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◼ REMARKS Bloomberg Businessweek June 10, 2019blacklistofU.S.companiesinresponsetoTrump’sbanon
HuaweiTechnologiesCo.It “couldbecomemorerelianton
tradewithothercountries,nottheU.S.,”Emonssays,“and
moredynamicathome.”Apartfromtariffsandsanctions,the
panoplyoftoolsatthedisposalofbothcountries—indeedall
countries—isbroad:investmentrestrictions,exportcontrols,
consumerboycotts,blacklists,antitrustactions,evencrimi-
nalindictments.China,whichsuccessfullyusedthethreatof
suppressingtourismagainstSouthKorea,hashintedatusing
similartacticsagainsttheU.S.
Asdisruptiveashiseconomiconslaughtshavebeen,Trump
clearlyprefersthiskindoffighttothetanks-and-troopscon-
flicts(sometimescalled“kinetic”)thattheU.S.hasbeen
engagedinformostofthelasthalfcenturyasit workedits
waytowardglobalhegemonyandtheroleofworldcop.Almost
allhisrecentpredecessorswenttowar.EvenBarackObama,
winneroftheNobelPeacePrize,bombedLibyaintoregime
change.Trumphasn’tentirelyneglectedthattradition,order-
ingtwomissilestrikesonSyria.He’splowingmoremoneyinto
thePentagon,andhe’llcheerfullytalkaboutrainingfireand
furyonothernations—even,inIran’scase,puttingan“end”
tothem.Buthe’salsobeentrying,withlimitedeffectsofar,
topulltroopsoutofSyriaandAfghanistan.Hecampaigned
againstforeignmilitaryadventures,andmostofhisoverseas
counterpartsarestillbettingthathemeansit.InEurope,for
example,leadersdidn’tmuchenjoya visitinMaybyTrump’s
secretaryofstate.MikePompeowastryingtogetthemon
boardfortheU.S.’s“maximumpressure”campaignagainst
Iran.Thebackdropwasominous,withheadlinesaboutU.S.air-
craftcarriersbeingdispatchedtothePersianGulfandechoes
ofthebuilduptotheinvasionofIraqin2003.TheEuropeans,
however,consoledthemselveswiththethoughtthatthepres-
ident,thedecider,didn’treallywanttostarta war.
Trumpsaysso,too.Buthehasn’tshiedawayfromexerting
economicpoweroverEuropeina waythatisn’tconsolingat
all.TheEuropeanswanttokeepthe 2015 nuclearagreement
withIranaliveaftertheU.S.pulledouta yearago.They’ve
beentryingtosetupa specialvehiclethatwillenabletradeto
flowwithoutanydollarsinvolved—essentiallybarter—sothat
it won’ttriggersanctions.ButtheTrumpadministrationhas
signaledanyoneassociatedwithit couldbebarredfromthe
U.S.financialsystemanyway.
ThethreatofU.S.sanctions,enforcedina waythatmeans
theyeffectivelyhaveglobaljurisdiction,dwarfsanyincentives
Europe’spoliticianscanoffertheirowncompaniestoengage
withIran.BrianHook,U.S.specialenvoyforIran,spelledit
outonMay30: “If a corporation is given a choice between
doing business in the U.S. and doing business in Iran, it’s
going to choose the U.S. every single time.”
Also causing vexation in Europe are existing and potential
curbs on trade with Russia, a much more important partner
of the EU than Iran—and a competitor for American natu-
ral gas, recently rebranded as “molecules of U.S. freedom”
by the Department of Energy. The biggest market Moscow
and Washington are fighting over is Germany. The Trumpadministrationhaswarnedit’sreadytoimposesanctions
thatcouldhobblea proposed$11billion pipeline to carry gas
there from Russia. But it dialed back the threat this year after
Germany announced it will build two terminals that could
receive U.S. tankers. The U.S. “strongly supports” the idea,
Deputy Energy Secretary Dan Brouillette said during a visit to
Berlin in February. As for sanctions, he said, “I cannot today
tell you that the U.S. has specific plans.”
Maybe the best example of Trump’s dual use of sanctions
and tariffs came when Turkey got whacked by both last sum-
mer. Its offense had nothing to do with trade. President Recep
Tayyip Erdogan, when he was rounding up tens of thou-
sands of alleged conspirators after a 2016 failed coup attempt
againsthim,madethemistakeofdetaininganAmericanpas-
torinhisnet.Trumpandhisevangelicalallieswereinfuri-
ated.OnAug.1, 2018, the U.S. president slapped sanctions on
two Turkish cabinet ministers. Nine days later, he unloaded
the other barrel. “Our relations with Turkey are not good at
this time,” Trump observed demurely, in a tweet that was at
least somewhat self-fulfilling because it also doubled tariffs
on Turkish exports of steel and aluminum, sending Istanbul’s
financial markets into a once-in-a-generation nosedive. The
pastor was released, and some of the penalties have been
lifted. But others may soon be on the way, as NATO member
Turkey prepares to buy a Russian missile defense system, a
sanctionable offense in U.S. eyes.
What’s striking about all these broadsides is that, like mil-
itary commands, they’re the work of a moment. There’s no
need to cajole or threaten legislators to build a coalition. And
theeffectis instant,too,whichis onereasontheprocesshas
becomedisturbingformanyinvestors,Emonssays.“Youget
onyourphoneat 3 a.m., and there’s the announcement, and
the consequences are very large,” he says. “It would be dif-
ferent if the market wasn’t listening to Trump or taking him
seriously. But because he can actually do it, and he did do it,
the markets are like: ‘We believe you!’ ”
The strategy is a stark contrast with the more than two years
it took to negotiate the Iran deal under Obama—or the Nafta
overhaul, which, as a frustrated Trump learned in the first half
of his term, has turned into a marathon that’s not done yet.
In the longer term, the repeated use of such high-impact
economic weaponry—and its scattershot targeting—may have
different effects. The Trump administration says it’s focused
on China, which is closing in on the U.S. as the world’s big-
gest economy, and by some measures has already surpassed
it. Since China isn’t shy about flexing its own economic mus-
cle, and many countries share Trump’s suspicion of its trade
practices, there’s potential support for a firm approach—but
it’s undermined when those could-be allies are under the same
kind of pressure themselves, and have no idea what to expect
next. Trump’s weaponization of the U.S. economy, and his
creation of a rolling emergency that’s invoked to justify each
move, is likely to “create real problems down the road,” says
Sachs. “It’s a very bizarre way for a $20 trillion economy, and
a supposed democracy, to operate.” <BW> �With Ladane Nasseri