Donald Trump’s Economic Warfare Abroad Comes Home

22:33And what does it mean looking ahead to 2028? Also, I have to say, I love these live events. I hope you'll join us. Actually, it's really fun for us. So also for anyone who gets a VIP ticket, there's also a meet and greet after the taping. So political analysis will continue over drinks. And if you're not in New York or can't get there, we have good news. We're going to be streaming this so you can watch from wherever you are. So head to 92NY.org for more info or check the link in our show notes today. And we hope to see you there on June 4th.

23:14forth. Eddie, you made a very important point a moment ago, which is that in a sense, the status quo right now seems unsustainable, that there may in fact be an escalation to come. Help us take stock of the impact already on the global economy, of what's happened, of the closure of the Strait of Hormuz, the blockade? And how bad do you think it could get, actually, for the global economy?

23:41Edward Fishman:Look, I think when you zoom out and look beyond the purview of the United States, this is already a major crisis in many parts of the world, right? I think I'm often in conversations with investors and policy people where they say, well, when are the shortages going to hit? Well, I would say, well, go to Sri Lanka or go to the Philippines, where people have been told they have to work from home or they have to ration gasoline. You know, they can only fill up their tanks once a week, right? You already have conditions that resemble the 2020 COVID in many parts of the developing world because they have actual fuel shortages.

24:13Edward Fishman:It's not just higher prices. They don't have the fuel they need. I think that's only going to get worse. The other thing to note is if you just think about how long it takes for oil and liquefied natural gas to get from the Gulf to Asia, where they're primarily selling these products, You know, it's a month long journey or more. And so you would only expect some of these really acute shortages to start hitting right around now in the coming weeks. So I think this is only going to get worse because I don't see that the Strait of Hormuz opening anytime soon. I think for us here in the United States, this manifests in terms of higher fuel prices.

24:49Edward Fishman:We already see gasoline above four dollars a gallon. I'm sure it will go higher than that. and probably in terms of inflation. It started ticking up already, but just because of sort of the ubiquity of oil in pretty much the entire supply chain of everything that we use here, you are going to see inflation go up. I think one way that we are somewhat insulated, at least relative to the rest of the world, because there's been this question, does, you know, the shale revolution, which in some ways I think is like one of the more underappreciated geopolitical stories of the last several decades. I mean, the U.S.

25:23Edward Fishman:is by far the world's biggest producer of oil and natural gas, not even close, which is quite remarkable. We are somewhat insulated on the natural gas side because we really produce the natural gas that we consume. So in some ways, we actually benefit from the crunch in natural gas markets because our exporters in the Gulf are selling liquefied natural gas at inflated prices, while Qatari LNG is offline because of the closure of the Strait of Hormuz and the attacks on Ras Lafon, this very large liquefied natural gas facility in Qatar. So there's sort of divergent effects in the U.S. I think most people will suffer, but I think the LNG producers in the Gulf Coast are going to be making a killing in the United States.

26:03It's interesting that you bring up the sort of effects around the world because this is also a little bit of a story about the limits of American power, right? And it's not just the question of failing to anticipate Iranian action, the Strait of Hormuz, but I'm really struck by Trump at the same time he did this temporarily waiving sanctions on Russian and even Iranian oil in the hopes of somehow insulating Americans even further. I'm having this conversation with you today in Europe where they're literally canceling thousands of flights already because of these shortages of jet fuel. And yet it didn't make a difference.

26:43You know, so Trump does a favor for Putin that sends billions more into Russia's war kitty. But at the same time, it doesn't really affect the prices in either the U.S. or Europe.

26:53Edward Fishman:Yeah, this was one of the more surprising and frankly, unprecedented actions that has taken place in this war, which is that the United States attacked Iran to try to affect regime change. Oil prices spiked because of the closure of the Strait of Hormuz. Russia, by the way, has been providing support to the Iranians throughout this war, including targeting intelligence to allow the Iranians to hit U.S. forces in the region. And the U.S. responds by easing sanctions on both Russia and Iran. I really cannot think of another analogy, frankly, in my entire study of sanctions, economic warfare, in which the U.S.

27:28Edward Fishman:actually eased sanctions on an adversary to try to undo a problem of its own making. I think the Russia sanctions easing in particular is very problematic. Because if you look at where we were in February, Susan, in February, Russia earned the lowest oil revenues on a monthly basis that it had since the beginning of the war in Ukraine. Their oil was selling for about$30 below the benchmark. They were getting killed, basically. As soon as these sanctions have been eased, and by the way, now it's been extended, Russian oil is selling at a premium to the international benchmark. And so Russia is making at least$150 million, maybe as much as$200 million a day more because of these sanctions easing.

