NYT: President Trump’s global aggression encouraged other countries to search for new ways to pressure the U.S. economy

Pic.: Axios

From Iran to China, President Trump’s global aggression has encouraged other countries to search for new ways to pressure the U.S. economy, ‘The New York Times’ stresses.

President Trump has unapologetically wielded the power of the United States on the global stage, taking a much more belligerent approach economically and militarily to try to dictate the actions of other countries.

From high tariffs to the war with Iran, Mr. Trump has claimed that this aggressive behavior internationally has only upsides, and that past leaders were fools for refusing to tap into America’s power.

But one clear drawback of the strategy is emerging. While many countries have acceded to the president’s demands, some have found a highly effective new way to fight back. Mr. Trump’s aggression has given them the opportunity to test their control over choke points, threatening the United States and the global economy.

Strait of Hormuz’ choke point

One such choke point is the Strait of Hormuz. Iran, which accounts for less than 1 percent of global economic output, has control over the shipping lane that transports a fifth of the world’s oil and gas. Its closure since the United States and Israel began attacking Iran at the end of February has blocked shipments of fuel, fertilizer and other goods, sending gas prices sharply higher and spreading anxiety among U.S. farmers and manufacturers.

Another experiment in retaliatory coercion began one year ago on Thursday, when Mr. Trump walked into the Rose Garden and unveiled tariffs on what he called “Liberation Day.” While many governments — even powerful economies like the European Union — complied with U.S. demands, China was a notable exception. Beijing rolled out a licensing system for exports of rare-earth minerals and magnets that has given China unparalleled control over the global manufacturing system.

China began designing a system of rare-earth controls before the re-election of Mr. Trump, whose strategy is not entirely new: The United States has a long history of weaponizing supply chains, from using its control of the global banking system to punish enemy nations to trying to halt the flow of advanced artificial intelligence technology to China.

Trump has dismissed any criticism

But Mr. Trump stepped up American antagonism, with tools ranging from tariffs to military strikes. One of his basic principles has been that the United States should do a better job of leveraging its power. He argues that, as the world’s biggest consumer market, the United States can force other countries to trade on terms less favorable for them, and that with the world’s most powerful military, it can remove heads of state from Venezuela to Iran.

Mr. Trump has dismissed any criticism that those actions violate international alliances, laws or conventions, preferring to see the world in terms of raw power. The countries that have done best against him, like China, seem to recognize that same principle, responding in economically destructive ways to try to force him to back down.

It remains to be seen whether Iran’s control over the Strait of Hormuz persuades Mr. Trump to call off his campaign. But the disruption appears to be encouraging him to try to bring the war to a quicker end.

The U.S. economy would grow 2.2 percent this year, rather than 2.8 percent

The United States has been more insulated from the economic aftershocks of the shutdown of the strait than closer economies in Europe, Asia and Africa. But more expensive global energy and tighter supplies of fertilizer, aluminum, helium and other products from the Middle East are still pushing up prices and slowing economic activity in the United States, creating a problem for the Republican Party as midterm elections approach. Higher fuel costs are trickling into the price of fresh food, and rates for international shipping have risen sharply, adding to the cost of importing goods to the United States.

Analysts at Evercore ISI projected that the U.S. economy would grow 2.2 percent this year, rather than 2.8 percent, because of the war and the accompanying energy shock, while core inflation would tick up 0.2 percentage points.

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