Just What Do Trump's "Trade Deals" Consist of? Nothing
Malaysia deals with a chaos-monkey superpower: empty appeasement coupled with steps at derisking via exit from coupled arrangements that create vulnerabilities...
Malaysia deals with a chaos-monkey superpower: empty appeasement coupled with steps at derisking via exit from coupled arrangements that create vulnerabilities...
A “consultation” clause beats nothing when you face a hegemon acting on chaotic impulse. As PR optics steer the Potemkin “policy” of Donald Trumps, savvy partners sell photo‑ops—not allegiance. And they take steps to derisk and decouple as the way to buy what insurance they can against capricious and unmotivated attempts to exert power. Hold tight to this: Trump’s trade “deals” aren’t deals—they’re stage directions for an impulse‑driven executive. Malaysia read the script and wrote itself a “call us first” clause.
Alan Beattie: The US can’t force Asian countries into its trade camp <https://www.ft.com/content/62e54b1e-1558-4692-b825-c4a6d08f8bc4>: ‘The US apparently gained… in… deals with Cambodia and Malaysia… [that were] unusually detailed by Trump’s standards — were the first of a planned string of deals with Asean nations… On the face of it… forc[ing them] to choose between the US and China…
But not really. First, it is not a binding “deal”:
There is no formal dispute settlement system with an independent panel, just the prospect of Trump acting as judge, jury and vengeful executioner…
Second, well:
Why did Malaysia sign?… [To avoid restrictions on] the electrical and electronic products… Malaysia sells… which help to make America its second-biggest national export market…
But what are the consequences for Malaysia of signing? None:
Zafrul Aziz, Malaysia’s trade minister, told me this week that the deal created a system of formal consultation rather than automatic alignment. “We are very clear that any actions taken under the agreement will be based on Malaysia’s interest and under Malaysian law,” Zafrul said. “There’s a consultation process, and if it’s not in our interest to follow the US we won’t….. If we don’t agree then we face the consequences and the US can put on tariffs or whatever, but at least this way we get to put our point of view. Otherwise they can do what they want without explaining the rationale…”…
So has Malaysia chosen to ally with the U.S. on trade issues vis-à-vis China? No:
The US offers an export market, but these days an increasingly fickle one…. China offers rare earths and green tech. Neither is dispensable.As Zafrul told me: “We signed this [US deal] on Sunday. On Monday, we signed an [Asean] agreement with China.”… Agile governments… resist being turned into economic satellites. It’s not a comfortable place to be, but… not a powerless one…
The most you can say about the “deal” is that it is a recognition by Malaysia that the strong do what they can and the weak suffer what they must. Except that, under Trump, “the strong do what they can” does not cut it, for the meaning in Thoukydides’s Thoukydides, an Athenian, wrote the history of the war… is that the Athenians will do whatever is to their advantage. But in the case of the Trump administration, the Trump Administration will instead do something completely random, but its actions can be somewhat shaped by giving it the PR bonus of an apparent “win” of some kind.
Thus this looks to me like a marginal win for Malaysia: the U.S. has now committed itself to inform Malaysia before it does something random and destructive, and that gives Malaysia a chance to dredge up a way to offer Trump another PR-event boost in advance, rather than having to pay catch-up after some random action.
And, of course, this is a marginal loss for the United States. Or perhaps it is part of a pattern that will turn out, in aggregate, to be not a marginal but a substantial loss?
Yes, the U.S. offers an export market. Yes, U.S. companies offer technological capabilities complementary to Malaysian labor. But for Malaysia to commit its workers to U.S.-centered value chains and to exporting to the U.S. creates, everyone knows, a pressure point of vulnerability to Trump attempts to play the game of “stand and deliver!” Better to partner with Chinese or European firms. Better to figure out how to spend time and energy growing export capabilities aimed at those other two economic powers. Better to derisk from a United States that will elect a Trump; that possesses a highly corrupt Supreme Court majority that is stretching almost every nerve not to take any serious steps to make Trump, you know, follow the law; and that has Republican congressional majorities that have no desire at all to guard their own institutional powers.
