by Chris Kuehl, managing director
Armada Corporate Intelligence
The Trump campaign was a mystery from the very beginning. Pundits did not give this effort much of a chance and assumed that it would fade as soon as voters started to make real choices. Obviously, this didn’t happen. The problem for many analysts was that Trump had no real track record as far as politics or governance were concerned. It was not all that clear what he would do once in office, and positions tended to shift as the campaign demanded. This was a populist insurgency – driven by voter anger and frustration – as opposed to a distinct set of policy prescriptions. The people who surrounded Trump were generally just as new to governing as Trump. The assumption was that the Trump team would evolve over time, but nobody really had a sense as to how this would take place. Now that evolution has started to take shape, and it seems that pragmatism slowly is overtaking populism. This will doubtless be frustrating for some of those core supporters who assumed government would be fundamentally altered, but this transition has been welcomed in the business community and has added somewhat to the confidence levels that had been noted at the start of Trump’s term.
One of the key differences between the campaign and the presidency thus far is that the advisers have changed – at least, some of them. The emerging inner circle is far more corporate- and business-oriented than was the inner circle during the race. The voices catching the ear of the president are pursuing a far less radical agenda and look a great deal more like the traditional base of the GOP. They have been far less antagonistic toward trade and far more supportive of agreements such as NAFTA. There has been a reversal as far as support for NATO and the Export-Import Bank, and suddenly there has been far less criticism of China and even Mexico. This doesn’t mean that all of the populist messages have been abandoned, and many likely will remain part of the White House strategy, but when it comes to the day-to-day of governing, there is more reliance on those who have been around longer – and with that comes more trust in the overall business community.
Three areas that have changed more radically than others include China policy, position on NATO and what to do with NAFTA and overall trade policy. Throughout the campaign, China was positioned as enemy number one. The country was held responsible for the decline of manufacturing jobs and the loss of US competitiveness and now would be dealt with severely. China was going to be labeled as a currency manipulator, and the US would impose everything from tariffs to legal restrictions to blunt exports from China. Today, most of those policies have been abandoned, and China has returned to its former status as partial ally. The fact is that China is vastly important to the US business community and is needed to put the brakes on North Korea. The Chinese never assumed the rhetoric was real and patiently waited for Trump to come around. With the advice of his team, Trump has returned to the positions the US pursued toward China under Obama, Bush and before.
The relationship between China and the US has always been complex, as each country needs the other – and deeply resents that dependence at times. Both China and the US have their nationalists who resent the impact of the other country. The US resents the import surge that has driven many manufacturers out or forced them to relocate. The Chinese resent their dependence on the US to buy these products and chafe at the demands made by US buyers. The Chinese would like nothing more than to ignore the US in pursuit of its regional ambitions, but the Chinese are in no position to ignore the country that buys $350 billion of the country’s exports. For those who are counting, that is almost a quarter of the total Chinese GDP.
A second major change is seen regarding NATO. During the campaign, Trump asserted the alliance was obsolete and that the US should no longer finance it. The policy was connected to the assertion that Europe had not been paying its fair share and owed the US money. This position was roundly criticized in Europe and stressed relations with several key US allies. That stance now has been softened, and NATO is back in the good graces of the US. It was made apparent by Trump’s military advisers that the US could not do what it wanted in the rest of the world without the support of these allies, and the criticism has been replaced by praise.
NATO no longer is focused on the threat from the USSR. Its mission is far more complex, and troops have been engaged in every US conflict of the last 20 or 30 years. Its role in Afghanistan, Iraq and Syria can’t be overlooked, and it has been engaged in Libya, Ukraine and many other hot spots. The generals who now advise Trump have urged a far more cooperative tone.
The third major shift has involved trade policy. The Trump of the campaign trail was a classic populist, supportive of an isolationist stance that was based on strict protectionism. That stance has been changing by the day, as there has been more reliance on pro-trade advisers as well as congressional leaders who favor expanded trade. The promised changes to NAFTA are now likely to be minor, and the White House position on the Ex-Im Bank has shifted toward support. The US seems willing to pursue trade pacts again, but more attention will be paid to the economic implications than to the political motivations. The bottom line is that many are making the case that the US benefits from free trade more than most nations – after all, exports account for 14 percent of the total GDP of the country.
Trade pacts that were far more political than economic in nature have been dismissed – as was the case with the Trans Pacific Partnership. But, pacts like NAFTA have been looked at more closely to realize what they have meant for the US. The fact is that every trade agreement will have provisions that benefit the US and provisions that benefit the other trade partner. It doesn’t hurt that the US is looking to ensure that more provisions favor America, but it is clear that a full-fledged protectionist approach is now off the table.
Chris Kuehl is managing director of Armada Corporate Intelligence. Founded by Keith Prather and Chris Kuehl in January 2001, Armada began as a competitive intelligence firm, grounded in the discipline of gathering, analyzing and disseminating intelligence. Today, Armada executives function as trusted strategic advisers to business executives, merging fundamental roots in corporate intelligence gathering, economic forecasting and strategy development. Armada focuses on the market forces bearing down on organizations. For more information, visit www.armada-intel.com.