Donald Trump’s America Isn’t Here to Make Friends — or Even to Retain Them

By
Trump trade adviser Peter Navarro stands between Reince Priebus and Jared Kushner. Photo: Ron Sachs - Pool/Getty Images

In its first week on the job, the Trump administration soured relations with Mexico, by demanding our southern neighbor finance a border wall — or else suffer less favorable trade terms with the United States — and escalated diplomatic tensions with China, by vowing to block Beijing’s access to its disputed islands in the South China Sea. And now, the Trump administration is turning its fire on Europe’s largest economy.

On Tuesday, Trump’s top trade adviser told the Financial Times that his team has little interest in a trade deal with the European Union, in no small part because Germany exploits its trade partners.

“A big obstacle to viewing TTIP as a bilateral deal is Germany, which continues to exploit other countries in the EU as well as the U.S. with an ‘implicit Deutsche Mark’ that is grossly undervalued,” Peter Navarro told the paper, referring to the Transatlantic Trade and Investment Partnership. Unlike the newly deceased TPP, the TTIP could be understood as a “bilateral deal” — an agreement involving only two parties.

The Trump administration prefers such agreements, believing that they provide the U.S. with more leverage. In multilateral deals, the thinking goes, small countries can team up to demand larger concessions from great powers. But if America takes on each nation individually — like an action hero fighting his way through a super-villain’s henchmen — it has a better chance of setting the terms of trade.

But, as Navarro notes, the EU is, itself, a conglomeration of smaller nations. Thus, any trade deal with the union is, essentially, multilateral.

“The German structural imbalance in trade with the rest of the EU and the US underscores the economic heterogeneity [diversity] within the EU,” Navarro told the Times. “Ergo, this is a multilateral deal in bilateral dress.”

Germany’s massive trade surpluses have irked Washington for years. The Obama administration implored Berlin to rebalance its economy by stimulating domestic consumption. But these complaints were gift-wrapped in diplomatic niceties. After all, whatever the divergent interests of our national economies, maintaining friendly relations with Germany is a core national interest.

Or it was. Navarro’s less than diplomatic remarks reflect the new administration’s broader aversion to designing trade policy with an eye toward strengthening geopolitical alliances.

In the wake of World War II, the United States provided heaps of foreign aid to its decimated allies, while offering their exporters access to the American market. The cost of such moves — both to the U.S. treasury and to the dominance of American manufacturing — was seen as small compared with the benefits of preventing desperate Western European countries from seeking recovery through alignment with the Soviet Union.

Similar geopolitical considerations weighed on the ensuing decades of American trade policy. A core part of president Obama’s argument for the TPP was that the agreement would check China’s influence over the nations of the Pacific Rim.

The Trump White House seems unmoved by such considerations — least of all the idea that American trade policy should prioritize the maintenance of the postwar liberal order. In fact, the Trump administration seems to desire the unraveling of that order. Or, at least, significant parts of it: Navarro’s true complaint appears to lie less with Germany’s monetary policy than with the existence of the eurozone itself.

Germany’s currency isn’t “undervalued” because Berlin favors low interest rates. Within the EU, Germany has been an inflation hawk. The nation’s central bank has called for less monetary stimulus, while its lawmakers have pushed for higher interest rates (measures that would strengthen the euro). A stronger euro would do far more harm to Europe’s periphery than to Germany, as unemployment — not inflation — is the principle worry in the former. Nations like Greece benefit from a weaker currency, which make its export and tourism industries more competitive.

Thus, Germany’s currency is “undervalued” because it is in a monetary union that must, to some extent, consider the interests of Europe’s weakest economies. Which is to say: Navarro’s problem with Germany isn’t a technical dispute over the finer points of monetary policy, but over the fundamental question of the eurozone’s viability.

Throughout his presidential campaign, Donald Trump displayed a proclivity for contradicting himself — particularly when doing so brought him into closer alignment with GOP orthodoxy. After making some noises about raising taxes on the rich early in the primary, Trump proposed the largest tax cut in U.S. history; after decrying Wall Street’s influence over our politics, the GOP nominee called for a moratorium on financial regulations.

Given this apparent nihilism, it was easy to imagine Trump taking the path of least resistance once in office: Do a symbolic gesture or two on trade, while focusing primarily on the deregulatory agenda that he and his party agree upon.

But even if Trump isn’t a sincere anti-globalist radical, he’s surrounded by advisers who are. In his interview with the Financial Times, Navarro suggested that the White House is aiming for nothing less than a revolution in global trade:

Mr Navarro said one of the administration’s trade priorities was unwinding and repatriating the international supply chains on which many US multinational companies rely, taking aim at one of the pillars of the modern global economy.

“It does the American economy no long-term good to only keep the big box factories where we are now assembling ‘American’ products that are composed primarily of foreign components,” he said. “We need to manufacture those components in a robust domestic supply chain that will spur job and wage growth.”

There are compelling critiques to be made of the global economy’s vast supply chains, on economic, environmental, and national-security grounds. But add Navarro’s ambition on that front to Steve Bannon’s interest in dissolving the European Union and drastically restricting legal immigration to the United States, and you have a far more radial international agenda than most Republicans had bargained for.

Whether the White House can pursue that agenda while staying friends with the congressional GOP remains to be seen. So far, Trump has shown little deference to the latter objective.

Trump’s America Isn’t Here to Make Friends — or Retain Them