Susan Segal, CEO of the Council of the Americas and former JP Morgan director for Latin America, participated in a panel discussion with Nelson Cunningham, former White House advisor during the Clinton and Obama administrations, where they agreed that everything that comes out of Donald Trump's Twitter account should be viewed in electoral terms.
On Monday morning the U.S. president announced that he would once again impose tariffs on steel and aluminum originating in Argentina and Brazil. "Yes, China. You have to understand everything in context," Cunningham said, explaining that Trump needs to prove to part of his base, in this case manufacturing workers and farmers, that he is protecting them. "Everything connects," Cunningham said, as he recalled that the president had no hesitation in involving the Ukrainian government in the 2020 elections.
However exotic it may sound, the triangle of farmers, aluminum and China has its explanation. There will be elections in the United States in eleven months and the economic climate is worrisome, despite the low unemployment and record stock market highs. "It is clear that we are going into a recession, the question is when," said Segal.
According to the speakers, the Brazilian real and Argentinian peso devaluations can be understood as a strategy to sell more grains, which would hinder farmers' profitability in the U.S. By retaliating against both countries, Trump sends the message that he will fight for his voters.
"He has to show the farmers and workers that he's going to guard them against China's bad business practices and that China will keep buying soy from the United States," Cunningham added.
U.S. Secretary of Commerce Wilbur Ross today confirmed on Fox News, saying that unilateral tariff sanctions are because "even our friends have to live by the rules".
It is worth remembering that Jair Bolsonaro just made a 180º turn in his position on Trump's trade war with China. Two weeks ago, he received Chinese president Xi Jinping for the BRICS summit in Brasilia and stated that "China is increasingly a part of Brazil's future".
The U.S. president wants nothing to do with the advance of China in South America.
Neither Cunningham nor Segal, however, stopped at this stage.They pointed out that with an open impeachment process against him, Trump must navigate eleven months until the elections and that he, as a businessman, measures the markets temperature at every moment and understands when they need a little push.
Cunningham said that "a few weeks ago Trump wrote on Twitter that there had been progress in the negotiations with China that weekend. He knew he had to encourage the markets. And there had been no talks that weekend. Not even his officials knew what he was talking about, and one by one they were talking to their favorite journalists".
In that sense, the adviser explained that what Trump seeks to sell as an agreement with the objective of profound transformation of the bilateral relation with China will probably end up being a "small agreement on tariffs, soybeans and some other issues".
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