Trump Unchained: Turkey, China, and North Korea

Over the past 24 hours, there have been a number of policy decisions coming out of the White House which I would group under the moniker ‘Trump Unchained’. That’s the term I used in March to describe what I saw then as a likely hardening of aggressive and unilateral moves from the Trump Administration.

And indeed, since that time, the Trump Administration has been more bold, and perhaps more unpredictable as well. The recent policy decisions regarding Turkey, China and North Korea highlight this shift.

Turkey gets the cold shoulder

Let’s look at Turkey first since I have been calling it a potential canary in the coalmine for an emerging markets crisis. The latest news is that Trump has vowed to double metals tariffs against Turkey due to a dispute over an American detained in Turkey. This would set aluminum tariffs at 20% and steel tariffs at 50%.

I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!

— Donald J. Trump (@realDonaldTrump) August 10, 2018

When I wrote about Turkey this morning, that tweet had not been written. So it adds a new dimension to this saga.

The problem originated with the arrest and detention of  Pastor Andrew Brunson, a 50-year-old native of North Carolina who holds an American Passport. He was leading a church in Turkey when he was arrested in December 2016 for being an alleged accomplice to the failed military coup d-etat attempt from that July. He’s been in jail ever since. Some of his former church members are said to be among the witnesses who have testified against him. Now he faces 35 years of jail time, if convicted.

The US government wants his release and has begun to ratchet up the pressure against Turkey in order to force it. Turkish President Recep Tayyip Erdogan is a proud man, who I suspect will have a difficult time climbing down on this one. His tone thus far has been defiant in what he himself calls an “economic war”.

“There are various campaigns being carried out. Don’t heed them. Don’t forget, if they have their dollars, we have our people, our God.”
-Turkish President Recep Tayyip Erdogan.

And Erdogan uses the term “economic war” largely because, even before the pastor issue came up, Turkey was feeling the heat from international currency and bond markets. That’s what he means when he refers to “various campaigns being carried out”.

Turkey, a NATO country and ostensible US ally, has already said it would continue to purchase natural gas from Iran in direct defiance of Trump’s new Iranian sanctions. Whether the tariff threat is a warning shot aimed at Turkey because of this natural gas announcement is unclear.  However, the key to note here is that we now have a significant escalation.

As UPI put it:

Trump’s action on Friday indicates he is willing to use his presidential powers as an economic and diplomatic weapon, even against allies, the Wall Street Journal reported.

North Korea – US detente breaking down

On North Korea, we also have a significant development, with the North Koreans expressing dismay that the US continues to impose sanctions despite an alleged detente between the countries.

According to the BBC, North Korea accused US officials of “going against the intention of President Trump” by “making baseless allegations” and “desperate attempts at intensifying the international sanctions and pressure”.

The North Koreans say that the return of the remains of American soldiers was a goodwill gesture that was not being recognized. But for the US’s part, the concern is that North Korea is not denuclearizing. Instead it is ramping up production. UN Secretary Nikki Haley made the ominous statement, that the US is “not willing to wait for too long” on denuclearization. This could mean anything. But given John Bolton’s preemptive strike doctrine, it certainly could mean war.

The key to note here is that, despite an initial rapprochement, relations between the US and North Korea seem to be as bad as ever. There have been meetings. But sanctions are still in place And there has been no meaningful change in the position of either side.

The hidden war against China

With China, the focus is on the tariff fight. But behind the scenes, the US is taking other measures to deal with the Chinese.

The Trump administration, as part of a crackdown on certain US investments made by Chinese companies, is set to snatch a majority stake in 850 Third Ave., The Post has learned.

The stake is owned by HNA, the deep-in-debt Chinese conglomerate — and its US partner in the building is desperate to save it.

The strike on the HNA building, between East 51st and 52nd streets, in the works for months, is believed to be the first move by the Trump White House since Congress on Aug. 1 approved expanded authority of CFIUS — the Committee on Foreign Investors in the United States.

The expanded powers include increased purview over foreign real estate interests.

“This is coming from the White House,” one source said of the seizure that could ultimately force the sale of HNA’s stake in the 575,000-square-foot building.

The seizure is tied to a specific national security concern, sources said. The NYPD’s 17th Precinct is located on the ground floor on the south side of the building. Officers from that precinct, at times, are detailed to protect Trump Tower.

The 58-year-old building, once removed by CFIUS from Chinese hands, sources said, will be placed in a trust. A trustee will then be appointed, and it may eventually be sold — although no sales process is underway.

HNA could fight the seizure in a court battle that could take years to sort out, sources said.

The move by President Trump to force the removal of the Chinese from 850 Third comes as the Washington and China are in a trade war.

Again, this looks like a significant escalation. The Trump Administration is signalling that it is prepared to expropriate Chinese holdings in the US if the Chinese do not bend to America’s will. The fact that the Chinese will be compensated for their loss doesn’t change the fact that the HNA move calls into question every single Chinese investment in the United States. Any of them could be deemed contrary to US national interests and stripped from their Chinese owner.

Final thoughts

This is what ‘Trump Unchained’ looks like – very aggressive, but, in my view, not necessarily well-conceived. I like the UPI’s framing on Turkey where they say it shows Trump is “willing to use his presidential powers as an economic and diplomatic weapon, even against allies”.

Now, look back at the personality profile I used back in January 2017 before Trump was inaugurated to predict how Donald Trump would act. The phrases I highlighted were

• People like Donald Trump leap before they look
• People like Donald Trump are the likeliest personality type to make a lifestyle of risky behavior
• to people like Donald Trump, it makes more sense to use their own moral compass than someone else’s. Rules were made to be broken

This is what we’re getting with ‘Trump Unchained’. And Trump is only just getting started.