April 20, 2017
Don’t bet on Trump turning globalist
We recently argued that it was too early to pass judgement on whether Donald Trump would transform into a classic Republican president, or whether his radical agenda would resurface. Greg Ip takes the same position, warning that it is premature to think of Trump as having gone globalist after his attack on Syria. That is not so. On economic issues, he argues, Trump will stick to his radical agenda. This is why we are taking an interest in this story, which would otherwise fall outside our reservation. Ip notes that, on immigration and trade, the "Republican working-class" is closer to Trump than to other Republican leaders. Ip says it will be Trump’s strategy to extract concessions from trading partners rather than to go for all-out trade wars. And Trump will not be averse to using unilateral action, in defiance of WTO rules.
FAZ, meanwhile, reports that Berlin is busy preparing itself against trade measures from Washington. The government has composed a paper on the German current account surplus, for discussions during the spring meetings of the IMF and the World Bank this week. The paper makes three points. The first is that the bilateral US-German trade deficit should not matter. The insinuation is that the trade surplus is due entirely to the policies of the ECB, which is to keep interest rates artificially low. Secondly, the mirror image of the current account surplus is the capital account deficit. Germany has invested €63bn into the US last year alone. And finally, the German government has estimated that the current account surplus will sink from 8.6% in 2016 to about 7% next year.