Update March 23: Argentina, Australia, Brazil, South Korea, and the EU would be exempted from the trade tariffs, US trade representative Robert Lighthizer told US senators today.
Seven days ago, Donald Trump issued a market-moving edict that threatened to alienate the US’s closest allies and start a global trade war. The US would levy across-the-board taxes on imports of steel and aluminum, he said.
This afternoon, Trump walked that back, exempting Canada and Mexico from tariffs pending NAFTA negotiations. The two account for a quarter of US steel imports. He also left the door open for other countries to negotiate their tariffs (25% on steel and 10% on aluminum) with commerce secretary Wilbur Ross. “These tariffs don’t go effective for at least another 15 days,” he added.
The chaos in DC that preceded today’s announcement has come to be something of a Trump trademark. A novice politician, Trump has made a potentially reputation-damaging habit of issuing hard-hitting edicts and quietly letting the courts, his own party, private business, or other world leaders walk them back. Here are a few:
Last month, Trump pledged to students of Marjory Stoneman Douglas High School that the White House would do everything it could to stop school shootings, support background checks, and keep guns out of the hands of the mentally ill. After meeting with National Rifle Association officials, there’s been little concrete done on the issue. The one related thing on the White House agenda is a “listening session” today with video game executives to talk about violence in gaming. The session was so hastily planned that a female invitee was addressed as “Mr.”
Trump promised on the campaign trail to immediately terminate DACA protections, which allow some 1.8 million immigrants brought to the US illegally as children to stay and work here. Then in September of 2016 he said the program would end in six months. Now the White House is promising citizenship for those immigrants, but in exchange for tough immigration reforms that Congress says show little chance of passing. A federal court ruled in February that the White House needs to continue issuing work permits.
This oft-repeated campaign promise was quickly shelved when Trump took office. Now the White House is pushing for Congress to allocate billions more to the Department of Homeland Security to pay for a border wall.
Trump’s promise to kill the nearly 30-year-old trade deal between the US, Canada, and Mexico last April whipsawed markets. Foreign leaders, US CEOs, and members of his own cabinet scrambled to explain why he shouldn’t. Now negotiations to modernize the pact are underway, and officials seem to be mostly ignoring Trump’s threats.
A few days after taking office, Trump issued an executive order that advisor Stephen Bannon said later was designed to cause maximum chaos. It barred people from several Muslim-majority countries from travel to the US, and was quickly suspended by US courts as unconstitutional. After being rewritten twice by the White House, legal challenges remain although the ban is being enforced.
After a year of bluster, could foreign leaders, American voters, and US industry heads soon stop taking Trump at all seriously, much like the villagers in Aesop’s famous fable?
Patrick Chovanec, managing director and chief strategist at Silvercrest Asset Management, says Trump’s threats raise questions about American leadership in the future. He finds a similar analogy in game theory, where it’s important to consider whether you’re playing a single round game (like, say, one hand of poker) versus a multi-round game.
Depending on the type of game, other people at the table react differently to your strategy, points out Chovanec. “If you’ve done something multiple times and people learn it’s a bluff, it stops working.”