Trump needed a trade win. Any win, quite frankly. Having to cut a check to his own farmer voting bloc was bad enough without his former attorney releasing tapes on him and all the lingering Putin stuff from last week. The automakers squealing about tariffs hurting their businesses was probably a last straw.
Then the EU shows up at his doorstep…
European Commission President Jean-Claude Juncker proved on Wednesday that the EU isn’t the useless bunch of bureaucrats populists and nationalists make it out to be. He came to Washington with a bridge to sell, and in three hours of talks he sold it to Trump.
I have been saying for weeks that this would end when the President finally declares victory in the trade war. He knows the base doesn’t need actual data or numbers proving it, just him saying he won would be enough. We’re talking about incurious people, impervious to facts and guided purely by emotion. All they need to know is what team they’re on in the culture wars, the rest takes care of itself and they’ll buy into anything if it comes from “their side.”
The genius of President Trump is understanding that dynamic intuitively. He probably can’t put it into words, other than “I could shoot someone on 5th Avenue” but he is highly adept at playing the game regardless of the inarticulate way in which he goes about it. Words are overrated.
This is the environment he is operating in, so it’s no stretch at all for him to simply say “Look, I won!”
Trump appears to believe he got two important promises from Juncker. “European Union representatives told me,” he tweeted, “that they would start buying soybeans from our great farmers immediately. Also, they will be buying vast amounts of LNG!”
In fact, the EU, which barely produces any soybeans, is already buying them from the U.S. and will increase imports of the oilseed this year because of a low domestic rapeseed crop and smaller supplies of sunflower seed meal from Ukraine and Russia.
The Europeans probably walk away having quashed the tariff on their auto exports into the United States for nothing of substance in exchange.
The real art of the deal is not necessarily winning a negotiation. It’s choosing the right time to negotiate, when your counterparty is on the mat and needs to save face. The flattery and false bonhomie is just a tactic, a nice touch that goes a long way when dealing with someone whose only real concern is their own feelings and the optics.
The Saudis knew how to play this guy from day one. The Chinese too. European leaders are learning.
The stock market is smart. It never fully bought into the worst-case trade war scenario. Nor should it have. The threat was always going to be worse than the outcome. Expect more capitulation with more countries as the march toward the midterm election continues.