Column by William Pesek

Unhinged by Woordward’s expose, Trump may create a ‘Wag the Dog’ crisis for Asia’s markets

Sunday, 09 September, 2018

William Pesek

9 Sep 2018

Who would’ve thought Asia’s fortunes might turn with the pages of a Bob Woodward book?


That is a growing risk as US President Donald Trump goes berserk over Fear, Woodward’s incendiary look at a White House in crisis. Yet, not because China, South Korea and North Korea figure prominently in the narrative, but how Team Trump might lash out Asia’s way.

Woodward’s depiction of Trump – essentially, that he is a national security threat – is pushing his rage, paranoia and unpredictability to new heights. And if we know anything about Trump’s temperament, it’s that he looks for rapid ploys to change the subject.

Legislative prospects are sliding with Trump’s support rates. That leaves trade tariffs on Asian goods as the cudgel of choice for the “America First” leader.

The levies Trump slapped on steel (25 per cent) and aluminium (10 per cent) in June coincided with damning disclosures about his team’s contacts with Russians and corruption charges heaped at cabinet members.

Trump’s 25 per cent taxes on US$50 billion of Chinese goods were also timed to distract from Robert Mueller’s investigations of Trumpworld. Ditto for planned 25 per cent penalties on imports of cars and auto parts.

Now Woodward is dropping fresh bombs on the political establishment, including embarrassing details about Trump’s views on Korea. Allegations that Trump’s people hid documents so that he couldn’t kill the US-Korea free-trade deal suggest a White House run more by the Marx Brothers than a competent businessman.

Trump is equally red-faced over a New York Times op-ed. Penned anonymously by a senior White House official, it assails his “amorality.” Caged and wounded, Trump is likely to seek equilibrium in one of two ways.

First, throwing more sand at Asia’s gears. Trump has threatened tariffs as high as US$500 billion on Chinese goods. The odds that he will, grow with each day that Woodward’s book dominates the news cycle. That includes declaring China a currency manipulator and pulling out of the World Trade Organisation, steps Trump threatens to take ad nauseam.

Odds are, Trump will be particularly spiteful heading into November. He wants to look strong ahead of Congressional elections that may decide whether he’ll face removal from office. He’ll also want to blow up two Asian summits he is decided not to attend.

What better way to upend the Association of Southeast Asian Nations (Asean) and Asia-Pacific Economic Cooperation (Apec) forum confabs than throw fresh grenades at global commerce?

Second, military adventurism. Woodward detailed US Defence Secretary James Mattis refusing to plan the assassination of Syrian leader Bashar al-Assad. Thwarting Trump might be harder a second time should, say, Kim Jong-un be the next target.

The risk is Trump will “wag the dog” to save his presidency. It’s a rising one as Washington wags buzz about moves to impeach Trump for everything from colluding with foreign powers to erratic behaviour to turning the White House into an ATM for his family businesses.

Asia, meantime, buzzes about the loss of America as a trusted power and counterweight to China’s surging influence. As such, the titbits Woodward offers about how little Trump understands about Asia’s challenges, and how little he cares, are sobering.

Come November, Asean and Apec have ideal opportunities to devise a united front against the fallout from Washington’s chaos. It also is a moment to build a more equitable and prosperous future. The Trump era will end at some point, and Asia must be ready to thrive in it.

Woodward’s fame derives from his role in taking down Richard Nixon by following the money. With Trump, though, he is following the causes and effects of Trump’s unhinged behaviour. Perhaps to an Asia market near you, and soon.

William Pesek is a Tokyo-based journalist and author. He has written for Bloomberg and Barron’s

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