally and look for jobs north. As the dollar strengthens against the Mexican peso, the money undocumented workers in the US send back home increases in value.


Trump has threatened to impose high tariffs on some imported goods to encourage the return of manufacturing to the US, but high tariffs mean that companies will pass the costs on to consumers. That will increase inflation and will reduce the purchasing-power of middle-class US citizens. If people expect that Trump will make America great again, implementing policies that will decrease the consumption power of middle-class families is not the way to go. Protectionism will help few US workers and hurt many more US consumers.


So far, Trump has been able to keep people guessing about which of the many campaign promises he will keep. The president-elect has been particularly clever in picking fights with the press, the Hollywood elite and the much-loathed political class in Washington. Any outrageous and aggressive morning tweet has successfully shifted the public debate away from policy specifics to debates on Trumpís undiplomatic and unpresidential style.


The strategy has worked so far. But being president-elect is very different from being president. Now that he is the commander-in-chief of the most powerful armed forces in the world, Trump will need more than just a savvy media strategy to lead a successful government. Now, Trump will need to start making decisions and calling shots that will alienate supporters and allies. People who expect that Trump will quickly turn things around are in for a rude awakening.


To be sure, the economy is doing well, there is strong job creation. In many regards, America is great already. But those who expect that the US will be made great again by going back to a time when the country was more protectionist and when globalisation was only looming in the horizon will soon begin to realise that, for all the power a clever leader can extract out of a tweet, time does not go back. In an era of a globalised world, protectionism will not be easily implemented, even if President Donald Trump claims that he can pull it off.