28:10Edward Fishman:So if you think about the ripple effects for Ukraine, I mean, that has always been, that's been a war of attrition. It's a question of who can sort of outlast the other side. This has given a tremendous amount of runway to Putin, financial runway, taken burden off him. And so I do worry that by virtue of starting this war in Iran, we may have prolonged the carnage in Ukraine. Yeah, I have to say, Eddie, hearing the way you tie these pieces together, and I don't mean this just to dump on President Trump, but he strikes me as almost uniquely unqualified for deploying the tools that you're describing.

28:43Because one of the things that comes through in your writing very clearly is that economic warfare requires a few things. Endurance, attention. You have to, if you're going to embark on this, you have to follow it through a whole series of second and third order consequences. You also have to have credibility that if you say you're going to do something that you follow through on that and other countries then have to anticipate and respond to it. It is a very delicate art in some sense, the use of economic warfare. And, you know, one of the sort of mantras we have on this show is the idea that a false belief eventually collides with reality at some point, usually on the battlefield, as Orwell put it.

29:20We are seeing right here a whole series of false beliefs that Trump had and has both about United States, American power, and about how other countries regard us and how they are situated around the world. I don't see, and I'd be curious if you can identify one, a path out of this spiral that he is in right now where things get worse and worse. Is there a scenario where this suddenly turns a corner that we haven't discussed yet? I don't think so.

29:51Edward Fishman:I'm quite concerned about this. And, you know, we're only a year into Trump's presidency. If you go back to last year, I mean, the Liberation Day tariffs, I think in some ways we've moved on from them in the United States in that, you know, the Supreme Court struck down most of the tariffs. But, you know, you travel around the world, you travel to Europe, you travel to Japan, you travel to South Korea. They've not forgotten. And we've really immolated a lot of the trust that has been built up over decades with key allies. And I think one of the key lessons, I think, whether it's economic warfare, whether it's military force, really whether it's diplomacy writ large, America is stronger with allies, right?

30:30Edward Fishman:We need allies. So I do worry that without the trust that is necessary to sort of carry through with an economic war, without the strategy and the strategic thinking, you know, you've decimated the National Security Council. I think that it's likelier that these economic conflicts bubble over. One final point, though, because I think it kind of connects some other geopolitical crises that Trump has been a part of. If you look at the trend from both Venezuela and Iran, with both Venezuela and Iran, Trump set out to use maximum pressure, maximum economic pressure to try to affect regime change. And with both, he failed.

31:09Edward Fishman:And instead of saying, well, let's stick with the maximum pressure, but let's lower our objective to something less ambitious than regime change. He said, we're going to stick with our goal and escalate to the use of military force. And so I worry that when we wage economic war ineffectively, the alternative, especially with Trump, is not peace. It's not maybe pivoting to something less confrontational. It may be war. I want to ask you about one other factor, though, that may enter in his decision about what way to go forward, which is something else you write about in your piece, which is the pressure that comes from domestic politics here at home.

31:51And you talk about how really the Achilles heel of American power is our low tolerance in this country for pain and that there will be a backlash against the war that he has to deal with in terms of domestic politics, which then will put the pressure on him to somehow fix things without prolonging the war.

32:14Edward Fishman:So there's some irony here in that in some ways, the rise of economic warfare in U.S. foreign policy over the last two decades was inspired by not wanting to fight more wars after Afghanistan and Iraq. We lost political support for the use of military force. And so we said we need to find another way to compete geopolitically. And that's largely why we've turned to sanctions and economic warfare. I think, though, what's happened as we've started waging economic wars against bigger powers like China or when other countries have started fighting back like Iran, we realize that economic warfare actually can spread costs across the American people, right, across our entire society.

32:57Edward Fishman:And we don't have the stomach for even small corrections in the stock market or fears of recession. I mean, that's why we have this acronym TACO, right? Trump always chickens out. You know, with taco, the taco analogy originated from Trump's tariffs. It was Trump would impose a tariff, the markets would tank, and then Trump would pull back the tariff, right? In that scenario, though, it's Trump is the decision maker on both sides, right? He signs the tariff in place with the stroke of a pen, and he pulls it back with another signature on a paper. With this current conflict, the reason the global economy is sort of spiraling into crisis is because Iran has closed the Strait of Hormuz.

33:35Edward Fishman:So if Trump were to walk away from this war, there's no guarantee that the strait would reopen. I think, to the contrary, Iran would probably set up their toll and probably not allow a number of ships to go through. So this is a crisis that Trump can't get out of, I think, of his own making, even if he wants to. Unbelievable. I'm glad. That pretty much sums it up. Yeah, really, here we are stuck. I think, what was it, Susan, that you were saying the word begins with Q at one point, quagmire? So I hope we're not really. Eddie, thank you so much for joining us today. This is helpful, clear headed and a little bit worrisome.

