Trump's Bluster Aimed At Domestic Audience

By bluster, I mean not only the rhetoric, but also the appointments of figures who are well known for aggressive or hard line positions. Virtually all of these types of appointments have been to NatSec related positions. Now, on the one hand, you might suppose that this strategy is meant to ramp up pressure on foreign governments that have been at odds with the US—Russia, China, Iran, etc. The idea is that Trump will then use that threatening stance to strongarm those countries into deals. We’ll return to that idea shortly. What I’m suggesting is that the main audience for the rhetoric is domestic—that Trump wants Americans to believe that that’s what he’s doing. The reality is probably different. Americans may, indeed, accept that view, but the reality is almost certainly that the foreign countries will be—probably already are—distinctly unimpressed and unmoved. Trump will end up making deals, but with the concessions that he’ll be forced to make by military and economic exigencies.

Here’s an example on the military side of things—the appointment of former general Keith Kellogg as Special Envoy for Ukraine and Russia. Trump is familiar with Kellogg from the Trump 1.0 regime. Kellogg is known for a variety of hare brained schemes regarding strong arming Russia into coming to the terms that Neocons want. Famously, he’s the one behind the idea of forcing Russia to come to terms by threatening to flood Ukraine with weapons—as if the US has the ability to do that, having expended most of our excess inventory already. I want to recommend this 18 minute Danny Davis video. In the second half Davis explains exactly why the Russians will be totally unimpressed by Kellogg:

Davis is unsparing. However, maybe he’s missing the real point. The appointment may be as much about Trump projecting an image of strength to the American public as anything else. Russia will do what Russia needs to do, and Trump will end up living with that. The point is that Trump will want to project a different dynamic to the American public than that. Trump wants to inspire confidence in the American public that he is in control of events, not drifting like Zhou trying to find the off ramp.

Similarly, yesterday Trump blustered at BRICS:

Again, projecting an image of strength, facing down countries that have played the US for a sucker—as if it hasn’t been the US doing exactly that to the rest of the world by exporting its inflation. A Russian member of parliament calls the bluster:

Apocalypsis pocalypseos @apocalypseos

Aleksey Pushkov: Donald Trump has a habit of pretending that he can solve all pressing political and economic problems with a single decisive step, conversation or threatening ultimatum. He talked to the President of Mexico, threatened trade sanctions - and she allegedly immediately agreed to stop migration across the Mexico-US border. However, then there was a denial from Mexico City: they say she did not give such consent. In his first term, he threatened Kim Jong-un with “Fire & Fury” - and he was allegedly ready to back down on the issue of developing nuclear weapons. In fact, Kim Jong-un met with Trump, which reduced tensions on the Korean Peninsula, but there was no information that this greatly affected the North Korean nuclear program. Nor did it affect the standoff between the DPRK and South Korea.

And now he sounds super-decisive: he threatens to introduce 100% duties on goods from BRICS countries if they abandon the dollar. However, this measure is declarative in nature and is not feasible in practice. By promoting globalization in its own interests, the US has ultimately become dependent on it and on imports from other countries. The US also cannot prevent the BRICS countries from switching to mutual settlements in national currencies, or from working on a new system of mutual payments, an alternative to SWIFT. At the same time, the BRICS countries do not naturally intend to abandon the dollar in trade with third countries, for example, with the United States, which seriously reduces the pathos of Trump’s announced measure.

Exactly. Trump has set up a straw man for the American public to see, and then knocked it down with his strong man rhetoric. But the reality is that the BRICS countries don’t intend to abandon the dollar. However, there is a problem here. Trump appears to be embracing a strong dollar. That will make imports cheaper for Americans, so life will seem better. The other side of it is that the US will continue to suffer rising debt unless Trump can pull a extra large rabbit out of the fiscal hat at home—not an easy trick for any president in the best of circumstances. Further, the strong dollar will not be likely to induce US companies to bring their factories back home. Finally, the reasons for the current strong dollar may prove temporary in this unstable multi-polar world. Trump will be under a lot of pressure to end the forever wars ASAP if he wants to address our economic and fiscal problems—which I believe he really does want to do.

The fundamental problem that I’ve pointed to is this, and it helps explain why Trump needs to end the wars before the bluff gets called:

The Alt Hyp @thealthype

That's why it is/was "mighty". It was always the threat of US military force that propped it up.

The original deal was that countries would hold dollars, and the US would expand their money supply to fund their military.

This model has broken down for several reasons, including US politicians using their ability to expand the money supply without inflation to fund domestic schemes, and the US military becoming corrupt.

9:16 PM · Nov 30, 2024

I imagine Trump is well aware of this, but he doesn’t want to let on to the folks at home that this is the case.

Arnaud Bertrand @RnaudBertrand

The "mighty U.S. dollar" is apparently so "mighty" that you need to threaten countries so they don't abandon it...

Of course, contrary to Arnaud, Trump frames this dilemma as the feckless Zhou regime allowing the US to be taken advantage of, whereas Trump 2.0 America will flex its might muscles and bend the world to its will. The reality is of US decline due to internal corruption over many decades that will not be turned around without great effort and, probably, a deal of pain.

Philip Pilkington gets it. Trump’s bluster is based on a real insight into a situation that he needs to manage from a domestic political standpoint in order to get some part of his agenda done:

Philip Pilkington @philippilk

USD got whacked after the Russian reserve freeze. China and others are buying gold. Foreign market for USTs is highly illiquid. The BRICS currency neurosis is just a projection of an awareness that the US current account position is more fragile than at any time since 1971.

Brian Setser from ground zero of the Ruling Class, CFR, has some pithy observations to show that the BRICS bluster is beside the point—but he misses what’s behind Trump’s rhetoric. Trump, who has been secretly consulting with Jamie Dimon, undoubtedly knows everything that Setser is saying, but he also knows what Pilkington is saying. Trump’s rhetoric is about controlling the public perception, a legitimate political goal. That’s the point. This is about politics. Trump needs to inspire public confidence to advance his agenda, and this is just one way he’s doing it. Don’t hold your breath for those 100% tariffs. Any tariff increases will necessarily be far more nuanced.

Curious how former President elect Trump ever became convinced that the nowhere close to happening BRICs currency was a threat to the dollar ...

It isn't a good look, as it indirectly elevates the stature of a non-threat and suggests a lack of confidence in the dollar

My personal view is that trying to coerce countries into using the dollar (which they voluntarily do now, apart from those facing serious sanctions) is actually a long-run threat to the dollar's global role. It makes the use of the dollar appear to be a favor to the US ...

And 100% tariffs would have essentially no impact on Russia, as there is almost no direct trade between the US and Russia right now.

Not sure Trump would like the results of a trade war with Brazil either, as it is a country that tends to use its surplus from exporting iron and 'beans to China to buy US goods, and thus the US tends to run a bilateral surplus with Brazil.

The US does run a deficit with India (despite large US energy exports), but not sure that the US would really like the impact of 100% tariffs on India either -- as it pushes India away from alignment with the US + makes India less attractive as a substitute for China ...

And of course 100% tariffs on imports from China would be one hell of a shock to the US -- Apple would have to pay $350-400 (the current import price more or less) per phone in taxes to the US government, so an iPhone price would go up a lot ...

And the price of a lot of parts that the US still imports from China would soar, along with the price of many consumer goods (until work arounds are found)

So it isn't in my view a credible threat to do 100% tariffs (the impact on the US would be huge) ... and it is in response to chatter about a BRICs currency that is going nowhere and simply isn't currently a real risk to the US economy ...

So I really don't get it ...