Date
22 July 2018
US President Donald Trump is very good at brinkmanship, ratcheting up pressure on the other party to get what he wants. Photo: Reuters
US President Donald Trump is very good at brinkmanship, ratcheting up pressure on the other party to get what he wants. Photo: Reuters

Trade war fears and Trump’s brinkmanship

Global stock markets staged a rally after US President Donald Trump dismissed speculation that Washington is gearing up for a trade war following his move to impose stiff tariffs on steel and aluminum imports.

Trump is very good at brinkmanship, ratcheting up pressure on the other party to get what he wants.

I think this trade war tactic is part of his efforts to get re-elected in 2020.

Trump has just reappointed Brad Parscale to manage his bid for a second term. Parscale was the digital director of his successful campaign for the White House in 2016.

The last campaign centered on his “America First” policy, but he has yet to deliver on his promises in this regard.

The proposed 25 percent tariff on steel and 10 percent duties on aluminum imports can be seen as a way to force the country’s major trading partners such as the European Union and China to respond.

He has to show to the American people that he has made solid accomplishments by way of fulfilling his previous campaign promises.  

Among Trump’s supporters are those who sincerely believe that the past administrations’ free trade policy has hurt blue-collar workers. They include former US steel and aluminum workers who lost their jobs as a result of such a policy.

Trump could be using the tariff hike to further cement or even expand his support base.

Meanwhile, the tariffs can also serve as a negotiating tactic in his negotiations for a new  North American Free Trade Agreement.

Trump indicated on Monday that the US may consider lifting the new steel and aluminum tariffs if NAFTA is renegotiated.

Trump argued that Canada and Mexico have not fully opened their farm produce markets and they should work harder to crack down on illegal immigrants.

Trump is a businessman. He has written a best-selling book, The Art of the Deal, which shows that he is an expert in employing brinkmanship and the madman strategy to get what he wants.

The hit-and-run approach appears to be working. But such a strategy would tarnish his credibility. If used too often, people may soon stop taking him seriously.

This article appeared in the Hong Kong Economic Journal on March 7

Translation by Julie Zhu

[Chinese version 中文版]

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RT/CG

Hong Kong Economic Journal columnist

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