Donald Trump’s Liberation Day tariffs shocked even me. I want to respond to it in two ways – first to examine the economics, since I think that the understanding of comparative advantage, the driver of global trade, is weak amongst most commentators; second, the politics of it, and whether the backlash could lead to an early termination of the Trump presidency. But I think both commentaries would benefit from a little more time passing to clarify things. Before that, I want to look at the Ukraine peace process started by Mr Trump’s administration – about which I have commented here previously.
In those comments I suggested that the process would encompass three things: a ceasefire on something close to current front lines; ending sanctions on Russia; and ending US aid to Ukraine. Only a token effort would be made to tackling a longer-term peace treaty. The strategy was first to pressure Ukraine into going along with this broad strategy and then to tackle Russia. The pressuring of Ukraine has gone more-or-less to plan. The second step has got absolutely nowhere.
There was always a puzzle about this process. Why wasn’t the Trump regime placing any pressure on Russia? Instead Mr Trump and his allies repeatedly parroted Russian talking points about who started the war (Ukraine/NATO); the impact of US aid (overwhelming); the legitimacy of the Zelensky government (elections overdue); how the war was going (Russia dominant); and who was the main obstacle to peace (Volodymyr Zelensky) . Russia, meanwhile, made plain their objection to the ceasefire idea unless the settlement “dealt with the root causes” of the conflict. This is code for an effective capitulation of Ukraine. Those experienced in negotiating wondered by Mr Trump was being so soft on Russia when it was so clear that a lot of pressure was going to be needed on them in due course. Instead, Mr Trump suggested that Russia would be easier to handle than Ukraine, and that they would be compliant for reasons that only he understood.
Just what was going on? One well-rehearsed conspiracy theory is that Russia has private information on Mr Trump and that they were blackmailing him. I find this hard to accept: surely there really isn’t anything out there that could harm him? Corruption; illicit sex – you name it, Trump can shrug that kind of thing off. There is an ideological overlap between hardline MAGA Americans and Vladimir Putin’s stated ideology – the stuff about white-supremacy, “Christian” civilisation and so on – but I’m not sure this has much sway on Mr Trump himself – he’s a narcissist not an ideologue. I’m left with the conclusion that it is sheer stupidity. I would call it naivity except that Mr Trump has four years experience of the highest office. The Putin regime has sugar-coated its hard line with flattery, talk of its desire for peace and the promise of exciting business deals; Mr Trump doesn’t seem to have got beyond the sugar coating to the bitter kernel what Russia is actually saying. You would have thought that a New York property magnate would have an ear for bullshit – but apparently not.
Still, this is a bit of a gamble for the Russians. They are hoping that the Trump regime will lose patience, blame the lack of progress on Ukraine, and suspend aid and sanctions without a ceasefire. But I think Mr Trump is expecting serious engagement with the ceasefire idea, and will eventually notice that he’s not getting it. The Russians might then end up with nothing. There are some early signs of frustration from Mr Trump. Interestingly, he was especially annoyed by the Russian suggestion that the Ukrainian government should make way for a UN-led interim regime while elections were held. This seems to break one of the principles of Mr Trump’s negotiating approach – after investing so much into bullying Mr Zelensky, removing him would destroy that investment. And yet it’s all of a piece with those Russian talking points.
But I can’t be too optimistic. The Trump regime has an America-first attitude to Europe, in stark contrast to its attitude to the Middle East. There are benefits to the US, as they see it, from ending aid to Ukraine and the sanctions – and so they may very well be tempted to do this without a ceasefire. But the plaudits as a peacemaker that Mr Trump seeks would disappear. Mr Zelensky realises all this and is now playing his weak hand well. He has to give way to American bullying in order not to be seen as the problem party; and this he is doing without being too craven.
Meanwhile the war itself has slowed down. Russia made a strong bid to recapture the territory in the Kursk region it lost to a surprise Ukrainian offensive. They have pretty much succeeded – but casualties were high and progress elsewhere largely stalled. They are doubtless regrouping – but then so are the Ukrainians. A decisive military breakthrough seems a long way off. Two questions lurk. The first is how close is the Russian war effort close to failing from its losses? Some western commentary suggests that it is much closer than most seem to think. Still, the resilience of despotic regimes under pressure can be surprising. The second is how well could Ukraine hang on without US support? It would clearly struggle – but would not fold as quickly as Russia is suggesting, and the Trump regime seems to believe. But both Ukraine and the European powers are desperate not to put this to the test.
What of the European powers? These are being treated with contempt by America and Russia alike. But in a long game their influence is growing. They are putting a remarkable amount of effort into developing the idea of an armed+ presence in Ukraine to secure any ceasefire. This seems odd, as it is categorically unacceptable to the Russians, and the Americans seem uninterested; militarily it doesn’t make much sense either. It seems to be a way of reminding both that Europe has some weight to pull in this affair.
The biggest question of all is whether Mr Putin will break free of the Russian stated position, and agree to a ceasefire without major concessions, in exchange for lifted sanctions (including those from Europe) and a suspension of US aid. It is possible, even if it doesn’t look very likely from where I’m sitting.
First published on Substack