Causes and Consequences of America That Go Amok: Asia Pacific Be Forewarned

Make America Great Again (MAGA) was once invoked by Ronald Reagan in 1980 during his presidential campaign. In it, there was a telltale sign of America weakening.¹

What the likes of Paul Kennedy, a historian, would call 'Imperial Overstretch,' a concept made popular in the seminal book "The Rise and Fall of the Great Powers: From 1500 to 2000."²

Embedded in Reagan's concept was the need to yank the US out of its economic stagnation, where inflation was breaching almost 20 percent.

Paul Volcker would be brought into the Feds to raise the interest rates almost in equal numerical threshold to bring inflation down to the low decimals of 3 to 4 percent.³

Not surprisingly, President Donald Trump is an unavowed fan of Ronald Reagan as is JD Vance, his Vice President. But instead of raising rates, Trump has taken to the belief that he should raise the tariffs on all those countries that have a trade deficit with the US.

To be sure, this form of statecraft is not entirely novel. Not because Trump has done it before in 2017-2021, where the tariffs imposed by him in 2018, were not repealed by the Biden Administration, but rather it has its roots in mercantilism.⁴

Take the trade practice of the British East India Company with Manchu China at the beginning of the 19th century, for instance. When the United Kingdom (UK) found itself buying more tea from China than the British India Company had anything in its offer to sell to the Manchu, it fell back on the right to sell opium – which it has harnessed from other places, including Afghanistan – to the Chinese.⁵

When the latter refused, the full night of gunboat diplomacy was brought onto Manchu, otherwise, known as the Qing Dynasty.

For the first time in the history of global trade, a proud civilization was compelled by an island peninsular in Europe, to comply with the terms of a thriving narcotics trade.

Trump is not threatening any wars of conquest. But in the guise of protecting American consumers and workers, which form the bulk of his MAGA electoral base, which is close to 80 million voters strong, one-third of the population of the US, Trump has seen it fit to tariff all allies and friends.

Naturally, tariffs would be applied to those who have known America since 1919 or 1945. Why? Only friends and allies are the ones to trade most intensely with the US. They cannot be Russia, North Korea, for that matter, Iran. These are countries on the sanctions and entity list of the US, to begin with.

Thus, when Trump seems to emulate the greatness of Reagan, who managed to transform the fate of the US between 1981 and 1988 when the US emerged as the top dog in the international system to be the "Unipolar Power," there is a strain in American foreign policy that constantly wants to be the first among equals.⁶

Whether this is done fairly or unfairly is not the question.  The World Trade Organization (WTO), established in 1995, was a derivative of the General Agreement on Tariffs and Trade (GATT) in 1962 anyway. GATT, at one stage, was even lampooned as the "General Agreement to Talk and Talk."⁷

But before the formation of WTO, the likes of the US forced Japan, to agree to the terms of the Plaza Accord in 1985.⁸  Notwithstanding the powerful relationship between Reagan and Japanese Prime Minister Nakasone Yasuhiro, popularized as the "Ron-Yasu" relationship,⁹ the Plaza Accord still had America and G7 insisting that the Japanese Yen should be allowed to appreciate to reduce the structural deficit of US-Japan trade, where Japan constantly enjoyed a surplus of USD 50 Billion without fail since 1970.

The acquiescence of Japan to the Plaza Accord, in turn, saw most of the Japanese small and medium enterprises relocating to Southeast Asia to enjoy the lower labour cost. Leading to the chimera of Southeast Asia enjoying an economic buoyancy from their Look East Policy, whether in written or non-written form.¹⁰

But what was the outcome of Japan? The Nikkei Index which had risen to more than 35,000 points burst in 1989¹¹, leading to a tremendous amount of debt overhang in the Japanese "Zaibatsu," (Conglomerates) that Richard Koo referred to as the "Balance Sheet Recession."¹²

The condition of the Japanese economy was so sensitive that as and when the late Japanese Prime Minister Hashimoto Ryutaro, upon seeing some bamboo shoots of growth in 1997, proceeded to impose a consumer tax on April 1st of that fiscal year, the anaemic economic growth of Japan, would once again falter even more completely.¹³

Japanese banks ended up with zero to negative interest rates to encourage entrepreneurs and consumers to borrow from them. Yet almost no Japanese were sufficiently confident to borrow from the banks in large amounts any more compelling Japanese conglomerates to privilege the importance of venturing abroad, especially China.

Be that as it may, this very form of investment over the last four decades has also allowed China to race ahead of Japan in terms of the size of its Gross Domestic Product (GDP) and Power Purchasing Parity (PPP).

However, China has not only eclipsed Japan, but it has also powered ahead of the US in many fields, including biotechnology, medical breakthroughs, and technological prowess in Rare Earth Elements (REE) Separation technology.

The US is intimidated by a China that can clip the wings of the proverbial Bald Eagle. In comes Trump, a convinced felon, who has acted as the don and head of the G7 mafia.

Indeed, one who sees its fellow friends and allies in the European Union (EU) and North Atlantic Treaty Organization (NATO) giving the US the shtick. Never mind the countless number of low and high-intensity conflicts that the US was directly enjoining the G7, often the world, to approve of its military actions.

As and when the world witnessed the US has gone amok, slapping tariffs on friends and allies, not excluding China, potentially even Taiwan, literally the whole world that has sold their finished goods and semi-conductors to the US, invariably to benefit from the strong value of the US dollar, an international Fiat currency that Trump has forbidden anyone to replace, the foreign and economic policy of the US will have the character of a sheer banditry.

When Saudi Arabia, which has one of the longest security treaties with the US, affirmed that Crown Prince Muhammad Bin Salman was willing to invest up to USD 600 billion in the US, Trump insisted that in his second tenure, the figure that he would be fishing for is none other than USD 1 Trillion.¹⁴

If one begins to see the unreliable US at work, both in its hemisphere as well as Western Europe, the lurking shadow that the US will call upon Australia, South Korea, Japan, and the Philippines, in turn, Thailand, to spend even more on defence purchases and acquisitions from the US is but a certainty.