LETTER FROM WASHINGTON Trump’s working against the global
economic order As the world slips toward recession, he’s making it worse by
lashing out DOYLE MCMANUS Warning flags are flying: The world economy is
heading into a slowdown, and possibly a recession.
FRENCH LEADER Emmanuel
Macron, right, and President Trump are joined by their wives at the G-7 on
Saturday. Macron says “it’s pointless” for members to do a consensus statement;
Trump disavowed last year’s. (Francois Mori AFP/Getty Images) 8/25/2019 Los
Angeles Times - eNewspaper
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2/3 Germany, normally the engine of Europe, has seen its growth rate fall below
zero. Britain is steeling for a potentially chaotic exit from the European
Union this fall. Trade wars are buffeting China, Japan and South Korea. U.S.
growth has slowed, too — partly because of the same damaging trade battles.
Before Donald Trump was president, leaders of the world’s biggest economies
would react to those worrisome signals with a flurry of meetings and
announcements. They’d promise to make their economic policies reinforce one
another and reassure financial markets that someone was in charge. That’s what
happened amid the financial crisis of 2008, and in earlier recessions and
financial crises as well. But it’s not happening this time — and Trump is one
of the reasons. Case in point: this weekend’s Group of 7 summit in Biarritz,
France. The G-7 was organized in 1975 for this kind of situation: joint action
to head off a recession. (In that case, the recession was already underway.)
Its members are the United States, Japan, Germany, Britain, France, Italy and
Canada. A normal G-7 meeting produces a long, often boring declaration in which
the leaders list everything they agreed on, beginning with efforts to bolster
growth and resist trade protectionism. This year, there probably won’t be a
joint communique for the first time since 1975. “It’s pointless,” French
President Emmanuel Macron, the unlucky host, shrugged last week. After all,
Trump disavowed the consensus statement last year. The main roadblock is trade
— specifically, Trump’s decision to make punitive tariffs a central part of his
economic strategy. He’s embroiled in a full-scale trade war with China, and
he’s threatened to escalate the battle in Europe, with tariffs aimed at German
automobiles and French wines. On Friday, Trump and China fired tariffs at each
other, sending stock markets plummeting. In a Twitter tirade, the president
also “ordered” U.S. businesses to stop doing business with China, although he
has no legal authority to do so. On Sunday, the president plans to lecture the
other G-7 leaders on why they should accede to his demands. It sounds more like
a campaign stunt than a serious attempt to stave off a recession. Let’s get
real: Economists say Trump’s tariff wars have made a recession more likely.
They include his own appointee as chairman of the Federal Reserve, Jerome H.
Powell, who said Friday that trade battles appear to be hurting U.S.
manufacturing and capital spending. “Who is our bigger enemy, Jay Powell or
Chairman Xi?” a furious Trump responded on Twitter, comparing his Fed chief to
Chinese President Xi Jinping. Neither presumably enjoyed being labeled an
“enemy.” But the obstacles to international action run deeper than the
president’s trade policies. 8/25/2019 Los Angeles Times - eNewspaper
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3/3 Trump believes that the United States, as the world’s most powerful
country, is usually better off acting alone, seeking one-on-one deals with
other nations. In his view, politics — like business — is a zero-sum game.
Every encounter has a winner and loser. Other countries, including those who
claim to be your allies, are generally plotting to steal you blind. “Our allies
take advantage of us far greater than our enemies,” Trump recently declared.
That doesn’t leave much room for cooperative efforts. And it doesn’t engender
confidence among smaller countries that the United States might look after
their interest as well as its own. This isn’t only about the G-7. There are other
ways major powers can work together to confront an economic crisis. Central
banks and the International Monetary Fund can act, too. But in recent history,
those efforts have worked only when the United States has stepped up to lead.
No other country has the wherewithal. The European Union is too disunited,
China too widely mistrusted. Trump doesn’t appear interested in assuming that
leadership role — not, at least, when it means accommodating others who don’t
always agree with his views. “In the last financial crisis, both George W. Bush
and Barack Obama were able to persuade the rest of the world that everybody in
the lifeboat should row in the same direction,” Stewart M. Patrick, a scholar
at the Council on Foreign Relations, told me. “With Trump the message might be
‘Every man for himself.’ ” “You need a president who engenders confidence that
he has the best interest of everyone in mind,” Patrick added. “Trump hasn’t
done that.” If a recession arrives, international cooperation could — with luck
— make it shorter and milder. But what happens if the United States no longer
wants to lead in that effort? Under Trump, we may find out. Doyle McManus’
column appears on Wednesday and Sunday
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