34:16I'd say more than a little bit, Eddie. That was just incredibly well informed. You've done the reading, the writing and and very bracing about what's to come. So thanks for coming on today.

34:26Edward Fishman:It was my pleasure. Thanks for letting me spend some time with you guys. We're going to take a quick break. This is the political scene from The New Yorker.

34:50That was really interesting and very, very bracing. Well, I think people are still in shock that one person kind of unleashed so much of this. I mean, you know, for me, and I'm curious for you guys, like everywhere I go and, you know, I'm in Europe now, but it's true in the U.S. too. It's like people, they didn't take Trump so seriously until he really started blowing up their lives. And he's affecting not only how much it costs to fill their car, whether they can afford to travel somewhere in the summer. There's this new, I think it's a new scrutiny of is Trump absolutely crazy is actually a direct result of the war in Iran in a way that I didn't figure.

35:31And here's my one data point I wanted to bring to both of you guys today. In the Fox News poll, no less. So Fox News poll has found that I believe 55 % of Americans believe that Donald Trump does not have the mental stability to be president. I think that's a really interesting point that it's when the havoc that has been created by Trump internationally comes home and affects people at the gas pump, they begin to question, they suddenly look at him differently and think, you know, is this man nuts? And I don't think we people have quite connected the dots even consciously, but you're right, it makes a lot of sense that that's what's going on, isn't it?

36:17I also think, and this came through to me when I was in Germany a few days ago, that this question of how does the rest of the world respond when the United States takes steps of this kind, when we unleash economic warfare in the forms that we have. I think one of the crucial failures of anticipation was realizing that the rest of the world is not just sitting on its hands, that in fact, it's been laying in preparations that other countries, as Eddie described, like in China's case, they started a decade ago saying, OK, if we do find ourselves so reliant on foreign oil reserves, what are we going to do?

36:55So they began to make plans to reduce their dependence on global energy supplies and on being more self-reliant with new energy. And one of the things I heard over and over the last few days, and Susan, I'll be curious if you get the same impression, is I asked people, you know, do you think the United States is fundamentally on a trajectory to move away from the NATO countries? Or do you perceive this as a Trump phenomenon? And they said, you You know, honestly, we're moving on, meaning we're beginning to imagine a world in which we simply they're not they do it more in grief than in anger where they're saying, look, we're not.

37:31Honestly, this conversation is exactly the one I had last night with some allied countries, representatives in the U.S. who said basically this is this is a rupture. They said it is a rupture. we expect it's entirely likely the U.S. will pull out of NATO. It's entirely likely the U.S. will pull out of the U.N. And we're going to make our own arrangements. I mean, that is happening in terms of the way the rest of the world is looking at us now. You know, it's interesting. The phrase here is strategic autonomy. But I think I have a little bit more of a kind of jaded take on this because Europe hasn't wanted to spend the money, hasn't wanted to do what's necessary and doesn't necessarily have the cohesion to do so.

38:19And so that's the bind for them. You know, Donald Trump is really one of his geniuses, right, as he identifies sort of the sore spots to pick at, whether it's in domestic politics or international. With European allies, he jumped onto something that actually had started during the Obama administration, which is a recognition that our allies really weren't fully paying the burden of security costs in Europe. And Donald Trump, of course, took it, magnified it and turned it into an outright rift with our partners. But it's really interesting to me. So yes, absolutely, there is a sense that it's not just America because America voted twice for Donald Trump.

38:55Maybe one time you could consider it to be an outlier. Twice, it's hard to do that. But the trick is that for Europeans, there's not a consensus. Last night, I was at a dinner here at a conference, international conference, and this dread phrase, strategic autonomy came up. And it literally took about two minutes to get from, yeah, you know, the Americans are so unreliable to the representative from Southern Europe, from Greece, getting in an argument with the representative from Northern Europe, the Baltics in this case, about who should pay the cost of security against Russia. And the bottom line is Greece and Italy and Spain are not on board with paying the cost of securing Europe from Russia.

39:41I will say, though, that Susan, you know, no consensus in Europe may be the oldest headline in the history, you know, since Gutenberg. The idea that there will not be consensus in Europe is exactly the phenomenon you're describing. And it is, in fact, something to be deeply concerned about in this. What it really speaks to is this idea of a global fragmentation that is going on. That is really the bigger picture of what the crisis in the Strait of Hormuz represents, is that if you tie all the pieces together, what you're talking about is you've got individual countries that are beginning to make preparations for a world in which, as Xi Jinping put it the other day, we're living in the law of the jungle, in which everybody has to look out for themselves.

