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Donald and the Delusion Discount

2 117 0
12.06.2019

The events of the past few weeks destroyed whatever credibility Donald Trump may still have had on economic policy. And investors are celebrating. At this point, evidence that Trump tweets are sound and fury signifying nothing is, in effect, good news.

Let’s review what happened. First, having gone to great lengths to get a new trade agreement with Mexico and Canada — an agreement that was very similar to the existing agreement, but one he could slap his own name on — Trump basically blew up his position by threatening to impose new tariffs unless Mexico did something about border issues that have nothing to do with trade.

This obviously weakens if it doesn’t destroy Trump’s ability to negotiate future agreements, on trade or anything else. After all, what’s the point of making deals with an administration that reneges on its promises whenever it feels like it?

But then, barely a week later, Trump called the whole thing off in return for a statement by Mexico that it would do … things it had already agreed to months earlier.

We don’t know exactly what caused Trump to back down, but a good guess is that the warnings of U.S. manufacturers — horrified at the possibility that Trump’s tariff tantrum would disrupt their supply chains — finally made it through to the Oval Office, or the golf course, or wherever he was when they finally got his ear.

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© The New York Times