Trumpism: How Will It Affect Wars, Economics and BRICS?
13:25 27.11.2024 (Updated: 11:53 28.11.2024)
© AP Photo / Alex Brandon
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Like the Terminator, Trump is back. This time, with a bigger mandate – he won 31 states, all the swing states, the popular vote, and a trifecta which gives Republicans control of the White House, the Senate, and the House of Representatives.
While Trump struggled a lot in his first term, the experience has made him more skilled in managing Washington DC, the deep state, the military industrial complex, the media etc. More importantly, he does not have to worry about re-election. He is going to rock US domestic politics as well as the fake rules-based order in geopolitics. Let’s analyse the good, bad and the ugly of Trump 2.0.
Trump has been obsessed with the trade deficit for decades – he was talking about it in the 1980s. For Trump, a trade deficit means “other countries are ripping the US off.” He wants other countries to buy more American products. While this is a reasonable economic goal, there are three problems with this belief:
1.
For the US dollar to be the world reserve currency, the US must run a trade deficit. How else are other countries going to get hold of dollars to put in their foreign exchange reserves (FOREX)? They have to sell goods and services to the US – i.e., run trade surplus with America. This is called the Triffin’s Dilemma, and is well known to economists from the beginning. However, the people who want an American empire do not care. Interestingly, Trump wants the dollar to be the #1 global currency. Well, he cannot have both.2.
The US is run by big banks and corporations. The reality of “America Inc.” is that large shareholders like Blackrock, State Street and Vanguard dictate the corporate policies. These mega-financial firms on Wall Street are focused on extracting maximum profits, which means finding the cheapest raw materials and cheapest labour from poorer nations around the world. This is why only 8% of the American labour force is engaged in manufacturing; and if you remove food, then less than 5% of American workers are in real manufacturing – like making steel, cars, machinery, electronics etc.3.
After 40 years of de-industrialisation, the US does not have many skilled manufacturing workers. For example, how many Americans have the skills to design and manufacture high-speed rail? When the US is almost 100% dependent on foreign countries for the refining of many critical minerals – including rare earth minerals – how many Americans are left with knowledge and experience in this area? This is why Tim Cook said a couple of days ago that, “We (Apple) could not do what we do without China.” Once upon a time, the US could make solar panels and EV batteries, but now China is far ahead in terms of technology, patents and manufacturing. Even in semiconductors, the US has fallen behind Taiwan and South Korea. Nobody in the US can make leading-edge chips anymore. Similarly, almost 100% of shipbuilding in the world is now happening in Asia. Bottom line: The US has lost most of its skilled people and the ecosystem to build stuff.Then, there are other factors such as automation, robots, infrastructure etc., where the US has fallen behind. For example, the US ranks #11 in the world in industrial robot density – robots per manufacturing employees. China has four times as many industrial robots as the US does now. By the way, Russia is also a champion in manufacturing – Russian factories produce four times as many weapons and ammunition as the entire EU does.
It will take a miracle or a dictator with unlimited powers to bring manufacturing back to the US.
Trade Wars and Tariffs
Over the last 8 years, US imports from China have remained quite stable at around $450 billion a year:
Graph Illustrates US Imports of Goods from China
© Photo : Census.gov
Given all this, will Trump stop waging trade wars? Of course, not! He has already said that, on the first day of his second term, he will impose 10% additional tariffs on Chinese goods, and 25% tariffs on Mexico and Canada. His excuse is the flow of drugs (like Fentanyl), criminals and illegal immigrants.
Trump has also threatened to increase tariffs to 60% to 200% on Chinese and even European goods. If he carries through, it will surely wreck the US economy. Some of his advisers – like Peter Thiel – have a fantasy that Vietnam, Mexico or India can pickup China’s manufacturing.
However, this is a fantasy that has not worked out over the last 8 years of tariffs, sanctions, and friend-shoring efforts. For example, even when the US imports more iPhones from India, many of the components inside are still made in China. This is why China’s exports to Vietnam, India, Mexico etc. have skyrocketed over the last six years.
China's exports to US
© Photo : Trading Economics
In summary, Trump is going to wreak havoc on the global supply chains. Anyone with a trade surplus with America will come under attack. Ironically, all these “America First” efforts will force the Global South to gradually decouple from the US.
End to Endless Wars?
On the other hand, Trump may do some excellent work regarding America’s perpetual wars and bloated military budget. This will surprise many people who are dismayed at all the warmongers in Trump’s cabinet, but that’s how Trump manages domestic politics.
For starters, Trump will end the Ukraine-Russia war. Although the Biden administration is trying very hard to provoke Russia and escalate the war before Trump gets sworn in, the evil efforts may not be fruitful. Ukraine’s long-range missiles – from France and the UK – may not be able to escape Russia’s missile defence systems. Moreover, Russia’s new hypersonic missile system – Orshenik, meaning hazelnut – has sent a clear message to NATO and European vassals.
Presidents Putin and Trump will meet in the near future and negotiate a peace settlement for the Ukraine war. Crimea, Donbass etc. will likely become a part of Russia, and will get international recognition. Of course, making Ukraine neutral and free from Nazism and NATO will be much tougher.
As for Iran and the other Israeli wars – in Gaza and Palestine – what will Trump do? There are two conflicting forces – Trump’s unwavering Zionist support versus his aversion to wars.
Trump does not care for Palestinians, so he is likely to give the green light to Netanyahu to do whatever the latter pleases with Gaza and West Bank. Sadly, this could lead to a second Nakba – the holocaust for Palestinians.
Iran, on the other hand, is not an easy nut to crack. It not only has the ability to inflict enormous damage to Israel and American military bases in the region, but it is on the verge of making its own nuclear weapons. Who knows, perhaps Iran already has succeeded and is just waiting for its leader Khamenei to give the approval. The situation in the Middle East will be the toughest issue for Trump.
Finally, the biggest geopolitical challenge will continue to be China. For all practical purposes, the Middle Kingdom has reached escape velocity, free from the gravity pull of US tariffs, sanctions and threats of war. If Chinese engineers manage to develop their own high-end lithography machines to make semiconductor chips, it will ring the bell for the end of the American Century. While many right-wing leaders and military generals have dreamed of a war with China, it is simply a fantasy.
Trump has never talked about BRICS or the concept of a multipolar world, and that may be his biggest foreign policy weakness. The people around him also seem be stuck in the American echo chamber of slogans and delusion. Thus, it is highly possible that Trump misses the massive trend on de-dollarisation and de-Americanisation.
In fact, there is one more factor that may accelerate the end of the American Empire under Trump – his new Department of Government Efficiency (DOGE), which will be run by Elon Musk. The #1 source for fraud and abuse in the US is the military-industrial complex. So, it’s quite possible that Trump and Elon will start unraveling the giant scams perpetrated by the military contractors. Elon has already tweeted about how the F-35 fighter jets are useless in the days of drones. Thanks to his technology background, Elon can easily identify wasteful weapons programmes. Finally, the 800+ US military bases around the world are also hubs of enormous money-laundering. Thus, DOGE may end up killing the US empire!
Conclusion
The next four years will be extremely consequential. Trump’s desire to “Make America Great Again” will severely weaken the American Empire. His desires to slash trade and budget deficits, boost domestic manufacturing, and drain the swamp will be catalysts for structural changes that dismantle the empire. Trump’s protectionism combined with expansion of BRICS will also accelerate dedollarisation, which will propel the establishment of a multipolar world.
