Destruction, Creative or ???

In the area of foreign policy, is Trump just plain crazy, or crazy like a fox? Is this random flailing bent on isolating America, or is it creative destruction which tears up the old deal before dictating a new one?

Everyone in America has their opinion now. But so, too, do the leaders of foreign nations who have to deal with it. Europe seems to think that Trump is an idiot for smashing the old alliances, and that’s understandable. China, on the other hand, is much more wary that they are dealing with a more serious and permanent change.

There are very good reasons for this.

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US vs The World

The Bureau of Labor Statistics (BLS) announced the addition of 223k jobs in May, bringing the unemployment rate down to 3.8 percent. Labor markets are tighter than they have been since the Managed Depression started in 2000, and there is upward pressure on wages. What could possibly screw it all up?

How about a global trade war pitting the US against every other nation on the planet?

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I’ll Thrash the Economy For You! (?)

Over the weekend, financial markets were sleeping. They awoke on Monday as if the weekend was a bad dream, filled with chatter about a trade war and how it was actually a good idea.

It’s not a dream, it’s reality. But is this all a stupid attempt to promote a candidate in a tariff-loving industrial district that should be winning a lot bigger? Nevermind the unreality of it, including the fact that the Pennsylvania 18th is certainly going to go away with court-ordered redistricting. There’s a special election on 13 March, and losing it would be very embarrassing.

This might all be a show to avoid losing a place where Trump should be winning bigly.

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Trade War – or Trade Tantrum?

President Trump is threatening a trade war with Europe. “I’ve had a lot of problems with the European Union, and it may morph into something very big from … a trade standpoint,” Trump said in an interview with British ITV on Sunday. “It’s a very unfair situation, we cannot get our product in. It’s very, very tough, and yet they send their product to us — no taxes, very little taxes.”

Yes, trade in goods and services with Europe is not precisely balanced. But why? Is it because it’s so hard to get products in, and they have a tax advantage? Wasn’t that supposedly taken care of in the recent tax bill?

Like most of what Trump says, the statement is not only wrong, but completely misses the difficult underlying reason why US trade will never be in balance. It’s a major feature of the power we wield around the world through the greatest strength we have – the US Dollar. And messing it up may make us lose far more than we think to in the destruction of a “war.”

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