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Your guide on what Trump's second term for Washington, Business and the World means
Say what you like about Scott Bessent, but the insistence of the Secretary of the Treasury to assert the logic in each procrastination of the random pricing policy of Donald Trump provides a lot of fun abroad. Bessent and other administration officials are now desperate to sign dozens of commercial transactions, while the fractious financial markets hold a weapon to the head, and we are asked to believe that everything is a cunning plan.
Obviously, Trump's strategy is terrible: it is not even clear What he wants. But a less inept administration would also be in difficulty. Over the decades, the leverage of the United States to redo the world trading system – capital flow, advanced technology and access to its vast consumer market – has been weakened compared to China. Barack Obama called the United States the “essential nation”. In commercial and technological terms, increasingly false.
During the Marshall Plan of the First World War after the seconds, the United States created a largely Atlanticist political economy in Western Europe. He offered not only Marshall financial assistance, but also advanced technology, and access to his consumer market.
These advantages have dissipated. Help budgets in the United States has reduced considerably compared to that of China, and the so-called Department of Government Effectiveness has more or less closed its latest vestiges in the American agency for international development.
The United States, especially under Joe Biden, worked hard to deprive China of advanced technologies, especially semiconductors. But failure to equalize official and Chinese business investments, while sending bad signals to American industry, means that it is well late in a large part of green technology. If a country wishes to adopt solar or wind energy or replace internal combustion engines with electric vehicles, including batteries, it will generally obtain the highly subsidized kit of China.
The Rhodium Group consulting firm esteem that The share of global export China in solar cells and modules was 53.5% in 2023, compared to 35.5% 10 years earlier, and had exceeded 50% for lithium-ion batteries and semi-finished electric vehicles.
The United States, using subsidies and protective prices on imports, have tried to build its own battery, its own battery production and its solar production for the internal market. This week, an initiative of Biden concluded in the announcement of the Mesospheric Prices of up to 3,521% On the solar cells of the countries of Southeast Asia. This may be politically necessary to maintain solar power alive in the United States, but it will never make a competitive exporter.
Likewise, on electric vehicles, the EU tries to integrate peak Chinese production into its domestic market. But the United States, its indigenous automotive industry biased by commercial protection Towards giant gas vans, which no other country wants, creates an EV sector at low prices which cannot compete abroad.
If it cannot offer technology to obtain commercial offers, the United States has its domestic market as an incentive? Here, it retains an advantage over China, which continues to follow a growth model oriented towards export. The OECD told me that in 2019, the last pre-cook year for which they could calculate this data, the American share of total imports of world goods was 15.4%, but its share of final demand (which takes into account added value at each stage of production) was 17.5%, well above 9.7%of China and even 11.3 percent of the EU.
The United States has long used market access as bait for business partners to reduce prices, adopt American rules on intellectual property rights, etc. The latest Hourra of this tactic was probably the carefully created transpacific partnership, signed by 12 countries in Asia-Pacific in 2016 and designed to surround China with economies oriented towards the United States.
But the Congress held the agreement before Trump completely withdrew the United States in 2017. The countries did before and transformed the TPP into CPTPP “complete and progressive” without the United States, exciting the IP arrangements which had been included in the insistence of Washington.
Since then, the prospects for the use of the American market for the lever effect have been narrowed not only because of the secular drop in the part of the world economy of America, but due to the toxicity of trade agreements in Washington. Biden administration has attempted to restore American influence in Asia-Pacific with the “Indo-Pacific Economic Framework for Prosperity”. But that simply created a perplexity in the region by trying to coax partner countries to adopt American labor standards and other rules without offering export markets in return.
Trump's idea is to threaten to withdraw market access with high prices and then restore it in exchange for commercial concessions. Everything is stick and no carrot. The credibility of its threat of imposing permanent import rights is subject to the whim of financial markets, and its reliability to maintain these taxes following an excessively suspicious agreement.
In the Global Game of Trade Poker, Trump inherited a weakened hand and play it extremely. Bessent and his other officials are in a precarious position. The United States does not have aid, technology or market access to exercise control over world trade as it has done in the past, and Trump's erratic behavior quickly increases the probability that it will never do it.
