Signal: Trade War, A Korean Surprise, and the Coup against Trump

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GOING TO WAR WITHOUT ALLIES

“Trade wars are good and easy to win,” said Donald Trump following his announcement that the US will impose tariffs on steel (25%) and aluminum (10%).

He has heard the concerns of Speaker Paul Ryan, Defense Secretary James Mattis, heads of US companies that need affordable steel and aluminum, and many others, but Trump’s decision will stand, at least for now. The resignation of Gary Cohn as head of the administration’s National Economic Council, effective in a few weeks, will remove an important White House voice for moderation on future trade actions.

These tariffs are not about China. Canada, the EU, South Korea, Mexico, Brazil, Japan, and even Taiwan (!) send more steel to the US than China does, and Trump knows that. For now, Canada and Mexico will be exempt pending completion of the renegotiation of NAFTA, the North American Free Trade Agreement.

President Trump says the tariffs will protect US national security. “We have serious doubt about that justification,” responded the EU trade commissioner. “We cannot see how the European Union, friends, and allies in NATO, can be a threat to national security in the US.” POLITICO Europe says it has “obtained a four-page list of American imports that the EU has targeted for duties of 25 percent to retaliate against Trump’s tariffs.”

Canada has already brought a WTO case against the US on other issues. South Korea has taken the US before the WTO in response to US trade laws in place before Trump was elected, but it will use his “America First” rhetoric to bolster its case. The EU, China, South Korea, Japan and Taiwan have all demanded compensation in response to the recent US decision to impose “safeguard” duties on solar panels and washing machines.

Trade wars are good and easy to win? Here’s a better rule of thumb: Don’t go to war, any war, against everyone at once.

P.S. Yesterday, 11 countries — including Japan, Canada and Australia — signed a revised version of the Trans-Pacific Partnership, an enormous trade deal that the Trump Administration has rejected.

PUMP THE BRAKES ON TRUMP MEETS KIM

We’ve all seen the breaking news. South Korea says Kim Jong-un wants to talk about denuclearization, and Trump has reportedly agreed to a meeting “by May.” This might be one of the weirdest chats in human history, if it happens, but we don’t believe anything substantive would come from it. Kim hasn’t come all this way with the nuclear program to simply give it up. He’s stalling or trying to win concessions. As Alex and I have said many times, the weapons are Kim’s guarantee that he doesn’t go the way of Saddam Hussein. We’d love to be wrong, and we’ll certainly keep watching.

COBALT CRIMES

If you’re reading Signal today on your phone, you may be financing child labor in one of the poorest countries in Africa without knowing it. A report this week from CBS News revealed that thousands of children are being used to mine cobalt in the Democratic Republic of Congo.

Our Kevin Allison explains that cobalt is an essential component in the lithium-ion batteries that power many of our gadgets, and child labor reportedly persists in the DRC despite a multi-year push by big tech companies, under pressure from activist groups, to clean up their supply chains.

The DRC, site of a war (1997–2003) that killed more than 5 million people, is home to two-thirds of the world’s cobalt. Mining it is toxic work, and the country’s weak central government can’t police working conditions in the informal mines that dot the country’s mineral belt, leaving industry effectively in charge.

Even if it were possible to track every ounce of cobalt that ends up in your Chinese-made iPhone battery and hold mining companies to account, cutting off unscrupulous suppliers could leave both kids and adults in the DRC economically worse off. In many villages, mining is the only way to put food on the table.

President Joseph Kabila, who has defiantly remained in power 15 months beyond the end of his elected term and whose government exerts little control over large swaths of DRC territory, says he’ll sign a new mining code into law that the country’s mining companies aggressively oppose. Will mining companies police themselves? We’re skeptical. Elections are due in December. We’re skeptical about that too.

The political point: Since 9/11, US policymakers have warned of lawless countries where terrorist groups can live, train, and organize far from watchful eyes. But in a political vacuum like the DRC — a country with dazzling natural wealth and terrible violence over many centuries as outsiders and insiders compete to loot the country’s mineral and metal resources — there are other forms of evil that deserve our attention.

And as our Alex Kliment points out, now you know about it because you read it on your phone.

PUPPET REGIME: NEGOTIATING WITH KIM

A Trump-Kim summit! Puppet Regime chats with Mr. Kim about his opening negotiating position… This might not end well.

COLOMBIA LOOKS LEFT?

The dominant trend driving politics in much of the world these days is public disgust with the political establishment. Colombia has a presidential election on May 27, and controversial former Bogota mayor Gustavo Petro, also a former member of the now-defunct M-19 rebel movement, has made his entire political career about challenging Colombia’s political and military elite. Petro has led in some recent polls. As in Brazil, Mexico, and elsewhere, demand for political change is running high, and that will help him.

But Petro faces an uphill fight. Better known than other anti-establishment candidates in the race — he graces the cover of the latest Colombian edition of Rolling Stone magazine — he also has much higher negative ratings.

