THESE ARE nauseating times to be a leader. Above, the sky is a mass of storm-clouds and swirling portents of change. Below, the earth itself feels treacherous. Small wonder that those who run the world, whether in politics or business, long to stand on more solid ground. That is why, when they gather, they talk of de-risking and hedging, and of ways to rely less on partners who have forfeited their trust.
When Trump aides are asked how foreign governments or investors are supposed to take long-term, multi-billion dollar decisions if the terms of a deal may later change, they serenely reply that “there is a value to uncertainty”. Yet President Donald Trump breaks new ground by treating inconstancy as his superpower. This is true in foreign policy, as he threatens to bomb countries before offering them friendship in the next breath. It is the case in trade policy, as he adjusts tariff rates and export controls on a whim. In their telling, unease usefully reminds foreigners that access to America’s market is a privilege, not a right. They note the advice of the president himself: if outsiders wish to avoid tariffs, all they need to do is to make things in America. If a multinational firm is now paralysed with doubt, not knowing how to balance laws in America, where it is listed, with those in China, where it sources important components, that is not an accident. In an echo of Mr Trump’s line—to avoid tariffs, make things in America—China has its own blackmail to propose. If companies wish to avoid the vaguely-written, politicised rules that govern export licences for rare earths and the like, they can make products in China and export them as finished batteries or electric cars. The offer is not subtle: China-based factories have no trouble sourcing rare earths; dependency is a small price to pay. If carrots do not work, China has sticks to use on foreigners trying to de-risk and diversify away from dependency on its supply chains. Specific rules aim to stop foreigners building up stockpiles of critical minerals, and even govern the export of machines to process and recycle them. Some Chinese controls are currently suspended as trade talks continue with America and Europe, yet hang like a sword over negotiators.
