Is a drowning Donald Trump set to take down China and Japan with him?
William Pesek says the Trump presidency’s struggles to stay afloat amid scandals and investigations increase the risks that he will fire salvoes of all kinds before he finally goes down, with Asian targets first in line
There are black swans and there are drowning swans. What to do when the leader of the world’s biggest economy is both?
Donald Trump’s shock election was the very definition of a highly improbable and impactful event virtually no one saw coming. But, some 215 days in, this black-swan White House is thrashing about desperately to stay above water. The world economy is caught up in its wake – nowhere more so than Asia.
Investigations, sinking approval ratings and ever more scandals mean Trump’s presidency is effectively over. Even if he survives his term, his legislative prospects are negligible. Trump has already descended into Nixonian flame-thrower mode, firing at every ally he would need to achieve anything big – Congress, business, media and leaders abroad.
Asia is the vanguard of this last group, and a caged and paranoid White House is a clear and present danger. Trump won’t go down without considerable drama – trade wars, Twitter attacks and perhaps even military strikes that raise the geopolitical stakes.
Take China. All eyes are on Robert Lighthizer, the trade representative whom Trump directed to probe America’s deficit with China. Earlier this month, the White House slapped tariffs of between 16.5 per cent and 81 per cent on Chinese aluminium foil imports.
Watch: Xi Jinping urged restraint on North Korea in call with Trump
Even if the legislative door is closing, Trump can do great damage via executive action. Desperate to change the narrative from Russia investigations and other controversies, Trump may roll out the 35 to 45 per cent levies that played so well on the campaign trail. His threated quotas on steel could become reality, and investigations could be revived into intellectual property violations and other contentious areas.
Count the ways this could backfire. China could devalue the yuan in retaliation and slap exit taxes on goods that Apple, Walmart and General Motors need to remain profitable. Beijing could cancel all orders at Boeing, and impose extra requirements on US tech firms and news agencies operating in China. It could also devastate global markets by dumping its US$1.1 trillion of Treasury debt holdings.
Tokyo, meanwhile, is experiencing a bull market in buyer’s remorse. No major leader embraced Trump faster or more enthusiastically than Japan’s Shinzo Abe. His sprint to Trump Tower 10 days after the November surprise was meant to buy Tokyo protection from US tariffs, an ascendant China and the @realDonaldTrump Twitter feed. Japan was betting on arguably the most chaotic US presidency ever.
Within days, Trump killed the Trans-Pacific Partnership, a centrepiece of the Abenomics reform drive. Trump tweeted that the yen is undervalued and slammed Toyota for building a new factory in Mexico. His decision to renege on the Paris climate deal belied Abe’s conviction that “Mr Trump is a leader in whom I can have great confidence”. Trump’s “fire and fury” shot at Pyongyang struck Tokyo as stunningly reckless.
Watch: Abe expresses trust in president-elect Trump
A US-China trade war would slam Japan’s economy, as it struggles to defeat deflation. Japan could be next, should Abe fail to display ample fealty. Japan Inc have taken out insurance against Trump’s wrath: Abe’s bow at Trump Tower, SoftBank’s US$50 billion investment, Toyota and Mazda’s US$1.6 billion put into a US assembly plant, Tokyo not criticising his North Korea threats. But it might not be enough.
As investigations in Washington intensify and some in Congress talk of impeachment, Trump’s behaviour is likely to become more erratic. And when the sinking president searches for people and places to take down with him, Trump will find many targets in Asia.
Might Trump precipitate tensions in the South China Sea to wag the proverbial dog? What about firing Tomahawk missiles at Pyongyang, Syria-style?
A commercial war would not make the US more innovative and productive, or repair its crumbling infrastructure. Even so, a cornered White House might wage one to punish China’s President, Xi Jinping ,for not reining in North Korea and to remind Trump’s base who’s boss.
In an era of extraordinary uncertainty, this much is clear: Asia will bear the brunt of Trump’s futile attempts at a swan song.
William Pesek is a Tokyo-based journalist and the author of Japanization: What the World Can Learn from Japan’s Lost Decades. Twitter: @williampesek