Trump Has Just One Trick—And It’s Not Working AnymoreDavid Frum
During campaign 2016, Hillary Clinton often warned that Donald Trump would do to the United States what he had done to his businesses.
She was thinking of his record of debt, failure, and bankruptcy—about which The New York Times offered grim new details yesterday.
But there is an even more disturbing way that Clinton’s warnings are being fulfilled. North Korea has resumed missile testing, disregarding both Trump’s wooing and his threats of “fire and fury.” They have taken the U.S. president’s measure—and found him weak and empty.
The Times’s story of the tax returns showed how stock markets did just the same thing in the 1980s. Between 1986 and 1989, Trump earned $67.3 million from short-term stock speculation. His method? He would acquire a substantial position in a company, then boast of his takeover intentions. Trump’s words would drive the stock price up. He would then sell at a profit.
The trick worked as long as Trump’s credibility lasted. Which was not long.
In September 1989, Trump tried that familiar trick once too often. He bought a large stake in American Airlines, talked takeover—and was jeered.
In the 1980s, Trump was burning through his own money. As president, he’s playing with the wealth and lives of nations. That greater responsibility has not in any way improved his behavior. Greater power has also only temporarily restored his credit. The North Koreans see through him on missile testing. Now the Chinese seem to be doing the same on his trade threats. Trump’s current round of trade threats is failing to elicit trade concessions.
U.S. stock markets slumped Tuesday. Markets had been expecting a trade agreement this week, and were taken by surprise by a sudden harder Chinese line. A new round of U.S. tariffs is scheduled to go into effect Friday unless a deal is reached. China balked at U.S. proposals, and Trump returned to Twitter for another round of threats. But those threats also revealed Trump’s fears. He wanted to score a domestic political point off his freer-trade Democratic rivals. But he showed his international opposite numbers how worried he is that trade disputes might cost him re-election.
The big question in a trade dispute is which side can stand more pain. At the same time as Trump has threatened China, he has pleaded with the Federal Reserve to cut interest rates. The Chinese have noted the juxtaposition. The Wall Street Journal quoted an analyst at Chinese government-backed think tank: ““Why would you be constantly asking the Fed to lower rates if your economy is not turning weak?”
The world is absorbing the lesson that Wall Street learned in the 1980s. Trump has only one negotiating move: take an aggressive position, try to deceive others and maybe yourself about your own strength, issue threats you cannot fulfill, and then retreat amid losses if the bluff is called.
But whereas once those losses were denominated in the millions, today they rise to the hundreds of billions. Where once he troubled only those investors credulous enough to take seriously his tycoon image, today he troubles the peace of the world.