Almost two years after Donald Trump’s surprise election, we’ve finally learned what he meant by “America First”.
We had to take it literally!
The US President is going to renegotiate every trade deal just so he can put his country’s name first in the agreement’s official name. That’s all.
The North American Free Trade Agreement (NAFTA) is now going to be called the United States-Mexico-Canada Agreement (USMCA).
Sure, the name change isn’t the only thing that’s different.
US farmers will sell some more dairy to Canada. Mexico and Canada will restrict their car part exports to the States. US patents on pharmaceuticals last a little longer.
But in the grand scheme of things, they’re no more than tweaks. It hasn’t transformed the trade relationship into something fundamentally different.
As Anne Applebaum comments in the Washington Post:
“The only truly radical difference is that Trump’s negative, angry language has been replaced by happy, enthusiastic language.”
Trump doesn’t see it that way. He’s claiming USMCA as a win for his patriotic agenda.
Then again, he may be living in a Potemkin village where things always seem better than they really are.
The emperor has no clothes
When Catherine the Great came to visit Crimea in 1787, the peninsula wasn’t ready for it.
Military leader Grigory Potemkin therefore created a ruse. He erected fake villages to let the tsarina think Crimea was something it wasn’t – a prosperous, booming region.
From the looks of it, Donald Trump’s subordinates are doing the same thing to him.
As far as I can tell, Trump is living in an alternative reality carefully constructed by his aides.
Of course, in order for the ruse to keep working everybody has to play along.
No one’s supposed to point out the emperor has no clothes!
Alas, Goldman Sachs didn’t get the memo. Its economics team went off script this week when it pointed out the problems with Trump’s policies.
The 25% tariff on Chinese imports could wipe out earnings growth for S&P 500 companies in 2019, Goldman said.
In January the bank already warned government tax cuts and spending increases would blow an even bigger hole in the fiscal deficit.
It angered Trump’s adviser Kevin Hassett who accused the investment bank of playing politics. He even went as far as to say Goldman looks like the Democratic opposition!
It’s an interesting turn of events. Goldman after all also happens to be the official supplier of Trump’s government.
No fewer than six former Goldmanites joined the cabinet, including finance minister Steve Mnuchin.
Are we now living in some dystopian reality in which banks are both government and opposition in American democracy?
Hassett is, of course, not completely paranoid. November’s mid-term elections are coming up.
It’s not good publicity if people start explaining how everything the government claims as a win is actually more a defeat.
But if Goldman Sachs is playing politics, so is the Trump administration.
The deadline for a new deal with Mexico and Canada was set a month before the November elections, presumably to bring some momentum to the vote.
As it happens, the biggest change to the agreement appears to be its name, which has been rendered unpronounceable.
For the sake of convenience people have started pronouncing “USMCA” as “YMCA”, like the youth hostel.
But if the treaty’s most remarkable achievement is that the Village People get some more airtime, I doubt it’s enough to swing the US mid-terms in Trump’s favour.
Trump aides keeping the President locked in an alternative reality would explain a lot…
Why he refers to seemingly accurate reporting as “fake news”, while making factually inaccurate statements himself.
Why his former adversary Kim Jong-un is suddenly a gentleman and a scholar, even though he’s made no real concessions to him about North Korea’s nuclear programme.
And why he claimed, at the United Nations, that in two years his administration has “accomplished more than almost any administration” in US history.
World leaders laughed. Maybe they knew the US President isn’t “winning” quite as much as he thinks.
The USMCA treaty isn’t the grand victory Trump makes it out to be. For something he’s called “the worst trade deal in the history of the country”, the changes to it have been minor.
“All three sides gained some things. All three sides conceded some things,” Anne Applebaum summarises.
America’s growing trade deficit with China also seems to disprove Trump’s assertion that his country is winning the trade war.
Despite $50bn tariffs on Chinese goods, US imports from China increased by $1.5bn to $213.7bn in August. That same month US exports to China fell by $2.3bn to $137.9bn.
Where Americans have responded to the tariffs by buying more “made in China” products, the Chinese bought fewer US aircraft parts (-$1.3bn) and soya beans (-$600m).
It’s helped China’s trade surplus with the US reach a new high.
The mid-term elections will be of crucial importance to Trump.
His government has had a majority in the Senate for two years and couldn’t even repeal Obamacare. Democrats hate his guts.
If the Republicans lose their majority in Congress and the Senate this year, it’s not going to be easier to push proposals through.
I doubt it’ll stop Trump claiming victories, though.
Besides, there is a chance Trump actually wins something tomorrow. He’s been nominated for the Nobel Peace Prize (but so has Kim Jong-un).
Should the US President win (bookies put the odds at 7-1), he’ll no doubt be strengthened in his belief that his administration is the best in US history.
Potemkin would be content.