Opinion | Trump’s naive Nobel Prize goal is creating false hope on US-China trade

Donald Trump’s is the White House that can’t shoot straight, policy-wise. But last week highlighted the extent to which key Trump team members are firing at each other, and in ways that should worry emerging markets.

Chinese Vice-Premier Liu He visited Washington to tamp down the threat of a giant trade war. The real stand-off, though, is between Treasury Secretary Steven Mnuchin and Trump adviser Peter Navarro. Mnuchin favours a US-China trade; Navarro wants to build a great wall of isolation around Trump Nation.

Last week’s talks got us no closer to knowing which of these hacks might be fired first – in a more perfect world, neither would get within miles of the Oval Office. But that’s what happens when a leader covets loyalty and bombast over skills. But the odds favour an ultimate Navarro triumph, adding to the troubles coursing through emerging markets.

Like clockwork, Argentina’s financial chaos spread to Turkey and, increasingly, Indonesia. Fitch Ratings last week warned that developing-nation government debt has quadrupled since the dark days of the 2008 global crisis. That, coupled with rising US bond yields, has Harvard’s Carmen Reinhart worried that 2018 could be even worse for the emerging world.

Trump’s erratic policy is a key reason why. One of his most consistently applauded lines at rallies around the US is the idea of taking China down a peg. At the moment, Trump is playing nice with Xi Jinping, not because he suddenly became a free-trade champion. No, Trump’s eye is still on the prize – the Nobel Prize.

This overriding goal is creating false hope on US-China trade. Every concession Trump makes – like aiding ZTE’s access to US markets – is partly about that Oslo medal ceremony. The more Xi helps Trump’s detente process with North Korea, the more conciliatory Washington will appear on trade.