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Trump and “other people”

Summary:
In the past, I’ve argued that Trump’s trade war with China is exactly what he says it is, an exercise in mercantilism. And for that reason it’s doomed to fail. Others argue that Trump’s actual objective is to stop China from becoming a great power. Perhaps he’d like to do that, but I just don’t see the evidence that it’s a central concern of Trump. Here’s Trump responding to the Philippines’ decision to pull out of its defense treaty with the US: “I really don’t mind, if they would like to do that, that’s fine,” Trump said Wednesday during a meeting with Ecuador President Lenin Moreno at the White House. “We’ll save a lot of money. You know my views are different from other people. I view it as, ‘Thank you very much, we’ll save a lot of money.’” Who are these other people

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In the past, I’ve argued that Trump’s trade war with China is exactly what he says it is, an exercise in mercantilism. And for that reason it’s doomed to fail.

Others argue that Trump’s actual objective is to stop China from becoming a great power. Perhaps he’d like to do that, but I just don’t see the evidence that it’s a central concern of Trump.

Here’s Trump responding to the Philippines’ decision to pull out of its defense treaty with the US:

“I really don’t mind, if they would like to do that, that’s fine,” Trump said Wednesday during a meeting with Ecuador President Lenin Moreno at the White House. “We’ll save a lot of money. You know my views are different from other people. I view it as, ‘Thank you very much, we’ll save a lot of money.’”

Who are these other people that Trump refers to?  I’d guess they are the foreign policy establishment within his administration:

The decision to terminate the agreement was seen as a pivot by Duterte’s government toward China and could complicate U.S. efforts to contest Beijing’s influence in the South China Sea. The Pentagon has vowed to shift more resources toward the Indo-Pacific to help counter China as part of what it views as the coming “great power” competition with Beijing and Moscow.

The president’s remarks represented a sharp departure from the position of the Pentagon, with Esper telling reporters en route to a NATO conference in Brussels on Tuesday that “it’s a move in the wrong direction, again for the long-standing relationship we’ve had with the Philippines, for their strategic location, for the ties between our peoples and our countries.”

Trump says he cares about saving money, while the foreign policy establishment cares about the US having a lot of allies in East Asia to confront China.

Who’s right?

Who’s calling the shots?

Who knows?

All I know is that Trump and his administration are not on the same page, and Xi Jinping is very, very happy about that fact.


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Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

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