Trump has people in Canada, Mexico, Japan and Europe a bit worried about how we'll fare in a trade war with the United States. We're told we could be heading toward a recession, a drop in GDP of perhaps 2 per cent.
Trump's abuse of America's traditional allies is small potatoes. The Big Show is the Clash of the Titans, Washington versus Beijing. There's the one to watch because it's possible that could end in fireworks.
It would be much less worrisome if America had a mentally sound president. It doesn't. It has Donald Trump.
Donald Trump is in the White House and the reasonable people, the boys in the long pants, are pretty much gone. Trump has now surrounded himself with some pretty sketchy types like Pompeo, Bolton, Navarro and Haspel. They're the sort who can play on Trump's worst instincts, his deranged sense of grievance, his fears and every base instinct - they are legion. Trump embodies a malignant narcissism. He's extremely sociopathic, utterly lacking in empathy. He's impulsive and more than a little sadistic. These are the foundational attributes that Donald Trump has consistently exhibited his entire life. They're also America's Achilles Heel.
Trump may be attempting to restore America's dominance in the world. He can't. America's days as the world's industrial powerhouse are over. Trump blames that on foreign predators. Not hardly. It was America's industrial giants that, unleashed by globalism, offshored their manufacturing operations to low-wage, minimal-regulation regimes abroad. The United States quite deliberately transitioned to a "fire" economy - finance/insurance/real estate.
A few years ago I read a fascinating analysis by an American labour economist about the state of industrialism in his homeland and why so much of it was gone for good. He pointed out that manufacturing generates stable albeit modest returns on investment. Typically it's something in the range of 3 per cent. At the same time, the fire economy, Wall Street, was generating returns of 9 to 12 per cent. To encourage financial investment the feds began cutting capital gains taxes. The Triumph of the Rentier Class. Trump has no appetite for undoing that.
Do we imagine Chairman-for-Life Xi hasn't taken the measure of Trump and the box he's in? Do we think only Trump will ruthlessly exploit every opportunity, every vulnerability?
Could Trump's trade war be the very opportunity Xi has been looking for? This could be China's opportunity to cement its ascdendancy. History tells us that most of these superpower transitions lead to warfare. That was predictable when ships were made of oak, cannon were cast iron and fired grape shot. This transition will be the first we've seen in the Nuclear Age.
I would bet that Xi has a critical advantage. He can probably weather the domestic reaction to a recessionary trade war much better than Trump. Trump's base will be hit. The Gullibillies are quite vulnerable. But it will be the Kochs, the Coors and the Adelson's who will be gunning for him if they see he's launched a ruinous trade war without much chance of success. They're already incensed with Trump's trade wars. They'll be unforgiving if Trump loses his war with China or winds up groveling for terms. And let's remember who owns America's "bought and paid for" Congress.
Trump is no Simon Bolivar but he may wind up as America's Don Quixote. He cannot endure humiliation and he's now surrounded with people like Bolton, Pompeo, Navarro and Haspel. With those people steering Trump, it's Xi's advantages that I find truly worrisome.
Remember, America is flying solo this time. It has viciously turned on its allies.
Let's hope this doesn't get out of control.
