It’s Trump’s economy against the rest of the world-and as of now, America is winning.
On one side is a nascent coalition of at least 36 nations with a population over seven times that of the United States, and a combined GDP almost twice that of ours. On the other side, standing increasingly alone, is America. Battle lines are drawn, hostilities have begun.
Turkey is only the latest member of the emerging anti-Trump coalition. It is a member of NATO, its troops are fighting alongside Americans in support of Afghan forces battling the Taliban, and it is home to the Incirlik and Izmir Air Bases, important strategic assets shared by the United States and Turkey. Recep Tayyip Erdogan, the country’s autocratic president, is an ally Trump certainly should grapple to his breast with hoops of steel, a phrase the president likely has underscored in his dog-eared copy of Hamlet.
But then there are the evangelical Christians, important to the president in the coming midterm elections. They are pressing Trump to secure the release of Andrew Brunson, an American evangelical pastor who Erdogan accuses of spying and terrorism. Brunson has been in prison awaiting trial for two years and has recently moved to house arrest. For Trump, votes of evangelicals are more important than the U.S.-Turkish alliance, at least right now.
So when Erdogan refused to release Brunson, Trump decided that tariffs can be every bit as powerful an instrument of diplomacy as it is a weapon in a trade war, and doubled tariffs on Turkish steel and aluminum, making up for some of the effects of a tanking lira on prices of Turkish products.
Vladimir Putin, ever on the alert to sever Turkey from NATO and enlist it on his side in his maneuvering for position in the Middle East and elsewhere, pounced. He rang up Erdogan and had an autocrat-to-autocrat chat about the American devil that is wrecking their economies with tariffs and sanctions, and how much better off Turkey would be with a reliable ally such as Russia than with on-again-off again Trump’s America.
So far, Trump is ahead. The Turkish lira is in free fall, down about 40 percent against the dollar. Turkey’s heavily indebted-businessmen are finding it somewhere between difficult and impossible to buy enough dollars with their shrunken lira to pay interest on the loans that Turkey’s banks were so eager to make only a few months ago (much less repay them). Two-year Turkish government IOUs now carry an interest rate in excess of 25 percent. Private sector players are risking their president’s wrath by demanding that Erdogan settle with the United States.
The diplomats who play corner men to the battling pugilists are quietly attempting to negotiate a solution that will salve the egos of both presidents, and preserve a partnership that is important to both countries. Some American diplomats, although not yet President Trump, are also eager to stop the financial crisis from spreading to similarly indebted countries such as Indonesia and South Africa. It seems that John Bolton has been meeting with Ankara’s ambassador to Washington to work out a solution. So it has come to this: Bolton as our chief peace-maker.
Guessing is that Trump will agree to an extradition hearing for Fethullah Gulen, a U.S.-based Turkish cleric accused by Erdogan of terrorism and of fomenting the failed coup attempt against his government, and that Erdogan will try, convict, and then deport Brunson. But almost anything is possible when two presidents who pride themselves on having toppled the existing orders in their countries butt heads.
On the Russian front, U.S. sanctions are adding to the hardship to be inflicted upon ordinary Russians by planned cuts in pensions. Only 49 percent tell the Kremlin’s pollsters they would vote for their president, Vladimir Putin, if elections were held now, and only 46 percent tell independent pollsters they approve of the direction in which their country is headed (down from 60 percent in April). Putin badly needs relief from Trump’s sanctions if Russia’s clapped-out economy (its GDP about equal to Nevada’s) is to recover and further, popularity-sapping austerity measures are to become unnecessary. Putin thought he could persuade Trump to roll them back when they met in Helsinki, but by humiliating Trump at their press conference he forced the American president to strengthen sanctions when he returned home so as to regain the title of toughest guy in the international neighborhood.
In Asia, Trump has China struggling to find some solution to the tariff war he has unleashed on its over-indebted, slowing economy. The renminbi is down almost 10 percent against the dollar since mid-April, the country’s stock markets have fallen by more than 20 percent this year, and China has been forced to abandon plans for a much-needed tightening of its money and credit supplies to reduce borrowing by its state-owned enterprises.
Next week a second round of tariffs takes effect, but that will bring the coverage of Trump’s tariffs to only 10 percent of China’s exports to America, or 2.2 percent of its total exports. This phony trade war will be replaced by the real thing when Trump supports his small-arms fire with big guns-a 25 percent tariff on $200 billion of imports from China, 11 percent of the People’s Republic’s worldwide exports. Since China has already retaliated by taxing $110 billion of the $130 billion of goods it imports from America, it will have to respond with non-tariff barriers to trade, a weapon which it may already have over-used and which Trump insists it abandon.
The European front is shrouded in the fog of trade war. The truce negotiated between reportedly hard-drinking Jean-Claude Juncker and teetotalling Donald Trump is holding, although without European concessions it will soon collapse. The French are willing to fight to the death of Germany’s auto exports, and the Germans are prepared to fight to the financial death of France’s last farmer. The American side has taken some serious inbound fire, but support of the president seems to be holding steady, for now.
Trump has proved to his satisfaction that America does better, at least in the near-term, by going mano a mano with its adversaries, rather than submerging itself in international institutions and agreements that dilute its overwhelming economic power and constrain its use-at-will of its best weapons. All in all, the wars unleashed by America on what we might with some accuracy call the rest of the world are going rather well.
But Trump has also proved, like a woman in the famous George Gershwin song, that he is “a sometime thing,” which will make it more difficult for him to acquire allies in the future. He offers firm handshakes and a state dinner to France’s president Emmanuel Macron, but then levies tariffs on French products. He offers a trade deal to British prime minister Theresa May, but then withdraws the offer and derides her negotiating skills. He wines and dines China’s president-for-life Xi Jinping at Mar-a-Lago, but then loads tariffs on China’s exports when it suits America’s interests (as he understands them). He chats pleasantly with Turkey’s Erdogan-“a friend of mine”-at a NATO meeting, but then cripples the Turkish president’s (badly mismanaged) economy when it suits his electoral needs. He defends Putin against charges of election tampering in Helsinki, but then doubles down on sanctions against Russia. Business critics of Erdogan now dare publicly criticize him, academics are doing what was unthinkable a few months ago and calling into question Xi’s handling of the trade war, and Putin’s popularity is shrinking. Meanwhile, Trump’s core support is with him all the way.
That’s three autocrats’ scalps hanging from his belt, as American cowboys would once have put it.