Primary elections will be held this Sunday. He should have little trouble fending off former Santa Marta mayor Carlos Caicedo, but if he survives through to a runoff in June, an otherwise fractious establishment fears him enough to unify behind his opponent from the right. And unlike Mexico, where there’s no runoff to unite opposition to candidate Andres Manuel Lopez Obrador, Petro will have to win a majority of votes to become a president.

WHAT WE’RE WATCHING

The coup against Trump — Following an order from a Panamanian court, a 12-day standoff was resolved peacefully in Panama City as representatives of Donald Trump’s family hotel business evacuated their offices in a luxury hotel that, until this week, bore Mr. Trump’s name. Last month, Orestes Fintiklis, a representative of the hotel’s owners, arrived at the site to inform Trump’s management team that they were fired. Trump security guards ejected Mr. Fintiklis from the building. Local police were then called in to break up fights between rival teams of security guards over control of the hotel’s administrative offices and security system. The Trump team has vowed to continue the fight in court, but for now Fintiklis has physical control of the premises, and Trump’s name has been removed from the hotel’s facade with a crowbar. We’re watching this story mainly because I love the name Orestes Fintiklis.

Pop stars for Putin — Russian pop stars just can’t get enough Putin, and they want you to vote for him. See for yourself. BTW, you won’t find the punk band Pussy Riot in that video. They prefer Daniel Biss, a candidate for governor of Illinois.

European clocks — To our European friends, you’re not imagining things: Some of your clocks really are running slow, up to six minutes since mid-January, according to Entsoe, an organization that represents electricity transmission operators across 25 European countries. These nations are collectively plugged into an electricity grid that operates at a synchronized frequency that regulates time-keeping in many devices, though not in smart phones. For several weeks, tiny Kosovo failed to generate enough electricity to meet its own needs. Entsoe says Serbia is legally obligated to meet Kosovo’s electricity demand in order to keep the European grid stable, but it has lately failed to keep its end of the bargain, thanks to a series of political disputes with Kosovo since Kosovar secession a decade ago. Serbia’s refusal to generate more electricity “forced the frequency to deviate,” according to press reports, messing up clocks and giving people across Europe a new excuse to be late to work.

WHAT WE’RE IGNORING

Boris Warns the Russians — UK Foreign Secretary Boris Johnson warned this week that Russia faces a “robust” British response if evidence emerges that Russians were involved in the collapse of Sergei Skripal and his daughter in Britain following exposure to a “very rare” nerve agent. Both remain critically ill after they were discovered unconscious on a bench outside a shopping center. Skripal is a former Russian military intelligence officer convicted in Russia of spying for Britain. He has lived in the UK since a prisoner swap between the two countries in 2010. Skripal’s family says his wife, brother, and son have died under suspicious circumstances in the past two years. Three police officers who investigated the scene have been treated for symptoms related to exposure to a dangerous chemical. Search the words “Alexander Litvinenko” and “diplomats expelled” to see why we’ll treat Johnson’s threat with skepticism, at least for now.

Lego Belt and Road? — China doesn’t need as many new roads, bridges, and housing towers as it used to. The country’s Belt and Road Initiative — a development strategy that creates infrastructure, transportation, and energy projects that link 70 countries across Asia, Africa, Europe, and Oceania — allows Chinese companies to avoid large-scale unemployment by producing steel and cement for construction in other countries. In an unrelated story, Danish toymaker Lego admitted this week it made way too many Lego bricks in 2017, forcing the company to sell at lower prices, cutting deeply into profits. Lego already sells about 75 billion bricks a year in more than 140 countries, so it’ll be hard for Lego to transfer its oversupply into new markets. In this case, the China model isn’t transferrable.

HARD NUMBERS

64: A new poll shows that 64 percent of American voters disagree with President Trump’s comment that a trade war would be good for the United States and easily won.

100 from 1: About 80% of the fake news found on Twitter comes from just 0.1% of accounts, and all fake news is shared by only about 1% of accounts, according to Harvard scholar David Lazer.

21: When Narendra Modi became India’s prime minister in 2014, his party, the BJP, governed just seven of India’s 29 states. Today, the party governs alone or in coalition in 21 states. Upcoming state elections later this year will prove an important test of the BJP’s lasting power as India’s most powerful political force.

53: Some 53% of Venezuelans between 15 and 29 would like to move abroad permanently, according to a new poll from Gallup. When President Maduro assumed office in 2013, just 12% of all Venezuelans said they wanted to leave the country.

3.5 trillion: Later this month, members of the African Union plan to sign a Continental Free Trade Agreement designed to integrate a continent with a population of 1.2 billion people and estimated GDP of $3.5 trillion.

WORDS OF WISDOM

“We are a great power, and no one likes competition… Those who serve us with poison will eventually swallow it and poison themselves.”

— Russian President Vladimir Putin sounds a tough tone ahead of elections later this month and delivers an ominous threat in a week that included news of the poisoning of a former Russian spy in the UK.

This edition of Signal was written by Willis Sparks, and prepared with editorial support from Kevin Allison (@KevinAllison), Leon Levy (@leonmlevy), and Gabe Lipton (@Gflipton). Spiritual counsel from Alex Kliment (@saosasha). Give a friend the Signal here.

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