Trump’s Deal-Powered Vision Will, and Won’t, Change US Foreign Policy

In 2000, as Donald Trump toyed with the idea of running for president on the Reform Party ticket, the businessman co-authored a campaign book with the writer Dave Shiflett. It’s a long-forgotten work, vastly overshadowed by The Art of the Deal. But one passage illustrates just how profoundly U.S. foreign policy could change under President Trump.

During the Cold War, Trump wrote, “foreign policy was a big chess game” between the Soviet Union and the United States and its allies, with every other country a “bystander.” But the fall of the U.S.S.R. had changed the game, he argued: “We deal with all the other nations of the world on a case-by-case basis. And a lot of those bystanders don’t look so innocent.” As Trump saw it, “the day of the chess player is over …  American foreign policy has to be put in the hands of a dealmaker.” There was precedent for this, he asserted. In recent memory, two great dealmakers had served as president: Franklin Roosevelt, who wheeled and dealed his way through World War II, and Richard Nixon, who initiated diplomatic relations with the Chinese and negotiated nuclear-arms reductions with the Russians.

“A true dealmaker,” Trump wrote, “can keep many balls in the air, weigh the competing interests of other nations, and, above all, constantly put America’s best interests first. The true dealmaker knows when to be tough and when to back off. He knows when to bluff and he knows when to threaten, understanding that you threaten only when prepared to carry out the threat. The dealmaker is cunning, secretive, focused, and never settles for less than he wants. It’s been a long time since America had a president like that.”

Dealmaking has, of course, always been an important part of foreign policy. The Obama administration’s big deals included the nuclear agreement with Iran and a nuclear arms reduction treaty with Russia. Elihu Root, the first U.S. secretary of state to travel overseas on official business, in 1906, negotiated arbitration treaties with 24 countries. Americans can thank him for resolving a pesky fisheries dispute with Canada.

But recent American leaders have largely been “poor” dealmakers, Trump argued 16 years ago. “We protect other nations when they’re in trouble. We lead the world in foreign aid. We’re everyone’s favorite trading partner, we take in refugees and immigrants at a million or so a year, we bail out insolvent governments and prop up weak ones, we mediate intractable disputes. We have standing armies and jetfighter squadrons and fleets the world over—we do it all. A lot of the time we don’t even bother to send a bill.”

This iconoclastic vision of America’s role in the world helps explain why Trump has long criticized the Cold War-era chess pieces—including security alliances and the promotion of free trade and democracy—that the U.S. government continues to deploy in the post-Cold War period against a shifting second player: no longer the Soviet Union, but Putin’s Russia, a rising China, or the generalized “chaos” predicted to result from the United States no longer “leading the world.” Trump’s vision helps explain why the president-elect recently threatened to recognize Taiwan diplomatically unless China struck a grand bargain with the United States on Chinese trade practices, China’s military buildup in the South China Sea, and North Korea’s nuclear program.

It also helps explain why Trump picked ExxonMobil CEO Rex Tillerson, who he describes as a “world class ... dealmaker” with “all types of foreign governments,” as his nominee for secretary of state. In Private Empire: ExxonMobil and American Power, the journalist Steve Coll offers a taste of Tillerson’s approach to dealmaking. He describes the CEO’s efforts to launch an oil and gas consortium on the Russian island of Sakhalin early on in Vladimir Putin’s presidency:

Under pressure, Tillerson applied the Exxon formula: no surrender. “We jacked this all the way to the top,” recalled one of his colleagues. We brought the issue up with the president.” …

Putin offered to write out an executive order saying that Sakhalin-1 could proceed, but Tillerson refused. Putin did not have enough legal authority to satisfy ExxonMobil; Tillerson said he did not want to operate by decree, but by durable laws. Tillerson wanted to have “all the t’s crossed and i’s dotted exactly according to Russian law and regulation, and if we couldn’t get it done, then we were not going to do it,” the former executive remembered. Ultimately, after Putin “blew his stack” at ExxonMobil’s affront, the Russian president agreed. ...

Russia’s negotiating culture of bluff and coercion seemed to suit ExxonMobil.

Trump’s vision also helps explain why foreign governments are already beginning to speak the real-estate tycoon’s language. An Iranian foreign ministry spokesman has announced that the country’s ability to conduct ballistic-missile tests is not “negotiable.” China’s ambassador to the United States has warned that “national sovereignty and territorial integrity”—an apparent reference to the status of Taiwan—“are not bargaining chips.”

