In These New Times

Cailein Bochanan

4th December, 2018

The G20 summit meeting between Trump and Xi has ended on an upbeat with the declaration a  truce  and a 90 day period in which to consolidate a deal. Xinhua has welcomed  what it describes as a consensus in rather glowing terms

It can come as no surprise that Trump has chosen not to push ahead with more tariffs. The tariff policy makes no sense and is presumably just the latest instance  of Trump’s art of the bluff. It’s true that they play a prominent role in US economic history having enabled the surge of economic growth at the end of the 19th century associated with the rise of Rockefeller, Carnegie and J.P.Morgan. But they only worked due to the unspoken decision by Britain to outsource the empire to the USA to the tune of 5% of GDP per annum. There is no such incoming investment this time although perhaps China can provide it: that may be the unspoken agenda this time round. Trump’s notion that US companies will just move back onshore is not based on reality: their suppliers would have to move with them and the USA would require an overhaul of infrastructure and be able to provide a suitable labour force. 

The collapse of Trump’s tariff agenda coincides with the collapse of the Brexit . That was based on Britain’s own feel-good heritage agenda; so-called free trade. Only to find that their “free trade” notions didn’t apply anymore. In fact, they never did apply: free trade was a typically British euphemism for trade carried out in their ships, paid for the their currency and subject to their gunboat diplomacy. Free trade was privileged trade but the privilege is fast ebbing away. Trade in the new, emerging multipolar reality involves some sharing of sovereignty.

It is ironic that both the USA and the UK have become befuddled by the complexities of globalisation given that they invented it. But it was game they decided they didn’t want to play anymore when they realised that emerging economies like China were winning it. Hence this brief episode of “taking back control”. Now, with isolationism looking anything but splendid, they are back at the table.

Of course, it will not all be plain sailing in the years to come. Assuming Trump is backing down, as he certainly appears to be, he will have to sell the sell-out to Congress and the American people as a great victory. In the UK the Brexit debate rages unabated with the two factions now being, in the finest traditions of British comedy, the Remain faction and the Leave and Rejoin faction. A lot can go wrong since both countries face a daunting challenge: they must reconnect with globalisation as major powers amongst others rather than as lords of the earth. This would seemingly require humility and an ability to take stock of what has gone wrong. But since neither is in evidence, Trump with his brashness, his bluffing and bragging may be just the kind of leader to make some progress. In the UK the question is more whether any leadership at all is possible.