Nukes On The Table, Sanctions Remain For Now, Time And Place Not Yet Determined, Just That It’ll Be “By May”
This story unfolded in a very strange way: South Korean National Security Director Chung Eui-yong, who just met with Kim Jong-un in North Korea, came out of the doors of the White House to announce he had presented Trump with a personal request from Kim for talks, and Trump had accepted. Here’s a short video of the announcement:
Trump was not present for that, but shortly after confirmed the story, in a Tweet:
Trump would be the first sitting President to meet with a North Korean leader. We won’t speculate too much about the location of the meeting: but with talk of “decapitation squads” and rapid assault teams, it’s highly unlikely Kim will leave North Korea. So will this become a “Nixon in China” type scenario (where Kim can deliver the type of spectacle Trump loves)? Or will the two simply meet at the Joint Security Area within the DMZ?
Most of the coverage is focusing on the shock and sheer audacity of the move, bringing together “two strong-willed idiosyncratic leaders who have traded threats of war,” (as the New York Times puts it). Others are debating whether it’s a good thing or a bad thing.
We will say, as Trump would say, “we called it!” In our April 18, 2017 edition, we wrote “Kim Jong-un’s best play might be to pick up the phone and give President Trump a buzz. Trump seems to respond favorably to strongmen who come calling. Maybe they’d even be friends. Anyway, that’s what we’d do if we were Kim.”
There’s an actual reason we’re bringing that up beyond patting ourselves on the back: we also stand by a second assertion we made around that time: that North Korea will never give up its nukes. It would be like asking Trump to give up America’s steel companies: nukes are the way Kim’s defines North Korea’s national identity, and one of its only sources of pride; distracting the populace from abject poverty, and rampant human rights abuses.
At the same time, North Korea has agreed to denuclearize in the past. The so-called “Agreed Framework” reached during the closing years of the Clinton Administration didn’t dismantle, but froze plutonium production, and activity at several nuclear reactors. The Bush administration somewhat rashly killed the deal, after it found North Korea still experimenting with ways to better enrich uranium. Then Under-Secretary of State, and now frequent Fox contributor, John Bolton, has gone out of his way to almost single-handedly take credit for scuttling the deal, saying “this was the hammer I had been looking for to shatter the Agreed Framework.” (Trump reportedly almost named Bolton Secretary of State, except he didn’t like the man’s mustache–no joke.) Now Bolton says the latest developments are just ways for Kim to stall for time until he has a “deliverable nuclear weapon”, calling North Korea “the world’s best grifters”.
Other columnists are likening Kim to the Road Runner and Trump to Wile E. Coyote. Or that Trump is ‘giving the worst human-rights abuser on the planet, what he most wants: international legitimacy“.
All that may be true.
At the same time–given the alternatives–it’s worth a shot.
Trump Puts Lagging U.S. Industries Ahead Of Key Global Alliances And Perhaps More Importantly: The Key Source Of American Economic Growth
Interestingly, when we looked at the websites of South Korean newspapers this morning, the top story for several was not Trump accepting an invitation to meet with Kim, it was Trump slapping a 25% tariff on steel imports. Korea is a major exporter to the U.S.
In his announcement, Trump somewhat bizarrely quoted William McKinley, who was President at the turn of the 20th century, who “felt very, very strongly about this”, calling protectionism “sweet”. Trump then continued on talking about his own long-held beliefs. Here’s a clip (click on the photo to watch):
While Trump, as promised, left Canada and Mexico exempt (which is kind of a red herring as we reported yesterday), and hinted that other countries, like Australia, with which the U.S. runs a trade surplus might be spared if it asks nicely, the President brought the boom down on everybody else, friend and foe alike, which puzzled many of our “friends”. (Meanwhile, Bloomberg says U.S. companies believe they’ll also be able to get exemptions on certain products they need, also if they ask nicely, and can prove they can’t buy the same thing from a U.S. manufacturer).
But forget for a moment about our foreign friends that Trump is pissing off. After all, we all know it’s “America First” now. They’ll retaliate, they’ll do what they do (including simultaneously finalizing an Obama-era anti-China trade pact Trump wanted no part of). Harley Davidson has been at the center of trade brawls for years: it’s almost a badge of pride; a signal that they’re making the most iconic American product possible, and one that people overseas want. (Remember the famous–and failed–Harleys for mangoes deal with India?)
What isn’t getting much attention is Trump actually isn’t putting America first by taxing steel. The service industry in the U.S. is far bigger than manufacturing, and very sensitive to retail price swings.
The Bureau of Labor Statistics has a really cool animated graphic of changes in job growth by state. It only goes up to 2013, but shows just how quickly and powerfully the U.S. has shifted to a service economy. (Click on the graphic for the full progression):
Now, obviously this is something Trump laments. But is it lamentable?
Forbes points out that while service jobs are often denigrated as low-paying and demeaning (flipping burgers at McDonalds, stocking shelves at Walmart), that’s not the case at all. According to a survey they point to from the famously Libertarian and Koch Brothers-backed George Mason University, while the economy lost 7-million manufacturing jobs, it’s gained 53-million service jobs, and 33-million were actually higher-paying than the jobs that were lost.
A lot of that growth came in health care, which makes sense with an aging population, and in some ways this was the “secret sauce” of Obamacare: creating a lot of new jobs in that industry.
Add it all up and the contribution of non-manufacturing jobs to the economy is 5 1/2 times larger than manufacturing, according to Business Insider.
Those people will be hurt by Trump’s tariffs in a very simple way: higher prices on things they buy.
We do think fair trade is important: we’re all for Trump going after China on intellectual property rights, as he’s vowed to do next.
But the other thing Trump has vowed to do next could hurt the service economy even more: reciprocal tariffs on goods.
Manufacturing is still important: American manufacturers that have kept up with the rapidly changing world are thriving (that includes some domestic steel companies) and are able to compete globally on a level playing field. They could be even better supported by centralized research facilities supported by the government: exactly the kind of thing Trump’s trying to cut back in his budgets.
But America has always been as much about selling dreams and ideas as selling product. In some ways, that’s what we’re best at. That’s what Trump’s best at. And that’s what we make by far the most money doing. We shouldn’t do harm to that just so we can have mighty fiery furnaces fiercely burning across the land again.