Five practical consequences of living in the Trump era

Right. Enough weeping and wailing. If you are anything like me, and admire any or some of the following Presidents of the United States, I mean Abraham Lincoln, Teddy Roosevelt, Calvin Coolidge, Harry Truman and Ronald Reagan, then watching the undignified nonsense that constituted Donald Trump’s inaugural address will have been a singularly depressing experience. It was a shockingly poor piece of rhetoric that channeled Mussolini, refracted through Berlusconi, all delivered by the latest carnival huckster opportunist clown to rise under the banner of populism. It was awful stuff.

But it happened. Trump is in the White House. The curtains in the Oval Office have been changed (to gold naturally) and he has begun signing executive orders. The oddest of those incidentally is the ordering of the establishment of a “national day of patriotism.” Isn’t that the 4th of July? Are Americans noticeably shy of flying the Stars and Stripes flag, and proclaiming their country’s virtues, to the extent that they require a new day of Trumpian patriotism?

Anyway, to the task of dealing with Trump and thinking clearly about what comes next.

For some the response is to go on a march, which personally has never been my scene. If you want a walk, fine, go along. But alongside the decent people protesting in London and elsewhere today are terrible Trots and Socialist Worker types. To say nothing of those who think the defeat of bossy ultra-liberalism requires them simply to shout louder at the voters. Each to his own though.

If you are not marching you are probably keen to get away from politics for the weekend. I certainly am, so this is not a long newsletter. I simply have five short observations about the practical implications of Trump’s Presidency:

1) It all rests on the US economy, even more than usual. It will dictate whether he survives. Much of the focus has been on protectionism, with an unresolved debate on the extent to which Trump can impose it via executive order and emergency powers dating back decades. I’ve heard the so-called Trading With the Enemy Act (1917) mentioned and later provisions too. The law is unclear. We’ll see. More significant on the upside, potentially, is the impact of reshoring vast amounts of American wealth, via a cut in high corporate tax rates meaning money might flood in to the US that is then, theoretically, poured into projects and innovation and investment. Economists are divided on whether it will mean much with unemployment already low. They may be underestimating the psychological impact on confidence of a splurge of private sector investment. The US is now energy self-sufficient – thanks to shale and fracking – and history shows it is capable of economic reinvention. What could possibly go wrong?…

2) Impact on the world economy of a strong dollar. There are a range of expectations on how much the dollar will rise under Trump. An area of concern – agitating some policy-makers – is the impact of this in emerging markets when it kicks in. These are countries where there has been a massive corporate borrowing binge in dollars, meaning the loans and liabilities are denominated in dollars. Such companies in those countries are badly exposed to a rising dollar. Turkey and Malaysia in particular are worth watching out for, I’m told. The fear is corporate collapse, a knock on to the banking system and then to sovereign governments.

3) Concerns about Western security are back and they matter, a lot. I’ve even bored myself on this in recent months by writing on it so much. Rethinking Western security should be the number one Western European priority. Forget the EU. Britain can help lead this in concert with Germany and France (if the French focus on not being grumpy for a second) and a range of smaller nations now desperately worried about Putin and Trump. NATO will probably survive the Trump era but we need to at least start thinking imaginatively about what happens if Trump encourages the Russians and scales back the US commitment, losing the brilliant pro-NATO Mattis as defense secretary. History says: think the unthinkable and plot calmly with allies.

4) China is not the answer to our problems. Hilariously, the Chinese Communist party leadership turned up in Davos this week presenting themselves as the guardians of free trade and the international order. Stroll on! This is the country that has manipulated the currency markets to its advantage and not opened its own economy properly to foreign investors. Trump’s response to China is incoherent and emotional, but the administration’s determination to be tough with China, rather than rolling over for it, is on balance to be welcomed. China has had it far too easy with the West in the last decade.

5) You want to beat Trump? Think. Organise. Beat him at politics. I won’t labour the general pointlessness of marching, and this item is directed at Americans, where Trump’s fate will be decided. All the daft demonstrations in Europe against Bush made no difference to anything. Politics made President Trump and it is the only legitimate way that he will be removed. There is good news on that score. One beauty of the US system is that as soon as the presidential election is done there is a relatively small window before the election cycle cranks ups again. Less then two years away, on Tuesday 6th November 2018, are the midterms, when Trump’s record will be on trial. If it has not gone well Trump will blame intransigent Washington and the “crooked media” – stoking his supporters and floating voters. Which makes it more important than ever that the Democrats shake themselves out of the Hillary-era and its ultra-liberal fixation on virtue-signalling, and instead get stuck into being a party that has something to say to angry voters on the economy, opportunity and defence. Moderate Republicans are there already and can only watch and wait to see if the opportunist demagogue Trump slips or falls. The Democrats need fresh faces and quick. (I don’t see any yet but perhaps I am wrong and will be on the look out the next time I travel to the US.) But cheer up. Trump won’t last for ever.