Trump is proving America’s power through economic warfare
After nearly two decades of strategically aimless military action in the Middle East, the Trump administration has apparently decided upon a new and smarter way to fight: employing resurgent American economic power in the forms of tariffs, sanctions and trade deals.
Starting with the oil embargoes of the 1970s, foreign adversaries have routinely employed economic warfare against the US. The rampant inflation of the Nixon, Ford, and Carter years were exacerbated by soaring gasoline prices that threw a monkey wrench into the American economy. But instead of pushing back against the Gulf States, which soon grew obscenely wealthy on the backs of the American consumer, presidents from Reagan on did little or nothing except coddle them.
Glittering new cities arose across the Gulf and in China while American manufacturing and jobs went overseas. In March 2002, in the wake of widespread steel-company bankruptcies, George W. Bush slapped tariffs on imported steel, but by year’s end he had reversed course after European threats of a major trade war. Obama tried a 35 percent tariff on Chinese tires from 2009-2012, which saved some 1,200 American jobs and resulted in a sharp increase in tire production — but economists complained that they raised prices for consumers and cost retail jobs in the long run.
With the most recent jobs reports to back him up — the president boasted Friday about 400,000 new manufacturing jobs since he took office — Trump has decided that the benefits outweigh the risks. He has history on his side. Tariffs were once a staple of our domestic and foreign policy, employed judicially by Washington, Lincoln, and Teddy Roosevelt. “The tariff makes manufactures profitable,” wrote TR in his 1902 State of the Union message.
Tariffs and fiscal and monetary policies can have diplomatic uses, too — and today, with the American economy booming, the Trump administration is finally swinging the big stick of tariffs and sanctions as a non-lethal substitute for diplomatic or even military action.
- In Iran, the rial is down 40 percent in the wake of Trump’s canceling of Obama’s nuclear agreement in May. America has been hindering Iran’s ability to conduct financial transactions in dollars and gold, and has hit its automotive and commercial airline sectors hard. Still to come in November: more punishing sanctions on oil and banking. As a result of the cratering of the Iranian economy, the country’s huge cohort of restive young people has been launching widespread protests that may yet bring down the regime, and Trump’s actions could accelerate that.
- In China, America’s foremost geopolitical challenger, Trump’s approach has been more stick than carrot lately, imposing tariffs and threatening a major trade war, unnerving the Chinese communist leadership, which is beginning to think he may just be crazy enough to do it. The Chinese yuan is down 9 percent against the dollar since April and its stock market is slumping. For all their defiant talk, however, the prospect of an economic war with the US is not something the Chinese leaders want right now, since they can’t afford to have access to the lucrative American market restricted. But both growth and consumer spending have slowed, and even ordinary Chinese are now publicly criticizing president-for-life Xi Jinping.
- Meanwhile, in Turkey, where the tinpot dictator Recep Erdogan is trying to revive the lost glory of the Ottoman Empire, the country’s currency, the lira, has lost 45 percent of its value this year. This is a direct result of American-imposed tariffs and sanctions against the Islamic regime, in part over the continued imprisonment of American evangelical pastor Andrew Brunson, whom Turkey has accused of spying. In “retaliation,” Erdogan has announced a boycott of US electronics. Good luck with that.
If Turkey’s economy runs into the ditch, Erdogan’s hopes to be the region’s dominant power as an Islamist state would be dashed.
Similarly, Shi’ite Iran’s ability to project force against Israel and America via its Hezbollah proxies would be nullified by an economically induced fall of the mullahs, as would its support of Syrian strongman Bashar al-Assad. On a larger scale, a new Iranian revolution would deal a body blow to international terrorism and take a crucial Russian ally in the region off the board (albeit while throwing oil markets into at least temporary disarray).
Meanwhile, China requires international financial stability as it plays its double game against the United States, flexing its might in the South China Sea
while not daring to entirely alienate its major trading partner. Once convinced the US would never start a trade war, the Chinese now understand that Trump’s constant railing against their currency manipulation and unfair trading practices has been serious all along — and now he’s put some economic muscle where his mouth is.
“People throughout the country are again feeling deep uncertainty and mounting anxiety about the direction the country is taking, as well as their personal security,” the Wall Street Journal quoted a Beijing professor as writing in an online essay. You can bet he’s not alone.
Michael Walsh is an author, screenwriter and contributing editor at PJ Media and American Greatness. His new book, “Fiery Angel,” is out now.
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