Trump Effect: The Power of Noun and Verb

The inauguration of the 47th US president is more than a month away. Yet, for all intents and purposes, Trump is in power. Like in Coppola’s The Godfather pilgrims are queuing up to kiss the ring. He has no time for niceties and is streaming intimidatory intent expressed on social media and in the choice of his team. Governments, markets and corporates are in a tiz. Trump’s return has cornered the world into a cul-de-sac of chaos. His tariff gambit is risky in a world of inter-dependencies. Is the world ready?

Shankkar Aiyar | The Third Eye | The New Indian Express | 15 Dec 2024

Power is not a means; it is an end… The object of power is power.” Donald J Trump has imbibed George Orwell’s immortal observation and embodies the idea in letter and spirit.

The inauguration of the 47th US president is more than a month away. Yet, for all intents and purposes, Trump is in power, calling the shots. Mar-a- Lago, his 1927-built, antique-studded mansion with over 128 rooms spread over 20 acres and towered over by a 70-foot pole flying the US flag, is a destination of political pilgrimage.

The pilgrims include Keir Starmer, Volodymyr Zelenskyy, Javier Milei and Justin Trudeau, while others like Mexican President Claudia Sheinbaum call him. Previously, sceptical tsars such as Mark Zuckerberg of Meta, Tim Cook of Apple, who paid obeisance, and Jeff Bezos of Amazon, slated to meet Trump next week, are all contributing to the inaugural.

The analogies triggered in the wake of worthies seeking his audience range from gestures last seen in 18th and 19th century royal courts or in Francis Ford Coppola’s cinematic rendition of lesser dons kissing the ring of ‘The Godfather’ to show fealty. Trump sees himself not just as the commander in chief, but as the chief diplomat, the chief trade negotiator and an arbiter of geopolitics and issues that matter.

Trump has no time for the niceties of protocol. His declarations stream on Truth Social and are reposted on X (formerly Twitter). China is already in his crosshairs, with tariffs of 50-plus percent threatened. In recent weeks, he has threatened Mexico and Canada, members of the USCAM trade treaty, over illegal immigration and drugs. He has warned BRICS countries to not try to replace the “mighty US dollar or face 100 percent tariffs”, adding for effect, “They can go find another ‘sucker’!”

The US markets are experiencing a stupendous post-election rally — forecasts for the S&P500 are at new highs, NASDAQ at 20,000 hit a record high, and Bitcoin shot up to over USD 101,000. On Thursday, Trump trooped into the NYSE to ring the bell. Beyond the bonhomie, there is no disputing the nervousness as currencies flounder. Across markets from Osaka to Mumbai to New York, investors are struggling to map post-January 20 scenarios. The term Trump punctuates discourse at global meets, in governments and company C-suites.

While the lame-duck Biden regime is still in office, Trump is at work projecting the power of the noun and the verb — his persona and the fusillade of intimidating intent expressed in the choice of his team.

Consider two of the nominees. Marco Rubio, the nominated secretary of state, is a known China hawk and author of the Patriotic Investments Act designed to prevent the US tax code from rewarding investments in China. The pick for commerce secretary, Howard Lutnick, is known to favour higher tariffs across the board. Loyalty to the goal is paramount.

The quest is to constrain all inflows — particularly goods and immigrants — and allow only FDI. The instrument of mass disruption is tariff, along with the promise of lighter regulation and smaller government by the proposed Elon Musk-led department of government efficiency, and tax breaks for investments in the US. Trump appears more prepared than before. His power stems from the size of the US economy and the promise underlying ‘Make America Great Again’.

Trump wants to rewire the US Economy. After the 1970s, American companies developed a tripartite franchise model where they designed products, retained the patents for technology and outsourced manufacturing and labour. The capture of policy led to the export of investments, manufacturing jobs, incomes and growth. This created a zone of high incomes in society and hollowed investment and employment out of the US economy, pushing masses out of the income and consumption square.

Trumponomics is, essentially, a promise to restore past glory and upend existing arrangements. Although experts are arguing against the high tariff wall and forced deportation of undocumented immigrants — both of which can push up inflation — Trump is steadfast. The feared collateral damage, to the US economy and relationship with allies, is not deemed consequential.

The optimists theorise that Trump is transactional and the tariff threat is an instrument of negotiation. That may be true. But in an unequal world — remember, the dollar is the biggest reserve currency and the US is the largest importer — the terms of endearment will be reset and will entail compromises.

It would seem the threats are yielding results. European Central Bank President Christine Lagarde advised the EU to buy American (arms and liquid natural gas) and avoid the Trump trade war. NATO members, who wouldn’t ramp up their defence spending to 2 percent of GDP earlier, are now considering hiking it to 3 percent.

This column had observed well before the results that unlike in 2016, when the world wondered whether to take Trump literally or seriously, it is now taking him literally and seriously. To appreciate the concern across the world, try looking up a search trend on Google — for the past seven days, the terms ‘tariff’ and ‘Donald Trump’ have been in perfect sync.

Trump’s victory triggered tremors of shock and awe as his party sealed the domination over the quadfecta of the presidency, the two Houses and an ideologically-aligned judiciary. His ascent to power has left the world in a cul-de-sac of chaos and consternation, angst and uncertainty.

Trump is playing a risky gambit. Two big questions remain: in a world of inter-dependencies, will the gamble pay off, and is the world prepared for it?

Shankkar Aiyar, political economy analyst, is author of ‘Accidental India’, ‘Aadhaar: A Biometric History of India’s 12-Digit Revolution’ and ‘The Gated Republic –India’s Public Policy Failures and Private Solutions’.

You can email him at shankkar.aiyar@gmail.com and follow him on X / Twitter @ShankkarAiyar. This column was first published here. His previous columns can be found here.