The Phantom Trade War
I spend a lot of my time helping people analyze information and use that analysis to make decisions. I also do the inverse — process decisions others have made, and try to infer the information and analysis that drove them. I’ll dive more deeply into some of my underlying theory & methods in future posts, but for my first blog post, I want to do a quick inference case study on a trending topic… that of Current President Trump, and his new game of “tariff chicken”.
I won’t go into why Trump’s tariffs are a bad idea from both an economic and political standpoint. Enough experts have done so. But even though DJT tweeted “trade wars are good, and easy to win…” I believe that not only does Trump not believe this, but also that he hopes not to have to impose any tariffs at all. Which is why I find it fascinating to try to figure out why he’s cornering himself into possibly having to impose them.
What does DJT see as the risk-weighted upside to threatening a trade war, which would outweigh (for him) the downside of an actual trade war:
- Fulfill a rally-rousing campaign promise. It may be bad policy, but it got him cheers – and isn’t that what matters most?
- Feel like a tough guy. When he was just a businessman, DJT’s power was limited to going around suing people. But as president, he gets to start trade wars, and maybe even real wars. Now that’s real power. Given that, why wouldn’t he start a trade war?
- Distract the media. Every ounce of ink and minute of tv dedicated to a trade war is one less ounce or minute spent talking about Mueller or Stormy.
- Maybe the Chinese will capitulate. In business, DJT often launched lawsuits, hoping the other side would settle quickly rather than face expensive litigation. This tactic has failed him repeatedly since he took office, and it won't work this time either, but it’s part of his DNA.
But as much as I think these are DJT's true calculating factors, there’s one theory I have that I find most compelling… It’s possible that Trump had just been watching “Star Wars Episode I: The Phantom Menace”, and really liked Palpatine’s strategy of fabricating a trade war as a pretext for consolidating power, and ultimately declaring himself Emperor of the Galaxy.
After all, being President is cool, but “Emperor of the Galaxy” is so much more awesome. After all, Clone Wars are good, and easy to win.