Paul Krugman, the 2008 Nobel economics laureate, lambasted US President Donald Trump’s team in two notable columns in The New York Times. He slammed the Trump team as The Worst and the Dumbest on January 8, 2018, and Donald Trump and His Team of Morons on January 14, 2019.
When I went through those two columns at the time, I thought them over the top.
The core Trump team comprises the secretary of state (now Mike Pompeo, but Rex Tillerson up to three months after Krugman’s first article appeared), secretary of defense (now Mark Esper, but Jim Mattis before the second article was published), treasury secretary (Steven Mnuchin), commerce secretary (Wilbur Ross), chief trade negotiator (Robert Lighthizer), and trade and manufacturing policy adviser (Peter Navarro).
Looking at the bios of Trump’s supermen, most of them seem to have studied at top US universities. They had good work experiences also.
Although Trump himself is impulsive and unpredictable, I thought back then that when it came to China policy, his team comprised hard-eyed, cold-hearted, rational strategists. However, Krugman termed these people morons, the worst, and the dumbest. So I thought he was gravely prejudiced against the Trump team.
But now, after watching the Trump team’s China policies in action on trade and technology, I am forced to admit they have proved Krugman correct: They are exactly what he accused them of being.
Next Tuesday, November 3, Trump will secure his stay in the White House for a second term – if a miracle happens. If not, it will confirm that the Trump team failed to impress voters with their policy on China.
On March 2, 2018, Trump tweeted, “Trade wars are good and easy to win … we win big. It’s easy!” But in fact, that is not how his trade and tech war with China has turned out. The US is losing the war, and China has became more self-sufficient in its economy and technology because of US miscalculations.
For two years, China was on the defensive, but now, it is waging an offensive trade and tech war against the US.
By announcing one aggressive policy after another, China is emerging victorious, while the US stands to lose more than it wins.
China has made some important policy announcements to counter the US recently. It has adopted a dual circulation policy, updated the export control catalogue, declared the goal of a carbon-neutral economy before 2060, and passed a new law to ban the export of strategically important substances and technology that could pose a “national-security threat” to China.
By making such policy decisions, Beijing sent a clear message to the US that it does not accept Washington’s trade rules shaped by its military might, strategic deterrence, and military and strategic coalitions against China.
The United States’ defeat in its trade and tech wars against China means the end of both of its post-World War II global prominence and American exceptionalism in foreign policy.
The Trump team itself is responsible for this situation. Its strategic blunders are accountable for the end of US supremacy and exceptionalism.
First, the Trump team overestimated the sustainability of US hegemony and American exceptionalism in a changed context. US policymakers seemed to be under the misconception that no one would disobey America’s policy decisions. Therefore, China would also naturally obey US rules.
Simultaneously, US strategists did not properly assess China’s economic, military, strategic, and technological advancements over the last five years.
Second, the laws of physics say that any physical matter has elastic properties. This refers to a deformed material body’s ability to return to its original shape and size when the deformation forces are removed. A body with this ability is said to respond elastically.
If force is applied on such matter beyond its elastic limit, it will turn into a plastic substance. These phenomena can also be seen in the outcome of the US-China trade war.
China did not want to weaken its relationship with its biggest trading partner, the US. Therefore, it tried to settle the trade dispute. That is why in contrast to the US, China has not targeted any particular American company. However, US strategists believed China could by cowed by sanctions.
That was the biggest mistake of the Trump team. They thought that China would demonstrate unlimited elastic properties. However, the US pressure exceeded the Chinese elastic limit on trade and tech matters. China has started to show its plastic properties now.
Third, the Trump team launched the trade and tech war against China in March 2018 without proper domestic preparation. They thought it would restart manufacturing in the US, but two and a half years on, it hasn’t happened.
Trump, who accused China of stealing US manufacturing jobs, could have done a lot to reinstate its manufacturing industries by providing incentives to American industrialists. However, his team believed that China could be intimidated by US sanctions and would accept America’s trade rules. Apparently they thought anti-China rhetoric would shape US-China trade relations.
Fourth, US strategists started the trade and tech war without an alternative plan. They seemed clueless about a Plan B if their Plan A led to unintended consequences. So once again, the Trump team overestimated American domination and exceptionalism.
Fifth, Trump’s team looked very naive. They were not able to read China’s tactical moves. China adopted tactics based on the late paramount leader Deng Xiaoping’s philosophy, “Hide your strength, bide your time.”
China imported and stockpiled semiconductors, and imported machines needed for making chips for its technology industry. As well, it succeeded in making 40-nanometer chips domestically. They also gained confidence through breakthroughs in making 28- and 14-nanometer chips.
After these successes, China started to retaliate against the US. It bided its time for two and a half years. Now Trump’s strategists are dumbfounded by China’s breakthroughs in the semiconductor industry that could soon severely damage the US chip-manufacturing industry.
This is a crucial issue that Trump’s strategists failed to foresee.
Sixth, Trump’s generals in the trade and tech war appeared to be waging battles with China without weapons, troops, or even a battle plan. After they started to lose the war, they did not have anything in reserve to inflict damage on China on the trade and tech fronts.
It was the equivalent of shooting an M-16 rifle at an enemy that had already survived a ballistic-missile attack.
Last, as a state, the US failed to stop the activities of Chinese companies such as Huawei, SMIC, TikTok and WeChat. This lends more credence Krugman’s depiction of the Trump team as full of morons.
The trade and tech war put an end to American domination. It would probably have ended eventually anyway, but could have lasted another 10 or even 20 years if the trade and tech war had not been waged. But now it seems US hegemony will come to an end in the very near future.
The US used to make the trade and technology rules for the world, and China abided by them. But from now on, the exact opposite will happen. Now it is China that will make the rules, and the US will have to accept them.
If Joe Biden wins the November 3 presidential election, the US will have to relinquish global domination and exceptionalism to end its trade and tech war. Team Biden will face colossal challenges in its trade and technology negotiations with China.
So as it turned out, the Trump team is indeed the herd of the morons and dumbest policymakers that Krugman described. He was right, and I was wrong.