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'Cagey' Finds Some Common Ground With 'Crass' Through The Politics of The Deal

20/03/2017 16:26
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President Trump's emerging leadership bears two hallmarks - governance by tweet and the politics of the deal. At their historic talks in Washington on Friday, German Chancellor Angela Merkel appears to have won over Trump by tapping into his love of the deal.

On the face of it, prospects for the dialogue seemed bleak. The genuine warmth of the Obama-Merkel relationship was never going to be matched here. The chemistry between Trump and Merkel was aptly summed by the German weekly Der Spiegel as 'crass meets cagey'. At a personal level too, the leaders have a little history. Merkel greeted Trump's election with a perfunctory two-minute address in which she pointedly reminded the president elect of the core values underpinning liberal democracy. After Merkel's nomination as Time Magazine's person of the year 2015, Trump tweeted that 'they picked the person who is ruining Germany'. Ominously, Trump and Merkel are also poles apart on key issues of international trade, NATO, the European Union, refugee policies, Syria and Russia. With the bar for success set low, Merkel was free to focus on finding a common language with Trump.

The postponement of the talks due to Storm Stella from their original Tuesday slot played into Merkel's hands. The Friday meeting gave Trump less opportunity to ride on the back of his talks with Merkel and influence by tweet the meeting of the G20's finance ministers in Germany on Friday and Saturday. Also, Trump had lost the advantage of privileged intelligence on the interest rate rise set to be announced the following day by US Federal Reserve Chair Janet Yellen. With the rate rise and an anticipated knock-on rise in the value of the dollar now in the public domain, the gloves were off.

What is at stake for both the leaders' and the G20 meetings is whether to underscore current commitments against "all forms of protectionism" or, as Trump prefers, to dilute the consensus to a weaker assurance to conduct trade that is "open" and "fair", a formula that offers some leeway for the introduction of import restrictions to benefit domestic workers. The US is already primed to introduce taxes on the imports of US corporations based outside US borders, but not on their exports. Merkel takes issue with this 'protective tariff' that violates World Trade Organisation (WTO) rules. On the other hand, Trump's administration has railed against Germany for 'exploiting' the US by manipulating the value of the Euro to boost its own competitiveness, a charge vigorously denied by Berlin.

Nevertheless, it was in both parties' interests to forge a platform for a viable transatlantic economic relationship. Merkel's task was to persuade Trump that free trade brings mutual benefit to their two countries. America is currently Germany's biggest export market. According to Germany's Economics Minister Brigitte Zypries, the US benefits from one third of German foreign investment. German companies now manufacture more cars in the US than they export to it from Germany.

Trump's Treasury chief, Steven Mnuchin stressed in his recent meeting with his German counterpart Wolfgang Schäuble that that the US is not looking for a trade war. Merkel will be keen to stress that, if Trump makes good on his threat to impose a 35% border tax on German cars, she will call on the support of the EU to block US protectionism. On the other hand, if he adopts a less uncompromising stance, America will not lose out.

Their pre-lunch press conference hinted at tough talking to come. Unusually, Trump appeared the more subdued and ill at ease and was visibly irked by a reference to American isolationism by a German reporter. There was none of the joshing that accompanied his press conference with Israeli Prime Minister Benjamin Netanyahu; none of the patronising hand-holding served to Theresa May. The leaders' prepared statements touched all bases: the intention to work towards security, prosperity and peace; a mutual commitment to NATO and a US nod towards the burden-sharing debate; immigration security with a US priority for defence and a German focus on the migrant experience. Both committed to free trade but stressed the need to work towards fair and reciprocal trade policies. Trump only really came alive when he spoke about their discussions on workforce development and vocational training with business leaders. He spoke with real enthusiasm about their forthcoming lunchtime meeting with the CEOs of Siemens, BMW and machine tools manufacturer Schaeffler. Merkel's instinct had served her well. After all, business leaders speak Trump's language.

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