Flying Down to Rio?

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While I am no President Trump fan — indeed, I regard The Boss as a deeply flawed president — intellectual honesty dictates that I should give him credit when credit is due. And I think that a recent meeting he had yielded some results that are worth reflecting upon. I refer to Trump's meeting on March 19 with Brazil's newly elected President Jair Bolsonaro. The two populist presidents appeared to get along well, as is perhaps to be expected from birds of a feather.

What was quite interesting was that The Boss announced he will designate Brazil a "major non-NATO ally" — interesting because the heralding of closer military ties, which is probably insignificant in itself, could lead to increased trade. Brazil is Latin America's geographically largest country, and its most populous (at well over 200 million people). Moreover, despite some poor performance during recent years, it is Latin America's largest economy, and the world's eighth largest, with a GDP of over $3.5 trillion.

Trump and Bolsonaro appeared to get along well, as is perhaps to be expected from birds of a feather.

The Boss even suggested that he would favor giving Brazil full NATO membership — totally bizarre, given his past skeptical remarks about the value of NATO and his seeming indifference to its cohesion and continued existence. In any event, NATO membership seems an unrealistic suggestion.

First, all the other 29 members of the alliance would have to agree, and clearly some of the current members — Germany and Turkey, to name but two — are run by leaders who hold Trump in deep disdain.

Second, Brazil currently spends only about 1.3% of its GDP on defense, and the requirement for a country being in NATO — albeit so far lightly enforced — is to commit to 2% of GDP to defense.

Trump has been good at raising tariffs and slowing free trade. The markets have not liked this.

Third, while Brazil's own erratic President Bolsonaro has expressed admiration for The Boss — no doubt a factor in the sudden warming of relations between the two countries — he has the Brazilian population to contend with. He is the first rightwing president the nation has elected in the 30 years since the military surrendered power. Since the US backed the military regime, many Brazilians are of course wary of American motives.

Still, this meeting and its results are a good first step toward a closer relationship with what is already an important international player with the potential to become a major power. The joke has been that Brazil has been and always will be a potential major power, but never an actual one. But perhaps the nation will finally eschew the sweet promises of socialism, settle into a centrist government with liberal economics, and thereby realize its true potential.

The real opportunity here, I would urge, lies not in the military but in the economic realm. We used to be Brazil's major trading partner. But China took that position a few decades ago, and still holds it. This is unsurprising, because China negotiated a free trade agreement with Brazil — something neither George Bush (who was quite good on free trade) nor Barack Obama (who opposed free trade until toward the end of his second term) even tried to do. This suggests an opening for The Boss, who half the time claims to favor free trade — although in the other half he bashes it, in gales of creative protectionism. He could at least open exploratory talks on the issue. Actually, there is probably a quick way to land a deal: ask for the same deal China got!

Perhaps Trump's ultimate desire to get a second term may lead him to not just talk about free trade, but to do something to actually advance it.

Brazil and America are a good fit for trading partners: we produce a lot of high-tech goods that Brazil needs, such as high-tech tractors and farm machinery. The Boss has been good at raising tariffs and slowing free trade. The markets have not liked this, and if the promised trade agreement with China falls through, the market will likely drop dramatically. And China, in retaliation to his tariffs, has switched buying soybeans and other agricultural goods from us to Brazil. This has made Brazil the world's largest exporter of soybeans, now eclipsing the US. The result — depressed prices for soybeans and other products, resulting in steep declines in many farm incomes — may well cost Trump crucial votes for his reelection. This — if it were combined with a stock market dramatically below what it is now — would likely cost him reelection.

So perhaps Trump's ultimate desire to get a second term may lead him to not just talk about free trade, but to do something to actually advance it. Who knows? Stranger things have happened, and The Boss is after all surpassing strange.




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