40:22So you've got their own interests competing. The United States, for reasons that I thought Eddie laid out beautifully, has neither the attention span in this administration or the expertise. I mean, they're running essentially with a skeleton staff over at the National Security Council, where they're kind of coming up with projections about what might happen in the event of a U.S.-Israel attack on Iran, and their projections are turning out to be totally inadequate. So that is a recipe for more than just, you know, spirited debate around the possibility for cohesive action. It is really a world in which it becomes every country for itself.

40:59That to me is the very worrisome trajectory. That's very much the world that Stephen Miller said that he thought we should be living in, though. Remember, this is very much their view of power. Though I would argue in some ways I think that the lesson has been that that view of power and Donald Trump's view of power has proven false in that what he's really discovered is that it is an interconnected world. And you can't go at just America alone. and he has an exaggerated sense of his own power and he's seeing it. Totally true. And one of the wonderful things about this piece that Eddie Fisher's written is about the steps that the other parts of the world take in what he calls de-risking.

41:40You know, Trump thinks the whole world needs us because we're the biggest market, but the rest of the world's kind of said, well, we'll make some other plans then. And they're actually not suffering so much. And Americans are beginning to suffer at home. And that is what we're beginning to see as we move into the midterm election. The price of gas is up. Inflation is taking off at home. And you're seeing this war become an issue in places like the main Senate race where Graham Plattner is bringing it up. You're seeing in Virginia a strong turnout of Democrats to redistrict in the state so that they win in the midterms.

42:19I mean, there are a lot of unintended consequences that Donald Trump and his administration seem to have completely missed. I absolutely agree. Look, I'll just jump in to say, in a sense, we are living through right now the early phase of what may turn out to be the dominant political story of this year, which is that the range of things that Trump has embarked on, which are wildly divorced from what public attitudes and public preferences would suggest, what Americans actually want, turns out to bear very distinct political consequences. Are you seeing, Susan, the sign that that this may end up being the albatross around his neck?

43:03Well, you know, beware. I'm here in Delphi. So beware pronouncements, cryptic or otherwise. about the future of Donald Trump. You know, people have been waiting for the thing that would end his political appeal. And it hasn't happened. If the man can survive January 6th, I'm wary of any predictions. But for me, I do see something different happening to Donald Trump's approval ratings and disapproval ratings now than ever happened in his first term. In his first term, there was a dynamic where Americans basically believed that the economy was going pretty well. And that was always his sort of, you know, get out of trouble free card.

43:42And there was a sense that Trump was a very polarizing and divisive figure. Approval ratings consistently showed people really didn't like him. However, even a substantial subset of the American population who didn't like him were still potentially supportive of him because they thought the economy was going well. Well, that's all gone. That's all gone. This is why independents have changed course so dramatically about Trump in the course to the last year with the speed that we actually haven't seen in the last few presidencies. And it's very hard to see those people coming back from. We're now in a situation that you might call sort of the very bottom of the Trump opinion approval window, right?

44:25You have about a third of the country only supporting Trump, supporting some of his most controversial policies, and two thirds of the public now registering their disapproval in various ways of Donald Trump. This is basically the lowest that he's been in either of his two terms. It's the lowest consistently for any president since modern polling began. And when you listen to a conversation like the one we had today with Eddie guys, I mean, I just don't see any way out of that for him. It's not necessarily going to get better, certainly not before the midterm elections as far as we can tell. Well, I think being in Greece is putting you in a prediction mood, Susan, and I think that's a pretty fair one.

45:08I'd say that sounds to me fairly plausible, exactly as you described. This is a hard hand that he's dealing with. This is such a great conversation. I'm so glad to get together with you guys again this week and with this fantastic guest. I mean, it raises a lot of questions in terms of the domestic fallout. But I keep wondering, are the Republicans in Congress going to recognize that this is going in the wrong direction for them? You know, I'm seeing Susan, for listeners, shaking her head. Anyway, listen, thank you so much, guys. It's been fantastic to be with you.

45:47This has been The Political Scene from The New Yorker. I'm Jane Mayer. We had research assistance today from Alex D 'Elia. Our producer is Nora Ritchie, mixing by Mike Kutchman. Stephen Valentino is our executive producer. Our theme music is by Alison Leighton Brown. We're going to be off next week, but we'll be back soon after that. So thanks so much for listening.

46:22This show is supported by Odoo. When you buy business software from lots of vendors, the costs add up and it gets complicated and confusing. Odoo solves this. It's a single company that sells a suite of enterprise apps that handles everything from accounting to inventory to sales. Odoo is all connected on a single platform in a simple and affordable way. You can save money without missing out on the features you need. Check out Odoo at odoo.com. That's odoo.com. From PRX.