How far will this derisking-from-the-U.S. go? How damaging is it going to be to the U.S.? How can it be repaired by doing something to fix the U.S. system so that foreigner become confident that U.S. governance will be, if not technocratic, at least not a constant exercise in chaos-monkey-feces-flinging?
All very big and important questions. I have no answers.
I would recommend Cassidy-Levy-Kent <https://www.cassidylevy.com/news/the-us-malaysia-agreement-framework-implementation-and-impact/> if you want to dig deeper, particularly their noting:
“Section 7.4(1) provides that the Agreement does not prevent any party “from imposing additional tariffs to remedy unfair trade practices, to address import surges, to protect its economic or national security, or for other similar reasons consistent with its domestic law…”
And their flagging what seem to me to be the weirdest things in the “agreement”:
“Malaysia has committed, ‘to the extent practicable’, to invest approximately USD $70 billion in ‘job-creating investment’ in the United States over the next 10 years…”
“Malaysia also ‘intends to purchase, or to facilitate the purchase by Malaysian companies, of’… Boeing aircraft, liquefied natural gas, coal, semiconductors, aerospace components and equipment, and data center equipment…”
But view with great suspicion this section in their commentary:
Both Sides Benefit: For the United States, the agreement expands commercial opportunities for U.S. exporters in a high-growth Southeast Asian market. It secures long-term access to Malaysia’s critical-minerals and electronics supply chains…. For Malaysia, the accord… strengthen[s]… Malaysia’s position as a partner in U.S. efforts to diversify critical global supply chains…. The agreement offers a pathway toward increased investment, both by and in the United States. Perhaps most importantly, for both sides the Agreement provides greater certainty with respect to the bilateral commercial landscape…
It does nothing long-term. It does not provide greater certainty. Agreements that do that come with dispute-resolution procedures that both sides intend to follow. I know. I have watched such agreements being negotiated back in the Clinton Administration, when the U.S. had a real government rather than a bunch of grifters trying to steal whatever they can. And since the reality is that the U.S. a bunch of grifters trying to steal whatever they can, there is no pathway toward increased investment. This verbiage is defensive insurance against Trumpist ire against Cassidy-Levy-Kent, not to be taken seriously.
The only sentence serious, but understated, in the “Both Sides Benefit” paragraph is:
Implementation may present challenges, particularly in balancing trade commitments with domestic stakeholder considerations…
Bottom Line: The broad national‑security escape hatch means adjudication is out; politics and leverage are in—consultation matters, because it is all you can do when courts and binding arbitration do not matter at all. The absence of binding dispute settlement and the presence of sweeping exceptions confirm the deal’s sovereignty‑first DNA: consultation is the scarce currency, because truly binding contract-agreement is off the table.
And hold tight to this: The strategic truth beneath the optics is that Malaysia traded PR‑friendly “wins” to an administration that prizes them, in exchange for (a perhaps empty promise of) policy forewarning and (a small amount of forwarning) insurance against unilateral surprises.
In the big picture, the centre of human civilization on earth is east Asia. If it were to shift from there, it would be to south Asia or Africa, not the Americas. Maintaining a global system centered on America and isolating China therefore requires a war on entropy. That war is difficult enough when prosecuted by diligent and competent patriots; when prosecuted by narcissistic grifting morons, it is hopeless.
Let’s hope that the Musk, Bezos, Ellison, Zuckerberg, Cook, Pichai, and Nadella gaggle have made just as sneaky a deal. I do wonder, though. They’ve given him a lot of money. It may be chump change (Trump change?) to them, but it’s still money for nothing, and at his age the chicks not being free probably doesn’t matter as much to Trump as it once would have done.) Did Zuckerberg and Musk make a better deal than the Krupps and Wernher von Braun did back in the day? Time will tell, I guess, but if we stay by the radio we may yet hear of a petrol fire burning in the rubble where the new Chancellery ballroom was supposed to have been built.