New currency of hard power: How Trump turned US imports into an asset

If China is an exporting superpower, America is an importing one. Mr Trump has turned what would usually be a liability into an asset

It’s still night time in America as I write this, and we don't know what Truth Social posts we’ll see in the morning, or what new geopolitical shift they might signal. But we are beginning to get some clarity on his method now.

 

Three days back, as US President Donald Trump was setting out for a three-nation Asia tour, he put out a shockingly disjointed and dangerous post. He said, “I'm asking for nuclear testing to be resumed so that [we are] at the same level as China and Russia,” and then ranted and rambled along.

 

Nuclear testing doesn’t scare anybody. Russia and China have much uranium to spare. This, therefore, wasn't going to set off a new nuclear arms race.

 

The dangerous part was how a man so powerful could sound so unhinged. I know there's a Trump fan club out there. See how Xi Jinping flattered him, President of peace, etc. The world has to see some genius in whatever Mr Trump says. It was said, “Oh, he was trying to soften the Chinese with that post.” But the Chinese are not going to be scared by nuclear tests. It was more like he knew he was going to capitulate, which he did.

 

This world is being restructured and redrawn by one man. What’s his power? It’s not his formidable military. It’s trade. With China, it turned on him.

 

Mr Trump has understood, paradoxically, the power of being the largest importer from much of the world. If China is an exporting superpower, America is an importing one. Mr Trump has turned a liability into an asset. If China, Japan, South Korea, Vietnam are all exporting powers, who do they get their surpluses from? You can add India. Mr Trump is saying — I know how important these surpluses are for you. I have the importer’s leverage.

 

His $30 trillion economy being the largest trade-deficit holder against all major countries is power in the Trump world. Remember, he credits trade also for his claims of bringing about an India-Pakistan truce.

 

Then why was that nuclear test post disjointed? It’s because he figured that he was being jujitsu -ed by China. Because in this equation, the Chinese have a seller’s power, as also a buyer’s power. As sellers, they own the critical minerals. As buyers, they’re the biggest consumers of American soybean and corn. The Chinese knew, and he knew, he couldn’t risk tariffing them punitively. That’s why the quick capitulation, proclamation of G2, as he boarded Air Force One for Kuala Lumpur.

 

That is something we in India have refused to understand. Our overall trade is still relatively so small that we have too little of this new strategic currency. We sell America nothing that it can’t do without except generic pharma that Mr Trump has exempted. But we are afraid to even exercise the significant buying power we could have had. China has lessons for us. You might wonder what’s the buying power of the Chinese if they are carrying a trade surplus of about $300 billion with America.

 

China rears about half of the world’s pigs. It has a pork- and tofu-eating population of 1.4 billion. It consumes and imports enormous quantities of soybeans. Those pigs have to be fed — soybean provides the protein in that feed, and corn the calories.

 

America is the largest grower of corn, and among the largest growers of soybean. Farmers, though only 1 per cent of America’s population, are a very powerful constituency. Watch Mr Trump’s celebratory posts after his soybean deal, asking his farmers to buy more land, bigger tractors, and declaring it the golden age of farming.

 

Xi Jinping just indicated he had options to get his agricultural commodities from other countries and Mr Trump keeled over. And while in India our debates remain frozen in the mid-20th century, and our appreciation of science in the 19th, the Chinese have no problem buying soybeans from anywhere — GM or not.

 

The Chinese are very progressive. Four years ago, they began sowing GM soybean and the area is expanding every year. Chinese cotton yields at this point are four times our own. Our yields have declined because our seed biotech was frozen in 2008. That’s a tragic story for another day.

 

The Chinese have shown you what you can do if you have the seller's power and if you have the buyer’s power. All the other countries without this power are facing a humiliating and extractive trading hegemon.

 

Mexico was able to reach a kind of peace with America simply because they started buying enormous amounts of corn from across the border. We blew our opportunity of giving Mr Trump a little leverage by offering to buy some of his soybeans. We import more than $18 billion worth of edible oils every year. A lot of it is soybean oil. We also need cattle feed. Even if we did not want our cattle to eat this soybean, we could have simply exported it after extracting the oil. The same could have been done with corn and ethanol. We routinely import both soybean and corn. But no, domestic lobbies, particularly on the Swadeshi side, couldn’t be annoyed. This, when the Modi government’s position on GM seeds is positive and nuanced, as stated in its affidavit supporting field trials for home-developed GM mustard.

 

This is a world where superpower relationships can be determined simply on the basis of whether you are buying my corn or not. The Indian poultry industry is crying because corn has become so expensive. They are short of feed. If only we had offered to buy a couple of billion dollars’ worth of American soybean and corn, the two pain products for Mr Trump that we import anyway. But no, we somehow think the world owes us much and we need to give nothing in return.

 

That era is now over. Mr Trump has no respect for your reputation, history, and, least of all, politics. He showed it in breathtaking condescension by saying he isn’t pushing Mr Modi too much (on trade and Russian oil) because I do not want to destroy his political career. He laughs at any talk of moral authority. He only knows hard power. And he’s told you what the currency of hard power is now. Mr Trump wants to see what you have on the table and what it is that you can do for them.

 

The next thing we need to learn from the Chinese is the old Deng dictum: Bide your time, hide your power. The breathless celebration of being the fourth-largest economy on the way to becoming the third isn’t helping India’s cause. The big powers only snigger. It’s time for some humility and focus.

 

This changed geopolitics has also ushered in a 1991 moment in India. If the challenge then was a balance of payments crisis, now it is the price India will pay for not dumping trade protectionism. This will be a reform, if under compulsion, as in 1991. That’s why Commerce Minister Piyush Goyal has been asking entrepreneurs to smarten up, not keep asking for tariff protection. Indian bureaucracy can drag anyone along for years. The use-by date on that is over. For removal of doubts, read Mr Trump’s posts before and after his Asia tour.

 

By special arrangement with ThePrint