By Ron Cheong
News Americas, NEW YORK, NY, Mon. Dec. 2, 2024: Influential thinker Thomas Hobbs described the political principles of his social contract theory in which there is agreement between rational, free, and equal people.
In a self-interested move, people agreed to give up certain rights “to,” in exchange for rights “from.” For example, men jointly gave up the right to trespass on their neighbors plot and in turn received the right to be free from attacks in the night. In other words, they entered a social contract in which they gain certain civil rights in return for placing their actions under the jurisdiction of a common authority and subjecting themselves to certain penalties for breaking the rules.
This thinking could also be applied to countries where cooperation and mutual agreements and treaties benefit everyone.
Machiavellianism, Narcissism & Psychopathy
But Trump would have none of that, he prefers fear, and even before assuming office, as the President-elect of the most powerful country in the world, he is threatening hefty tariffs on neighbors, allies and rivals in a show of power to his base.
Taking a page right out the 1513 treatise by Niccolò Machiavelli, for whom the term Machiavellian is named, meaning: manipulation, indifference to morality, lack of empathy, and a calculated focus on self-interest – Trump is threatening trade wars with basically the entire world.
Machiavelli famously wrote in his political treatise, The Prince:
“… whether it is better to be loved rather than feared, or feared rather than loved. It might perhaps be answered that we should wish to be both; but since love and fear can hardly exist together, if we must choose between them, it is far safer to be feared than loved.”
While the narcissist side of Trump can never get enough adulation, he has decided to inspire fear of a breakdown in the world community which is aware of his egocentric antisocial behaviour, and lack of remorse or empathy.
Potential costs to the US
But as China has said in response to Trump’s threat of an additional 10% tariff on all goods from China, “There are no winners in tariff wars. If the US continues to politicize economic and trade issues by weaponizing tariffs, it will leave no party unscathed.”
By way of a single example of the damage the US would do to itself – Walmart is the largest private employer in the US and the largest employer in 22 States. Walmart imported 60% of all its goods sold in 2023 from China; which translates into $320 billion in the cost of goods sold. These tariffs would be an indirect tax of 10% or $32 billion on mostly lower and middle income households, increasing their cost of living through everyday purchases.
Trump also threatened a 25% tariff on Mexico and Canada. Prompting Mexico’s President Claudia Sheinbaum to have a telephone conversation with him and Canada’s Prime Minister Justin Trudeau to travel to Mar-a-Lago and have dinner with him.
After each even, as is his style, Trump tried to put a positive winning spin on the events. Regarding the discussion with the Mexican President, Trump posted on Truth Social, “Just had a wonderful conversation with the new President of Mexico, Claudia Sheinbaum Pardo. She has agreed to stop migration through Mexico, and into the United States, effectively closing our Southern Border. “It was a very productive conversation!”
The Mexican President denied this, posting on Twitter,” “In our conversation with President Trump, I explained to him the comprehensive strategy that Mexico has followed to address the migration phenomenon, respecting human rights. We reiterate that Mexico’s position is not to close borders but instead build bridges between government and people.”
After the Trudeau dinner Trump said he had a “very productive meeting.” He also posted that “they discussed many important topics.” Trudeau told reporters that he Meeting an “excellent conversation” with Trump but declined further comment.
More than 83% of Mexico’s exports and 75% of Canada’s went to the US in 2023. US/Canada trade is estimated at more than a trillion dollars; a 25% tariff this alone would work out to about $130 billion indirect tax on Americans. Canada the US and Mexico have a deeply intertwined supply chain system. The cost to all three countries would be severe. And there is Japan, China as a whole, the EU and the UK to consider. Given Trumps nature it’s impossible to predict what will happen, it is even possible that this is one of Trump’s bluff’s by which he hopes to extract concessions.
Wall 2.0?
Even if the threatened tariffs did not materialize, it would still be a bragging point for Trump of the fear he can instill. Going into Trump 2.0 the Mexican wall still has not been built and Mexico has not paid for it. We could well have been looking at Wall 2.0 where his base gets some satisfaction without any substantive results.
Newly announced 100% Tariffs for BRICS
Now as this article is about to go to press, Trump has announced he will slap 100% tariffs on them unless the BRICS – Brazil, India, China, South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates, commit to the U.S. dollar as their reserve currency. This clearly takes things off the charts into the area of the impetuous.
The new announcement now pushes things beyond the pale, it is difficult to see any strategy or bluff being constructively applied here. The way it was done in a petulant social media post is appalling and would not be expected from even Putin. This new tariff threats just further undermines the credibility of the United states of America in
the eyes of world, its neighbors, allies, trading partners and adversaries alike – the President-elect of the United States issuing massive punitive edicts by “tweet”.
Among the pillars that have held America true as the reserve currency of the world are its economic might, democracy, rule of law, and its status as the leading member of the world community of free nations.
These are the very reasons that BRICS system won’t be a viable challenge to the US dollar reserve currency status anytime soon. Two of their most powerful members are headed by dictators, their justice systems are heavily influenced by their political masters and their liquidity is totally eclipsed by the depth of US markets.
Ironically, Trump is eroding the very pillars which have upheld the US currency and its status as reserve currency to the world: US Democracy, the rule of law, and being fully committed to participation in and cooperation with the community of free nations.
