US President Donald Trump has always appeared sincere in his belief that “trade wars are good, and easy to win”, but his recent policy swerves and mood-music shifts suggest he is coming to realise he has overplayed his hand in waging a trade war against the world.
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Trade partners from Beijing to Brussels are relishing the sight of Trump scrambling to back off from his preposterous “reciprocal” tariffs, while painting a rosy picture of the prospect of “fair” trade deals and seeming to eschew his trademark hard-nosed negotiating tactics.
After receiving Italian Prime Minister Giorgia Meloni – an official not empowered to negotiate on behalf of the European Union – at the White House, Trump stated his personal “100 per cent” certainty there would be a trade deal with the EU.
The following week, Trump claimed he would “not play hardball” in negotiations with Chinese President Xi Jinping, that the 145 per cent tariff would come down, a rather stunning concession that violates a cardinal rule of negotiations: do not negotiate with yourself.
Even by Trumpian standards, this is a dizzying turn of events. What happened? Simply put, Trump wildly overestimated the strength of the US position and underestimated the strength of its trading partners.
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In Trump’s estimation, the dynamics are simple and overwhelmingly in favour of the United States. Other countries are dependent on exports to the US market while the US is far less dependent on its ability to export. Threaten to cut access to the US market and countries will line up, hat in hand, to offer concessions to Trump. An easy win for the consummate negotiator.