Donald Trump ally Steve Bannon haunts Asia
If Steve Bannon thinks the US can easily bend the global economy to its will, he’s dreaming
In her new book, Hillary Clinton aptly sums up Donald Trump’s baffling appeal: “You’ve got to give it to Trump; he’s hateful, but it’s hard to look away from him.”
Clinton could easily be talking about Asia as it struggles to decide who to fear more—the US President or Kim Jong-un.
Asian leaders shouldn’t look away from Steve Bannon, Trump’s economic alter ego, either.
Yes, this xenophobic nationalist is out of the White House. Not out of Trump’s sphere of influence, though, as Bannon intensifies efforts to goad Trump into trade battles. Asia is in harm’s way as Bannon says he’s “going to war for Trump” via his Breitbart News platform. His initial target, of course, is China.
“If we don’t get our situation sorted with China, we’ll be destroyed economically,” Bannon told Bloomberg. “The forced technology transfer of American innovation to China is the single biggest economic and business issue of our time. Until we sort that out, they will continue to appropriate our innovation to their own system and leave us as a colony—our Jamestown to their Great Britain, a tributary state.”
The biggest problem with this worldview is timing. It might have been helpful indeed if Washington played the hardball with Beijing that Bannon and Trump favour 10 to 15 years ago.
But that proverbial ship has sailed. Sure, we can gripe about how China ran circles around the World Trade Organization (WTO) system—how it rolled Presidents Bill Clinton, George W. Bush and perhaps even Barack Obama.
But this retribution obsession ignores that the real threat to American jobs is now coming from within. Automation, robots and an internet-of-things (IoT) productivity revolution now threaten services-industry jobs paying more than factory slots China once stole.
There are plenty of reasons to take China’s Xi Jinping to task: human rights; rampant pollution; see-no-evil support to North Korea’s regime; bullying neighbours in the South China Sea; censorship; government-sponsored hacking; subsidies for state enterprises; endemic corruption; and, sure, the intellectual-property theft that animates Bannon and Trump.
But harping on, say, currency manipulation won’t Make America Great Again any more than taking a zero-sum stance against the world’s biggest trading nation.
If Bannon thinks the US can easily claw back that label or bend the global economy to its will, he’s dreaming. That might have been possible in the Plaza Accord days of 1985; it’s simply not 32 years later.
As Trump’s economic brain nudges the White House to wage war with the past, America’s future is at stake. So is Asia’s, with economies from Japan to India caught in the crossfire.
China, remember, is Trumpworld’s catchall phrase for mercantilist Asians playing Americans for suckers.
In mid-September, Bannon visited Hong Kong, “Asia’s world city”, for his first overseas trip after leaving the White House. The title of his speech, “American Economic Nationalism, the Populist Revolt and Asia”, and the tenor of his comments, reminds us this isn’t just a Communist China obsession.
The Bannonites are now trolling the notoriously thin-skinned Trump to pounce. Trump is deeply frustrated. Nothing has worked legislatively, and his vague Ronald Reagan-wannabe tax-cut plan is likely to die the same death as healthcare reform. Russia probes are closing in, as is fallout from scandals among his cabinet, hostile tweets and administrative chaos. That leaves executive actions. Trump can still do substantial damage to Asia’s outlook with trade levies alone.
Count the ways Trump might overreact to perceived slights. A sliding Chinese currency or Xi failing to curb Pyongyang’s provocations could prompt Trump to make good on his threats of tariffs as high as 45%. Japan’s Shinzo Abe failing to display sufficient fealty to “America First” priorities could get Tokyo labelled a yen manipulator. Might Trump, for similar reasons, leave South Korea high and dry amid free-trade deal renegotiations? Could shifting White House views on Pakistan put Narendra Modi in a position where he needs to rebuff Trump?
Drama surrounding these landmines and others would be, to borrow Hillary Clinton’s line, “hard to look away from” for governments and markets alike. But America’s narcissist-in-chief is desperate for a win, any win, to placate his base. Few ploys would satisfy the Bannonites more than showing China who’s boss. Never mind that this would be a Pyrrhic victory as Beijing retaliates—dumping $1.2 trillion of US Treasuries, cancelling Boeing orders, slapping retaliatory taxes on goods US manufacturers assemble in China.
Not a man of nuance, Trump may act regardless. The plot thickens when you consider Bannon is joining forces with Henry Kissinger, famed Richard Nixon staffer who’s visited China some 80 times.
Diplomacy has nothing to do with it, though. Trump’s base wants him to toss grenades at the global order. Now that Bannon is training his guns on Asia—guns Trump may be happy to fire—it’s time to price in how a trade war might look.
William Pesek, based in Tokyo, is a former columnist for Barron’s and Bloomberg and author of Japanization: What the World Can Learn from Japan’s Lost Decades.
His Twitter handle is @williampesek