This is Brad DeLong's Grasping Reality—my attempt to make myself, and all of you out there in SubStackLand, smarter by writing where I have Value Above Replacement and shutting up where I do not… Just What Do Trump's "Trade Deals" Consist of? NothingMalaysia deals with a chaos-monkey superpower: empty appeasement coupled with steps at derisking via exit from coupled arrangements that create vulnerabilities...
Malaysia deals with a chaos-monkey superpower: empty appeasement coupled with steps at derisking via exit from coupled arrangements that create vulnerabilities...A “consultation” clause beats nothing when you face a hegemon acting on chaotic impulse. As PR optics steer the Potemkin “policy” of Donald Trumps, savvy partners sell photo‑ops—not allegiance. And they take steps to derisk and decouple as the way to buy what insurance they can against capricious and unmotivated attempts to exert power. Hold tight to this: Trump’s trade “deals” aren’t deals—they’re stage directions for an impulse‑driven executive. Malaysia read the script and wrote itself a “call us first” clause.
But not really. First, it is not a binding “deal”:
Second, well:
But what are the consequences for Malaysia of signing? None:
So has Malaysia chosen to ally with the U.S. on trade issues vis-à-vis China? No:
The most you can say about the “deal” is that it is a recognition by Malaysia that the strong do what they can and the weak suffer what they must. Except that, under Trump, “the strong do what they can” does not cut it, for the meaning in Thoukydides’s Thoukydides, an Athenian, wrote the history of the war… is that the Athenians will do whatever is to their advantage. But in the case of the Trump administration, the Trump Administration will instead do something completely random, but its actions can be somewhat shaped by giving it the PR bonus of an apparent “win” of some kind. Thus this looks to me like a marginal win for Malaysia: the U.S. has now committed itself to inform Malaysia before it does something random and destructive, and that gives Malaysia a chance to dredge up a way to offer Trump another PR-event boost in advance, rather than having to pay catch-up after some random action. And, of course, this is a marginal loss for the United States. Or perhaps it is part of a pattern that will turn out, in aggregate, to be not a marginal but a substantial loss? Yes, the U.S. offers an export market. Yes, U.S. companies offer technological capabilities complementary to Malaysian labor. But for Malaysia to commit its workers to U.S.-centered value chains and to exporting to the U.S. creates, everyone knows, a pressure point of vulnerability to Trump attempts to play the game of “stand and deliver!” Better to partner with Chinese or European firms. Better to figure out how to spend time and energy growing export capabilities aimed at those other two economic powers. Better to derisk from a United States that will elect a Trump; that possesses a highly corrupt Supreme Court majority that is stretching almost every nerve not to take any serious steps to make Trump, you know, follow the law; and that has Republican congressional majorities that have no desire at all to guard their own institutional powers. How far will this derisking-from-the-U.S. go? How damaging is it going to be to the U.S.? How can it be repaired by doing something to fix the U.S. system so that foreigner become confident that U.S. governance will be, if not technocratic, at least not a constant exercise in chaos-monkey-feces-flinging? All very big and important questions. I have no answers. I would recommend Cassidy-Levy-Kent <https://www.cassidylevy.com/news/the-us-malaysia-agreement-framework-implementation-and-impact/> if you want to dig deeper, particularly their noting:
And their flagging what seem to me to be the weirdest things in the “agreement”:
But view with great suspicion this section in their commentary:
It does nothing long-term. It does not provide greater certainty. Agreements that do that come with dispute-resolution procedures that both sides intend to follow. I know. I have watched such agreements being negotiated back in the Clinton Administration, when the U.S. had a real government rather than a bunch of grifters trying to steal whatever they can. And since the reality is that the U.S. a bunch of grifters trying to steal whatever they can, there is no pathway toward increased investment. This verbiage is defensive insurance against Trumpist ire against Cassidy-Levy-Kent, not to be taken seriously. The only sentence serious, but understated, in the “Both Sides Benefit” paragraph is:
Bottom Line: The broad national‑security escape hatch means adjudication is out; politics and leverage are in—consultation matters, because it is all you can do when courts and binding arbitration do not matter at all. The absence of binding dispute settlement and the presence of sweeping exceptions confirm the deal’s sovereignty‑first DNA: consultation is the scarce currency, because truly binding contract-agreement is off the table. And hold tight to this: The strategic truth beneath the optics is that Malaysia traded PR‑friendly “wins” to an administration that prizes them, in exchange for (a perhaps empty promise of) policy forewarning and (a small amount of forwarning) insurance against unilateral surprises. If reading this gets you Value Above Replacement, then become a free subscriber to this newsletter. And forward it! And if your VAR from this newsletter is in the three digits or more each year, please become a paid subscriber! I am trying to make you readers—and myself—smarter. Please tell me if I succeed, or how I fail…#just-what-do-trumps-trade-deals-consist-of-nothing |
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