I’m running a bit late this morning with the Daily Newsletter. So I will make it shorter than usual to get it out earlier. Let’s move away from earnings season here. I think the macro view I want to focus on is Trump’s approval rating and what that means for his likely policy platform.
Trump Unchained Revisited
Back in March, I coined a term “Trump Unchained” to represent the likely shift in tone coming out the White House as non-loyalists left the Trump Administration. The way I described it was this:
So forget about an administration of the best and brightest CEOs bringing business acumen to government. Instead think of the Trump administration as America’s being run like a closely-held private company. Let’s remember that Trump has never run a public company. And he has had autocratic control over decision-making at the Trump organization. At 71, he is not going to cede control at the White House.
We had a year during which Trump, new to office, listened to competing ideas and policy visions. He has rejected those now. And he now feels comfortable going his own way. In fact, he may feel trapped by the lingering investigations into his campaign. That gives him every incentive to take bolder and more aggressive action.
The subsequent four months have proven the “Trump Unchained” framing to be accurate, as the President has indeed been more bold and more aggressive. The question is what this means for the economy, for policy and for Trump’s popularity as a politician.
Trump is at his most popular now
This post’s title says it all. The ratings are still sub-50% for Trump. But his approval ratings are the highest they have been since Trump became President.
President Trump’s approval rating hits 45% in new NBC/WSJ poll today, the best of his presidency. 28% have a “very positive” view of him, also his best number yet.
— Ryan Struyk (@ryanstruyk) July 23, 2018
The deeper dive shows Trump stronger with his Republican base, but weaker with the middle and with Democrats. Eighty-eight percent of Republicans approve of Trump as President, according to the NBC/WSJ poll. That’s the highest in Trump’s Presidency, putting Trump in the same sphere as George W. Bush after the Iraq War. With Independents, Trump’s job approval rating is only 36%. That’s down 7% in a single month. And Trump has a mere 7% approval rating with Democrats.
Why this matters: The data show the US electorate becoming even more polarized during the Trump presidency. And given Trump’s increased ratings and high approval marks among Republicans, Trump should feel enough support with his base to take unilateral actions that he might not otherwise take.
Trump’s trade policy will continue to be protectionist
Tomorrow, the EU will be in Washington to hammer out a potential solution in the budding trade war between the two trading blocs. At a White House event where Trump touted the benefits of his hardline approach to trade, he said:
They’re coming in to see me Wednesday and we’ll see if we can work something out. Otherwise, we’ll have to do something with respect to the millions of cars that they send in every year. Maybe we can work something out.
I’ve heard some business leaders who are anti-tariff say that they hope this indicates he is flexible, and that the tariff fight is just a negotiating ploy. But I don’t believe it is. Trump, feeling vindicated for his “Unchained” approach in 2018 because of support from his base, will be likely to follow his protectionist instincts and go into a trade war with the EU to get what he wants.
Why this matters: The EU will not back down here. So we are going to see a trade war between the EU and the US, just as we will between China and the US. This is potentially the beginning of a new post-globalist era.
French President Emmanuel Macron, for his part, has already said to Trump that the EU may strike first. Axios’ Jonathan Swan wrote:
Like many foreign leaders, Macron has learned that the only language the U.S. president understands is the un-nuanced, transactional language of dealmaking and the blunt projection of strength.
And at this point, we know China’s Xi is not going to back down. In fact, speculation is rife that China has turned to its currency as a weapon in this war.
The post-globalist era
When talking about Trump ushering in a new post-globalist era, I am reminded about the mission his former strategist Steve Bannon is now on. The BBC is reporting that Bannon is planning a European-wide populist supergroup right now.
The former chief Trump strategist travelled to Europe after he was pushed out of the White House and then departed the right-wing Breitbart media empire. His ambition now is a populist implosion across the Continent.
Everything started with the Brexit vote in June 2016, he believes. It continued with the election of President Trump the following November and returned to Europe with the success of two populist parties in Italy’s election last March.
Italy is “in the vanguard of change in Europe”, he argues, and along with Hungary’s Viktor Orban is proof that the message from Europe’s citizens is that people “want their countries back”.
The next step, Mr Bannon has revealed, is for a non-profit foundation called The Movement to be set up in a Brussels office and recruit staff to help advise on messaging and targeting of data.
If it sounds reminiscent of Cambridge Analytica’s use of data and Facebook to attract US voters, Mr Bannon was on the company’s board of directors.
Why this matters: Mainstream parties are not prepared for this drive toward a new post-globalist, populist era right across western liberal democracies. And so the upcoming period is likely to be chaotic politically and economically.
That’s all I’ve got this morning.
Cheers,
Edward