Trump's masterstroke

The United States says it is being looted by the world in trade and wants compensation.

This looting has happened through the US not being able to export as much as it imports because of a strong dollar. And the dollar is permanently strong because the whole world uses it and it is constantly in demand. The US is thus forced to have a high trade deficit with most nations, including its allies, who ‘cheat’ the US through subsidising their home companies and keeping their currencies artificially low.

And then the US also spends trillions on the safety of the world by maintaining military bases across the globe and fighting wars. The world must repay the US by accepting President Donald Trump’s new customs duties without retaliation and buying more things from the US, including defence equipment. They must also invest in factories in the US — or they can simply send money to the US treasury.

This, more or less, is the plan that the US president has presented before the world, asking it to pay up. Whether this is fair or not — or based on facts or not — is a separate matter. The US trade deficit is linked to its budget deficit and overspending, requiring capital to come from abroad to make up the gap.

Meanwhile, the world has not asked America to set up bases outside its borders. Who the US attacks and who it defends is not based on some global consensus but a US assessment, which it carries out alone. But all that is, as I said, separate. The issue at hand is this: Can a competent plan on a vital matter be incompetently executed?

And this is, of course, a vital matter. The tariff plan’s goals are to bring manufacturing back to America again; to decouple or reduce dependency on China; to at the same time reduce the relative value of the dollar while retaining its position as the reserve currency; to collect billions from tariffs that will be spent on tax cuts; and to balance the budget — in short to make America great again. It is a serious matter and it deserved serious planning and careful execution.

Alas, the American tariff plan has instead unfolded with a series of pauses, withdrawals and exemptions — all of which were forced by events that had been predicted by critics. The result is chaos.

Watching the American business networks, it becomes apparent that nobody is really sure what the precise situation is with tariffs on any given day. The US trade representative is deposing before elected members of the Congress and does not know that a U-turn has happened at the White House on the very issues that he is taking questions on. Statements made by the treasury secretary (the equivalent of a finance minister) are at odds with those made by the commerce secretary.

Chinese president Xi Jinping has called him to negotiate, apparently to mollify the markets that are getting jittery. The Chinese immediately issue a statement saying this is a lie and the markets are weak again.

Any competent plan would have assumed that the targeted nations would retaliate. On 24 April, the Washington Post ran a headline reading . The report said that ‘Beijing’s curbs on rare earth exports, used to make military drones, consumer electronics, electric cars and more, have caused alarm across federal agencies.’

Why should retaliation from those being targeted ‘alarm’ anyone unless they did not think of the consequences of their actions? The people drafting the plan on such a vital matter should have not only anticipated this but also studied in detail the fallout.

As the madness unfolds, it is unclear what the ultimate objective even is. If the aim is really free trade, then how will manufacturing shift to the US from lower-cost nations? If the manufacturing of iPhones, shoes, garments, steel and semi-conductors is brought back to America and imports reduced, then the tariffs will not bring in much revenue and the deficit will remain. Both problems cannot be solved through this approach.

If the aim is decoupling from China because it is poised to overtake the US as the world’s largest economy, then what is the point of begging it for negotiations?

These are questions that should have, of course, been asked before the commencement of the exercise. They were not asked, except by critics who were dismissed as ‘haters’ or ‘anti-nationals’ determined to stop America from .

To return to the question we began with, the answer is no. It is not possible for a competent plan on a vital matter to be incompetently executed. This is because any plan made with seriousness will and must anticipate the consequences, in particular the negative ones. A casual approach such as the one America is using reflects not only on the execution — which is shoddy by all accounts, including those of its supporters — but on the plan itself.

It means that little thinking has gone into creating it — and not much weightage assigned to concerns that it may not work as intended and perhaps even fail.

It is shoddy work and shoddy thinking, revealing itself in real time through the disorder of execution. It is a masterstroke.

Views are personal. More of Aakar Patel’s writing may be read .