During Trump’s presidency, transactional thinking—the freewheeling pursuit of deals—could become the organizing principle of the administration’s foreign policy, rather than one element of it, as in past administrations. Previously unthinkable bargaining chips—including, apparently, a vulnerable island of 23 million people in the Taiwan Strait—could come into play. The question of what is negotiable, and what isn’t, will be a persistent source of uncertainty. Is America’s commitment to the most peripheral members of the NATO military alliance a tradable asset? What about U.S. security commitments to countries like Japan and South Korea? Developments that initially seem like one thing (a phone call suggesting closer U.S. relations with Taiwan) could turn out to be another (an opening gambit in complex U.S. negotiations with China). Trump and his team may prove to be masterful negotiators on behalf of U.S. interests. Or they may prove to be dangerous or incompetent ones. As Dominic Tierney points out, Trump has so far signaled that he will fulfill Putin’s desires in Syria and Ukraine in exchange for the mere possibility of improved relations with Russia—pretty weak stuff from a guy who claims to drive a hard bargain.

In one sense, Trumpian dealmaking may be less a new form of U.S. foreign policy than a return to an old form—one that Robert Blackwill and Jennifer Harris, former officials in the George W. Bush and Barack Obama administrations, respectively, call “geoeconomics.” They define “geoeconomics” as the “use of economic instruments”—everything from trade, investment, and monetary policy, to foreign aid and cyberattacks against banks—to “accomplish geopolitical objectives.” For much of its history, from the Louisiana Purchase to the Marshall Plan, and especially during the presidency of Trump’s favorite dealmaker, Franklin Roosevelt, the United States prioritized geoeconomics in its foreign policy, Blackwill and Harris argue. But ever since the Cold War, the U.S. government has mainly employed diplomatic and military tools. It regularly imposes economic sanctions on other countries, but rarely takes other geoeconomic measures.

At the same time, other countries, including top U.S. rivals like China and Russia, have embraced geoeconomic carrots and sticks. China, for example, has conditioned economic assistance to countries like Costa Rica on those countries granting it diplomatic recognition over Taiwan. So why are leaders of the United States—still the largest economy in the world, by many measures—so resistant to taking a similar approach? As Blackwill and Harris wrote earlier this year in Foreign Affairs:

Many states now appear entirely comfortable employing economic tools to advance their power, often at the expense of Washington’s. China, for instance, curtails the import of Japanese cars to signal its disapproval of Japan’s security policies. It lets Philippine bananas rot on China’s wharfs to protest Manila’s stance on territorial disputes in the South China Sea. It rewards Taiwanese companies that march to Beijing’s cadence, and punishes those that do not. Russia, meanwhile, bans imports of Moldovan wine as Moldova weighs deeper cooperation with the EU, and Moscow periodically reduces energy supplies to its neighbors during political disagreements. It dangles the prospect of an economic bailout to Cyprus in return for access to its ports and airfields, forcing EU leaders to choose between coming through with a sufficiently attractive bailout of their own and living with a Russian military presence inside the EU.

Many of Trump’s more provocative foreign-policy proposals have been attacked on economic grounds. Critics point out, for instance, that slapping a 45-percent tariff on Chinese imports to the United States could spark a trade war that would damage the U.S. economy as well. But in a talk this spring, Harris and Blackwill noted that geoeconomic actions can’t simply be judged by their economic costs or benefits. Harris cited the scenario of China dumping its massive holdings of U.S. Treasury securities in an effort to punish the United States:

[T]he conventional wisdom goes … [t]his is economically irrational. Therefore, because [China] would take heavy economic losses on the remaining value of whatever they don’t dump, they wouldn’t do it. That’s true if you were looking at the world through the lens of economic rationality, with those interests at the fore.

But if you are [Chinese President] Xi Jinping and the U.S. has escalated tensions around some maritime claims that you feel are first-order to your national security and you are looking for a way to underscore your displeasure with Washington, and you have, say, I don’t know, $2 billion that you want to budget for this, where are you better off putting that $2 billion? In some fraction of your next aircraft carrier installment when the U.S., even after that, will remain hyper-dominant in the military realm? Or might you want to, I don’t know, short the U.S. housing recovery and your holdings of Fannie and Freddie?

So I do think that once you take off the lens of economic rationality and begin to look at it through a geopolitical lens, it’s not so clear.

Blackwill and Harris don’t necessarily support Trump’s brand of geoeconomics. None of their favored geoeconomic policies “threaten our closest allies with termination of our alliance systems on which we have depended since the end of the Second World War for promoting stability around the world,” Blackwill noted, in contrasting his proposals to Trump’s.

But they do seem to agree that the United States needs to dispense with its Cold War mindset, including the notion that every advance of free trade and liberal markets is a geopolitical victory for America, as it was when the capitalist United States was competing against the communist Soviet Union. Today, instead, “we’re up against countries like China and Russia that ... appear to have no particular distinctions between state and market, and are pretty comfortable exercising power in economic terms,” Harris observed. “[M]aybe it’s time to ask whether this happy alignment of our security and our economic orthodoxies still exists.”

In this context, critiques of Trump’s wavering positions on America’s alliances or commitment to free trade can sound a bit like warnings about the strategic stupidity of moving a rook here or a bishop there. Donald Trump might respond: “Who says we’re playing chess?”