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Energy and the economy: Trump’s next two years - Transatlantic challenges

Rome, 15/01/2019, Aspenia

It is not going to be the economy that jeopardizes Donald Trump’s eventual re-election to the White House. The American president, who for some remains a sort of accident of history, is much more pragmatic than his abrupt strategy changes and innovative communication habits – by quarrelsome tweet – would indicate. Tax reform is doing the American economy good, and its advantages should last long enough to play a role in his run for a second term in 2020. Moreover, the new tax structure has helped the American middle class and not the super-rich as many observers were expecting; despite some limited slowdowns, U.S. economic growth is still steady, and should reach around 2.5% over the next two years; and there are no financial downturns or Fed interest hikes on the horizon – two elements that have sent fuelled past recessions.

Even some Democratic analysts acknowledge that the president’s policies have provided economic stimulus, therefore the future in economic terms appears substantially rosy. Something that cannot be said of the political and administrative situation. The longest government shutdown in American history is currently under way, and a political polarization of unprecedented depth is placing the values, ideologies and strategies of the two traditional parties at odds.

The Republican Party has a “negative agenda” in which deregulation and decentralization prevail, and that allows Republicans to close ranks around a president who, like Donald Trump, best represents this choice. For their part, the Democrats cannot seem to manage to agree on a vision and a leader. Their “positive agenda” contains too many positions and a leader capable of incarnating and empowering such an agenda has yet to emerge.

Donald Trump, in any case, remains archetypical and emblematic of a crisis in Western society – and above all, in his leadership – that has chosen the populist route in its attempt to restore a bond with the citizenry it lost by refusing to listen and respond to their needs. Intermediate actors – political parties, but not only – have failed and a phase of arrogant leader-ism built essentially around a person and not political ideas or practice has begun; a phase marked by bitter competition between economic and social systems whose outcome is not always predictable.    

According to the Trump doctrine, the United States is still a reference point on the international political stage, but no longer wishes to be the policeman of the world and, equally important, no longer wants to shoulder the costs of that role. It is demanding that NATO and Europe change their positions in terms of both defence costs and of better trade surplus management. Nevertheless, the new Cold War is not over trade now, and neither will it be in the future, despite the heated confrontation that recently erupted over customs tariffs. The real Cold War is going to be fought for control over artificial intelligence-based technologies: China’s massive investments in these sectors over the past two years poses a serious challenge to American predominance. The real Cold War – that between Beijing and Washington – is being waged with one foot in the economy and one in security and will end up, as happened with Washington and Moscow, triggering competition for respective spheres of influence. Thus, not simply a trade war, but rather an unyielding confrontation on shaping future geopolitical balances.