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The markets were fools on Saturday, and shrewd judges of character on Monday. When Donald Trump announced tariffs against America’s neighbours last weekend, investors who had talked since November of a misunderstood, deceptively pragmatic US president were exposed as naive. For 48 hours. Then he more or less vindicated them. The tariffs have been put off in return for Canadian and Mexican assurances about cross-border drug traffic and other Trump bugbears. Investment banks can postpone the sheepish client calls until March.
The world would be silly to relax, of course. Trump has the potential to shatter the trading system in the coming years, even if he does so in fits and starts. But if nothing else, the past few days have been an education in the art of dealing with him.
Because Trump is so quick to quarrel, people tend to miss that he is also quick to settle. He almost never drives as hard a bargain as his belligerent manner seems to promise. In 2020, China bought some peace with a vague and hard-to-enforce pledge to cut the two countries’ trade imbalance. (“The biggest deal anybody has ever seen,” he called it, with telling emphasis on external perception.) Likewise, he didn’t abandon Nafta so much as pass off a revised version of it as a personal coup. Being an egoist, not a fanatic, what he cares about is his reputation as a maker of deals. To keep it going, he needs a regular flow of them. And so their content becomes secondary. We can mock, but the lesson here for countries faced with Trump is an encouraging one: give him something that he can call victory. The concession needn’t be huge, and he will in fact co-operate in talking up its significance.
Nor does he seem to mind all that much which coin he is paid in. Trump is open to what Henry Kissinger called “linkage”. If he is upset about one thing, he can be mollified with a gesture on something apparently unrelated. Want to avoid a trade war, Europe? Spend more on defence. Want to prevent the betrayal of Ukraine? Soften the regulation of the tech sector. It is hard to know what is more telling about Trump’s truce with his northern and southern counterparts: the smallness of their concessions (Justin Trudeau is appointing a fentanyl “czar”) or the fact that economics and drug policy are mixed up like this in the first place.
So yes, Trump threatens to displace industrial investment from Europe to the US. But Europe is spoilt for things to offer him, precisely because his grievances are so numerous. In that sense, he might be easier to defang than Joe Biden, who didn’t think Nato was a club of free-riders or the EU a conspiracy against Silicon Valley. There was nothing Europe could offer him on those fronts that would make him ease up on the America First industrial plan. With Trump, there might be. The very paranoia of his worldview — in which the US is being ripped off by almost everyone, almost all the time — means there are lots of entry points for a negotiation.
If Trump is that paradoxical thing, an aggressive soft touch, then it shows up in his personal relations, not just in his international statecraft. Think of all the once-hostile Republicans who have found a way back into his graces. A stint in the Trump doghouse is unpleasant but often brief, as all one has to do to get out is to stop fighting him. His own vice-president is a vehement former critic. So is his secretary of state. This shouldn’t be mistaken for magnanimity or largeness of soul on Trump’s part. Instead, I suspect, he would just rather have the slow-burn pleasure of someone submitting to him over years than the one-time high of destroying them. There is something of Caesar in his belief that the ultimate emasculation of an enemy is to spare them.
In fact, Trump might even prefer former detractors who bend the knee to him over faithful, longtime fans. (For where is the sense of conquest with them?) If so, David Lammy and Peter Mandelson, far from being awkward choices as Britain’s foreign secretary and ambassador to Washington, make perverse sense. Their past jibes at the president are the point, not a liability. If being a Trump stalwart from the beginning were a guarantee of anything, Nigel Farage’s place in the Maga court wouldn’t be so uncertain.
Time and again, whether in the personal realm or the geopolitical, a small step towards Trump has tended to be well-received. The outlandish ugliness of his statements make this hard to see. When a US president wants to “take over” Gaza and develop it into a Levantine Cote d’Azur, throwing him a bone — on trade, on anything — seems pointless. But the record is the record. Of course, the problem with this argument is that it is self-undermining. If the president’s habit of declaring victory in disputes almost as easily as he starts them becomes a trope, a Thing People Know, his ego won’t have it. He will ramp up his demands.
Until then, countries contending with him have to use what they have. Trump’s restless hankering after “deals”, as proofs of his personal clout, is something that can be exploited. In the end, whatever the face-saving news on Monday morning, the markets are still naive about him. For anyone who recognises that trade and internationalism have raised the lot of humankind, there isn’t good news to be had about the next four years, only least-bad ways of operating in the storm.
janan.ganesh@ft.com