G 7 SUMMIT

A new world disorder

Trump's unpredictable behaviour has led to uncertainty in world politics, economy

G7-SUMMIT/CANADA Odd man out: Canadian Prime Minister Justin Trudeau, British Prime Minister Theresa May, French President Emmanuel Macron and German Chancellor Angela Merkel deliberates with US President Donald Trump at the G7 summit in Quebec | Reuters

Love him or hate him, but Donald Trump is changing the world order. Three contrasting spectacles in three countries in three days underline the stunning tectonic shifts. For the first time, an American president signs a denuclearisation agreement with the North Korean dictator-turned “Chairman” Kim Jong-un in Singapore, a historic deal that could dissolve the last frontier of the Cold War. Equally historic was the agreement of the Group of Seven industrialised nations that an American president did not sign—also for the first time. In stark contrast to the G7 disarray in Canada was the show of unity in China by the “Xi 8” or the Shanghai Summit led by Xi Jinping. Do these events symbolise a declining west, a rising east, a new world disorder characterised by U-turns and abuse?

“There is a special place in hell for any foreign leader who engages in bad faith diplomacy with President Trump and then tries to stab him in the back,” said Trump’s trade adviser Peter Navarro to Fox News. Just six months ago, we would have assumed Navarro was talking about Kim. Trump’s condemnation of America’s closest ally, Canadian Prime Minister Justin Trudeau, calling him “meek, mild and dishonest” was unprecedented. This was followed by revoking support for the G7 communique, which had met all his demands for reducing subsidies and trade barriers. “It is sobering and a little depressing,” responded German Chancellor Angela Merkel, who after Trump’s election, had predicted that America was henceforth undependable, and that Europe would have to fend for itself. Now it is “Europe United” vs “America First”.

What got Trump so angry after he left Quebec? Was it because Trudeau said Canada would not be “pushed around”? Was it because Trudeau said he was “not remotely interested” in Russia returning to the G7, when Trump argued it is an “asset” to bring back Russia after it was kicked out for its 2014 annexation of Crimea? Or was it designed to demonstrate toughness on the eve of the Singapore summit—“Kim must not see American weakness”—as proclaimed by Trump’s economic adviser Larry Kudlow? Trump’s volatile temperament and erratic decisions defy logic and analysis. Canadian commentator Colin MacDonald said: “This is schoolyard bully stuff. This is the type of thing we would never teach our children to do.”

What is bullying to Canadians is toughness to core Trump voters. But, outside of this base, there is alarm, even disgust in America, as Trump legitimises tyrants and ridicules partners, praises adversaries and punishes allies, defends nuke foes and attacks peacenik neighbours. Republican Senator John McCain tweeted, “To our allies: bipartisan majorities of Americans remain pro-free trade, pro-globalisation and supportive of alliances based on 70 years of shared values. Americans stand with you, even if our president does not.” Hollywood actor Robert De Niro was devastating. He got a standing ovation at the Tony Awards in New York when he said on stage: “F…Trump”. In Toronto next day to inaugurate a hotel, he said, “I want to make an apology for the idiotic behaviour of my president; it is a disgrace. I apologise to Justin Trudeau and other people in G7.”

After the Trump tirade, is there a G7? Is it as French President Emmanuel Macron described: G6 plus one? Or more accurately G7 minus one? Trump argues, “We are like the piggy bank that everybody robs, and that ends.” According to The Washington Post, Trump has made 3,000 false and misleading statements in his 500 days in office. This is one of them. He uses selective evidence to impose trade tariffs, highlighting 270 per cent Canadian duties on dairy imports. True, but that is only for milk products in surplus domestic production. The Canadian ambassador to Washington, David MacNaughton, points out that America, in fact, enjoys a 2 to1 surplus in milk trade. Trump ignores that America has “trade” deficits because manufacturing shifted overseas, but enjoys huge “services” surplus from its finance and big tech companies’ exports. Trump complains of $800 billion trade deficit, but gives away $1.5 trillion in tax cuts to the rich.

A dangerous, destabilising and costly Atlantic trade war will erupt if Trumpian tariffs on EU and Canadian steel and aluminium extend to car imports. Trudeau warns of retaliatory tariffs from July 1, and the European Union says it will impose tariffs on Levi’s, Bourbon and Harley Davidson—goods picked to hurt swing states like Wisconsin that got Trump elected. The World Trade Organization’s Director General Roberto Azevedo laments: “The rising trade tensions we see before us, they risk a major economic impact. A tit for tat process is not going to be helpful.”

Yet, the bottom line is that America is the world’s most powerful nation, militarily and economically—double China’s economy, a lynchpin commanding 25 per cent of global trade. Not much the EU can do. Besides, if the Korean peninsula is normalised, trade shifts even more from the Atlantic to the Pacific. The pivot that Obama talked about becomes a reality with more trade among the US, China, Russia, Japan, South Korea, and now, North Korea.

America is big, but still, its share in the global economy has declined nearly 50 per cent in the last half-century, while China is getting bigger. Xi holds the key to turn the Trump-Kim agreement into a permanent treaty. Proof of this is that even as he imposed tariffs on his allies, and accused China of trade rape during his election campaign, Trump gave a dramatic concession to Xi, allegedly to “buy” his support ahead of the Kim-summit. The White House agreed to lift the ban on ZTE, China’s telecom equipment maker, from buying vital US components in exchange for a $1 billion fine. ZTE was accused of espionage in the US and violating sanctions by selling equipment to Iran and North Korea. Rich in irony is that Trump cuts a deal with ZTE—deemed a national security threat by the US intelligence community—while citing national security reasons to impose trade tariffs on Canada, whose soldiers fought and died in America-led wars and whose steel is used to make American weapons.

Trump’s unpredictable behaviour has injected uncertainty into world politics and economy. While much needed to be stirred, instability is not a prescription for growth and prosperity. IMF’s Christine Lagarde highlighted the consequences and extent of the Trump disruption: “The biggest and darkest cloud over the global economy is the risk of a deterioration of confidence, by attempts to challenge the way in which trade has been conducted, the way relationships have been handled and the way multilateral organisations have been operating.” The damage is real. The fundamental shift is that under Trump, America is morphing from guarantor to disruptor of the existing world order, challenging the very notion of the “west”.

Does the Trump disruption signal the change of an era, or an era of change? How will America’s key allies respond to Trump polarisation, provocation and protectionism? European leaders will wait to hear whether Trump’s trade tantrum extends to security standoff at the NATO summit in Brussels in July.