It may be a little too glib to say
Donald Trump’s days are numbered as president of the United States. A week is a long time in politics and the next eight months between now and the November 3 presidential election could see a lot of changes. It is far too soon to write him off as there is plenty of time to show some solid leadership to help dig the US and
global economies out of a deep hole.
The challenges are great, the scope for personal redemption is enormous and the only question is whether Trump is up to the task. It’s make-or-break time and the outlook for economic salvation, world financial stability and global welfare is in his hands.
He has his work cut out. His record so far has not been great and markets are sizing up the possibility of a
Democrat presidency by the end of the year. It could bring seismic changes to domestic economic policy and especially the way America deals with the rest of the world.
Trump has failed on too many fronts. His “America First” approach to policy has inflicted heavy damage on global well-being. Trump has presided over one of the largest
stock market collapses of all time and left the US and global economies dangerously exposed.
While the coronavirus crisis has dealt a cruel blow, the
damage was already done to global confidence by an unnecessary trade war with China. A Democrat-led US could be a much-needed positive force for change and a welcome relief to global well-being and financial market stability as the world eventually gets back to normal.
The costs to human life in the next few months will not only be a dreadful tragedy, but also exact a terrible toll on global growth prospects. Without a doubt, the US economy is already experiencing the onset of recession as economic confidence, consumer spending and business output and investment go into free fall. It’s anyone’s guess how great the damage will be, but estimates of the economy contracting by as much as 25 per cent in the second quarter are no exaggeration.
The real uncertainty is down to how long the recession drags out and how soon before the economy springs back. Whether recovery is U-shaped, V-shaped or flatlines into an L shape is down to how quickly the government responds with stimulus in the coming weeks.
Trump not only needs a plan, but a good plan at that, which needs him showing a lot more inspired statesmanship. It’s not just about opening the fiscal floodgates with Congress’s
US$2 trillion rescue package and the Federal Reserve’s
mass monetary mobilisation with open-ended quantitative easing and zero interest rates. This is all about hearts and minds – getting America behind the recovery effort and encouraging belief in the government having the power to put things right.
It’s not about
“draining the swamp” any more, but building confidence that the US medical system can protect the people and heal the nation. The American people desperately need to have faith that the president has their interests at heart and that the economy will spring back.
Trump must carry out policy for the long haul, instead of resorting to short-term political expedients. This means backtracking on some of his more cherished political notions, not least taking on China’s rising economic might. Trump needs to bury the hatchet with Beijing and bring the
US-China trade war to an immediate end.
Trump also needs to have constructive
dialogue with China’s President Xi Jinping to explore how the world’s superpowers can work together to beat the coronavirus and get the world back on its feet. The US and China have too much in common to let the opportunity slip. The trade war was a grave mistake that needs to be corrected.
Unparalleled times require unprecedented actions and Trump must help to reboot the global economy. It means putting greater faith in closer policy coordination to get a sustainable recovery back on track. It needs a change of heart but he has nothing to lose and everything to gain if he could be a credible world leader so badly needed in this time of crisis.
If Trump fails to rise to the challenge, it will be a lost opportunity and we will all end up a lot worse off. The world waits with bated breath.
David Brown is the chief executive of New View Economics
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This article appeared in the South China Morning Post print edition as: Trump must end trade war to help reboot the global economy
