Unreliability, By The Numbers

THE WEEK JUST PAST SAW AMERICA’S MEDIA, much of the world’s too, breathlessly following the US President’s trip to the greater Middle East, specifically to three of the plutocratic Gulf States.

The Gulf here being that body of water which the man himself has wanted to start calling the Arabian Gulf instead of the long-established Persian Gulf. At least that’s a long-established label in the West.  Arab states in the region have, many of us can recall, been calling it Arabian ever since the 1960’s upsurge of Pan-Arabic nationalism.

Trump’s name-changing fetish is as quixotic and ultimately pointless here as his Sharpie pen-stroke relabeling the Gulf of Mexico as American. Every bit as quixotic, too, was Trump’s own stretch of a claim as he prepared for the Mid-East trip. It’s one for the ages: “I don't want to hurt anybody's feelings.”

What most captured the media’s engagement in the talks and announcements happening across three Arab capitals were the investment deals being clinched - Arab investment in US industries, that is – which involved some eye-watering dollar amounts, or what The Economist magazine more soberly described as “unlikely” numbers.

But it was a relatively small cash sum that may have generated most coverage -  $400 million, which ABC News was one of the first outlets to cite as the estimated value for the new Air Force One, the presidential jet (or the “Palace in the Sky” as some of the more infantile-minded tabloids have been calling it). The idea is that the newly-built, supposedly fabulously-equipped 747-8 should come to Trump from the Emir of Qatar as a gift, a loan, or something more complicated, that could even involve him still using it personally after he leaves office. This extraordinary largesse could well count as the biggest-ever trinket exchanged leader-to-leader as a token of friendship.

The legalities of this, especially given the quaintly-named (but practically-speaking very clear) “Foreign Emoluments” clause in the US Constitution, were inevitably enough handed over to Trump’s Attorney General, Pam Bondi to “work out,” in the words of Trump’s spokesperson Karoline Leavitt. Way too many news outlets failed to point out that Bondi herself, when she was formerly a lobbyist, was paid $115,000 per month by – guess whom? – the government of Qatar.

THE REGIONAL TOUR, THROUGH RIYADH, DOHA AND ABU DHABI, did give the American media, with their battalions of business and economics specialists, something else to gnash their teeth on besides the near-panic lately about Trump’s frenzy of international trade tariffs. Much gnashing, to be sure, but without a great deal of certainty.

Shipping containers pile up. Will trade recover long-term?

I might be forgiven — we might all be forgiven — for getting thoroughly confused about what the current US Administration wants out of its tariff policy … if policy is even the right term to use here. “Policy” after all is a descriptor that aspires, at the very least, toward some cohesion, even, dare I say, some logic. And yet the specialist pundits are having a hard time explaining it to their audiences.

The truce quickly agreed in Switzerland between the world’s two biggest economies, has meant they’ll each dial back down again, if only for a 90-day period, the massive hikes recently imposed (by the US first of course) on goods being traded between each country. America’s faintly ludicrous 145% levy on Chinese imports was dropped to a still pretty swingeing 30% … and vice versa China lowered its tariffs on American goods from 125% to 10%

Judging by all its public efforts at justification, the Administration’s tariffs are supposed to accomplish many things: stimulate the U.S. economy, bring home (to back on-shore-again) many manufacturing jobs, raise tax revenues to the Treasury that will pave the way for income tax reductions, for at least some Americans. Trouble is, many economists believe these aims are too sweeping, or innately self-contradictory. And that’s not including the hope that they’ll somehow prevent illegal opioids reaching our shores.

The Reuters general and economic news agency made a neat and rather clever choice, about which experts it consulted for their views on the matter. The agency concentrated on current and former Trump advisers, and found, perhaps unsurprisingly, that they differed sharply on the economic theory that is supposed to guide the president's purpose. The depth and tone of such differences might be judged by Elon Musk’s now rather well-circulated assessment of his colleague, the trade adviser Peter Navarro as being “a moron” for his views on tariffs.

But one prediction did emerge almost unanimously from the Trumpians that Reuters consulted, on and off the record.  Once the dust settles, they think, maybe after the US-China 90-day pause for further thought and talks, the world will be left with the US enforcing higher tariffs across the board, higher in all likelihood than most other countries. 

But the prospect of higher tariffs is an insufficient guide to the future. What is clear is that their sharp and sudden imposition in April angered America's trade partners, slowed the global economy considerably and sent markets into wild gyrations. Now, several weeks later, can markets, and more to the point the global economy as a whole, completely change long-tern on a dime, as it were?

Ben Kumar who’s head of equity strategies at Seven Investment Management in London. is one of those financial analysts from whom journalists like to seek guidance, but he’s been leery about all the many financial services companies (not including his own of course) who like to make forecasts, especially about a looming global recession. He says he’s “not sure that big banks putting out recession updates every other day is necessarily helping their reputation as all-seeing and all-knowing.”

What would have been better? - you may ask.  And Kumar says the soothsayers could have said in April, “Things might be a bit more uncertain from here on; let’s wait and see.” Such caution, claims Kumar, QUOTE “would probably have served us best.” But this, of course, is not accounting for business reporters and their insatiable demand for crystal ball-gazing, delivered with as much authority, however spurious, as can be mustered.

At the heart of the Trump approach is his notion that import-export trade balances are some kind of primitive arm-wrestling contest. That wildly out-of-context phrase “ripping us off” is one he loves to use about countries who happen to be maintaining a trade surplus with America – exporting more in our direction than importing from us.

IT IS INSTRUCTIVE TO CONSIDER THE CASE of my old home-country, the United Kingdom, not because it is where I originated, but because it’s the first country with which Trump has actually struck a tariff deal. It grew out of lengthy negotiations following Prime Minister Sir Kier Starmer’s ingratiating visit to the Oval Office back in February – to be fair, any leader’s visit to the Oval Office is going to be ingratiating; we can be sure of that these days.

Starmer even delivered a “trump card” (in a manner of speaking) -- in fact an invitation from the English King for Trump to make an unheard-of second state visit to the UK, even though he enjoyed an earlier such jamboree in only 2019. The invitation came in the King’s own handwriting – a big and bold, indeed oddly familiar, Sharpie-like set of strokes (helpfully enlarged further by CNN, above left) that seemed designed expressly for the Trump Oval and its jostling cameras.

While very evidently more details still have to be worked out, one broad measure in the agreement is clear – there will be a new blanket 10% tariff on British goods and services purchased by Americans.  Ten percent compared with the previous zero percent might strike you and me as an imposition … but Starmer, on the day of the announcement, swallowed any pride or indignation and claimed it was “a really fantastic, historic day.” Trump meanwhile claimed that his British opposite number was ”very happy” with the deal.

So here’s a question – was Britain previously one of those countries who could be “ripping off” the United States, in Trump’s idiosyncratic definition?

The answer is: actually, no. The US in fact runs a trading surplus with Britain -  it exports more to the UK than it imports from it, $12 billion or so every year, and growing.  But the UK is still, in Trump’s mind perhaps, to be punished, or perhaps just reprimanded, or even (who knows?) warned off against any future bad trading behavior.

You don’t have to be originally British to turn, as I have, to The Times of London, to see if the paper has covered this deal with the same decisively judgmental approach that once earned the two-and-one-half-centuries-old publication its wonderful nickname, “The Thunderer.”

The Times reports one simple fact and makes a just-as-simple assessment.

It reports: “The first page of the deal is very clear: ‘This document does not constitute a legally binding agreement’”  

And the paper goes on to say carefully, “Given Trump’s unpredictability, there are obvious questions about whether the agreement can be relied upon.”