‘He’s Putting The Prosperity Of The World At Risk’: Trump’s WTO Threat Has Experts Holding Their Breath

In case you were wondering whether Axios is going to leave Donald Trump alone when it comes to reminding America that the President of the United States is not-so-quietly talking to his advisors about effectively blowing up the global trade order, the answer is definitively “no”.

Late last week, Axios published a story that cited multiple sources familiar with Trump’s thinking/venting/ranting who all seemed to think the President is some semblance of serious when it comes to trying to torpedo the World Trade Organization.

One source paraphrased (maybe) Trump as follows:

We always get f*%cked by them [the WTO]. I don’t know why we’re in it. The WTO is designed by the rest of the world to screw the United States.

As a reminder, that isn’t true – at all.

And if Trump had read The “Economic Report of the President” (as opposed to just signing it), he would know better. I guess he missed the sections in there about how the U.S has won nearly 86% of the cases the country has initiated before the WTO over the last 23 years, compared to the global average of 84.4%. For reference, China’s success rate is a comparatively paltry 66.7%.

In other words, this is a lie:

But hey, so many “documents” to “study” and so little time, right?

The Axios story came on a morning when Kellyanne Conway said the “WTO is another group that [Trump] said we should take a look at”, another indication that this administration is indeed actively pondering its options, despite the necessity of including Congress in any and all serious discussions of the issue.

Investors were unnerved by the Axios report and Steve Mnuchin was quick to dismiss it as “fake news” in an interview with Maria Bartiromo who, by virtue of working for Fox, knows a thing or two (or two hundred) about fake news. The clip is especially creepy in slow motion:

You're welcome… pic.twitter.com/MUNpopm5mz

— Heisenberg Report (@heisenbergrpt) June 29, 2018

Well, Jonathan Swan (from Axios) was having none of it. Specifically, he accused Mnuchin of lying and just a day later, Axios published the details of what they say is a “leaked draft of a Trump administration bill — ordered by the president himself — that would declare America’s abandonment of fundamental World Trade Organization rules.”

You can read all about that here, but suffice to say the bill is called the “United States Fair And Reciprocal Tariff Act”, which means that if Trump were to somehow cram it through Congress, the headline could conceivably be: “Trump Blows Up WTO With FART.”

Fast forward to Wednesday and, 48 hours (give or take) ahead of the deadline for the U.S. and China to strike a truce before tariffs go into effect, Axios is out with a third story on Trump and the WTO.

There’s nothing “new” in the piece, per se, but it’s still worth excerpting the following passages in the interest of underscoring how dangerous Trump’s “FART” is (and look, I’m sorry to keep coming back to that juvenile joke, but I didn’t name that bill, now did I?). To wit:

The big picture: Thus far, Trump has mostly damaged U.S. prestige with his anti-globalization actions, including withdrawing from the Trans-Pacific Partnership and the Paris climate agreement, as well as threatening to pull out of NAFTA.

He’s also caused global stock markets to gyrate by imposing tariffs on Canada, Europe, and China; and oil prices to rise by pulling out of the Iran nuclear deal. But “the financial shock would be very, very large” should he withdraw from the WTO, said Gary Hufbauer of the Peterson Institute for International Economics.

“Business confidence in the system would be severely shaken,” Hufbauer told Axios, and there would be “quite a hit” to long-term investment in plants and equipment. “You don’t need much of a slowdown in these areas, and you have recession.”

“If he persists, if this is more than bluster or a negotiating ploy, he is putting the prosperity of the world at risk,” said Brookings’ David Wessel.

Again, the economists and historians among you already know all of that (and really, anyone with a shred of common sense knows it intuitively), but considering we’re about the step off the cliff on Friday, you should note that what was unthinkable on trade just six months ago is now quickly on its way to becoming reality.

China will hit back immediately and although that retaliation has been well telegraphed, what’s also been well telegraphed is Trump’s intention to view Beijing’s retaliatory measures not as defensive acts, but rather as escalations, to which he has already promised to respond.

Slippery slope to economic hell, here we come.