There is much President Trump does not understand about the outside world. High up on the list is the crucial importance of US trade policy in creating and sustaining the American Empire.
The key to the post-World War II US imperium was granting other nations commercial access to the huge, vibrant American domestic market. This, as much as the highly successful Marshall Plan in Europe, was responsible for stabilizing the world economy and extending US geopolitical power across much of the globe.
I vividly recall when war-ravaged Japan produced only junk and cheap toys. A small town in Japan called ‘Usa’ produced fake Zippo cigarette lighters stamped ‘made in USA.’ Five years later, I was amazed to discover the quality and capability of new transistor radios from an electric company later known as ‘Toshiba.’
Japan’s hard work and determination played a key role in rebuilding that war-ravaged nation, half of whose cities and industries had been fire-bombed into ruins.
But industrial Japan would not have risen from the ashes without access to the American market which consumed an ever-larger share of Japan’s high quality exports.
South Korea and then China followed the same growth curve, responding to America’s insatiable demand for lower cost products. In both cases, the boom in exports sparked rising economic activity in domestic industries and commerce.
Today, large parts of the world economy depend on access to the US market, its primary engine of growth. Canada and Mexico are prime examples. Almost 80% of Canada’s exports go to the US. As a result, Washington treats Canada like a dependency, though most Canadians don’t seem to care.
A major trade war between the US and Canada looms, centered on efforts by Washington to break into Canada’s heavily protected dairy, poultry and swine markets. Amid all the heated exchanges between Ottawa and Washington, there is hardly any mention of improving the cruel treatment and lessening the terrible suffering of farm animals.
What President Trump and his advisors don’t seem to get is that China’s access to Wal-Mart shelves deeply affects its behavior. Profits from China’s exports have been plowed into $1.2 trillion of US treasury instruments, making the Communist People’s Republic America’s leading creditor.
It’s an old canard that nations that trade don’t go to war. Untrue. Just look at Britain and Germany in 1914 or Germany and the Soviet Union in 1941. War, as the bellicose Trump threatens, is quite possible even between major trading partners like the US and China.
Risks of a Sino-US military confrontation over the disputed South China Sea or North Korea remain dangerously elevated. The dangers of war to major industrial powers Japan and China also remain elevated, posing another systemic risk to the world economy.
Trump’s campaign to return manufacturing to America and repatriate profits held overseas makes good business sense. The ravaging of America’s once mighty industrial base to boost corporate profits was a crime against the nation by unscrupulous Wall Street bankers and short-sighted, greedy CEO’s.
The basis of industrial power is the ability to make products people use. Shockingly, US manufacturing has shrunk to only 14% of GDP. Today, America’s primary business has become finance, the largely non-productive act of paper-passing that only benefits a tiny big city parasitic elite.
Trumpism is a natural reaction to the self-destruction of America’s industrial base. But the president’s mania to wreck international trade agreements and impose tariff barriers will result in diminishing America’s economic and political influence around the globe.
Access to America’s markets is in certain ways a more powerful political tool than deployment of US forces around the globe. Lessening access to the US markets will inevitably have negative repercussions on US exports.
Trump has been on a rampage to undo almost every positive initiative undertaken by the Obama administration, even though many earned the US applause and respect around the civilized world. The president has made trade agreements a prime target. He has targeted trade pacts involving Mexico, Canada, the EU, Japan, China and a host of other nations by claiming they are unfair to American workers. However, a degree of wage unfairness is the price Washington must pay for bringing lower-cost nations into America’s economic orbit.
This month, the Trump administration threatened new restrictions against 120 US trade partners who may now face much higher tariffs on their exports to the US.
Trump is in a hurry because he fears he may not be re-elected. He is trying to eradicate all vestiges of the Obama presidency with the ruthlessness and ferocity of Stalinist officials eradicating every trace of liquidated commissars, even from official photos. America now faces its own era of purges as an uneasy world watches.