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Waiting out Trump.

Every President sooner or later says too much – draws a red line in the sand, declares the war is won or, as in Trump’s case boasts that the “trade wars are easily won.”

Now 18 months on and trade wars look anything but easily won. Instead if the Europeans are united it is by fury and humiliation at their off handed treatment in trade relations. Even the US farmers are starting to wonder at their apathy faced by the White House unflinching capacity for failure and cover up.

And China is preparing to wait out the President and live to start another day.

The glib thinking of the US Administration included no understanding of the complexity or established efficiency of global supply chains. Ill briefed, they thought in the simpistic terms of generalised balance of payment deficits that obscured the massive scale of total trade and ignored the years of negotiations that formed the understandings, partnerships and agreements that eventually served all sides pretty well. And frightened, they baulked at confronting the two real challenges – how to understand the different culture and thinking of the far larger nation, with its far far greater history, and how to persuade it to want to collaborate to everyone’s mutual benefit. (see my talk “China, the US and World War 111”).

Throughout, the White House has been hamstrung by its dearth of China speakers and experts, and in some cases by a complete lack of Asia experts on the ground. Empathising with a different, in many cases far greater, civilisation is no place for former radio and TV personalities.

So on the US side Trump will continue to flap around, 10% here, another tweet there, a lurch forwards and then some stumbles back – all couched in baby talk and dishonest asides to his silly supporters. This will have one certain and constant impact – it will unsettle the confidence of our great businesses planning how best to invest in China and Asia, how best to counter the huge sovereign power of China and the other nations competing with them for the new technology markets. They will have to wait out this administration.

China used to be the market that bought our goods and services – it still is the prime market for cars and luxury goods. Trade now will slow. Obtaining licenses will take time,some key supplies may become rarer and tariffs will inevitably reduce the value of the yuan unless a determined effort is made by China to support it. Above all, as with the global companies China will take its cue from Trump – the US is not to be trusted – and so they will look elsewhere. The US is smallĀ  (320 millions) compared to Europe (520 millions) – expect to see growing trade with Europe and Asia, a consolidated position with Russia (oil and arms for technology) and a steady enlargement of the Spice Road as a spring board for all manner of future partnerships. China too will wait it out.

Th future world order will depend upon mutual collaboration. This will come. The question is at what cost, over what time and with what degree of unnecessary pain. In so far as the US wishes to shackle this outcome so far is it excluding itself from the new order and prejudicing the futures of its next generation.

Have a good day, JamesĀ