In this edition, we feature key insights from PWP CEO Robert Steel. Earlier this summer, he delivered a keynote address to the Northern Light Conference in Helsinki, Finland regarding the Trump presidency, the rise of populist protectionism in Europe and the U.S., and the future of globalization.
/ Trump policies driven by mindset, not ideology
In place of a traditional ideology – like Reagan’s free market conservatism or Obama’s modern progressivism – Trump’s guiding principle is that over the last several years, many Americans have gotten a raw deal, and globalization and its supporting elites are to blame. He is less intent on trying to advance a set of ideas than on achieving his goal: for America to win.
This mindset illuminates his policy stances. It explains his withdrawal from the Paris Agreement – under the rationale that he “represents Pittsburgh, not Paris.” His rebuke of NATO allies for not shouldering their share of the defense burden – which he characterizes as “not fair to the people and taxpayers of the United States.”* His attacks on globalization – which he describes as a conspiracy by “the financial elite who donate to politicians … but has left millions of [American] workers with nothing but poverty and heartache.”* Through this lens, the rhetoric and policies become understandable.
/ Globalization’s gravitational pull is too powerful to overcome
While it is easy to miss amidst the hail of tweets and undiplomatic bombast, Trump has begun to walk back some of his early positions. Trump criticized NATO as a candidate, but belatedly embraced it as president, including Article 5. His call for non-intervention in Syria was overcome by the use of chemical weapons against civilians. He once termed China a currency manipulator but now wants to work with China on North Korea. These policy pivots are the realization and grasping of a new presidential reality. They signal that the gravitational pull of globalization is more powerful than any administration’s ability to limit it. Trump may object or resist, but the pull of globalization will continue.
Even modern day globalization began more than 150 years ago with the marriage of technology and economics that allowed for the laying of the first transatlantic cable and first promised the “annihilation of distance” – the assurance that easy communication and easier trade would bring nations and peoples closer together. That path has often been difficult, but it shows a trend that makes it impossible for the Trump administration to disengage from the world or derail globalization.
/ Globalization is not a choice – it’s a fact
As we have seen in the election of Trump and the rise of populist parties in Europe, there is a huge public misunderstanding around the subject of globalization. Too many people speak as though globalization were a choice. But in reality, it’s a fact. And it’s not going away. In all industries, business is truly a global game and economic policy inevitably will bow to this reality, even in a Trump Administration.
In fact, it already has. Today, nearly 14 million American jobs depend on NAFTA, including about 5 million from trade with Mexico* and 8.8 million from trade with Canada*. These facts clearly weighed on the Trump administration. After threatening to withdraw from NAFTA, President Trump changed his mind after Agriculture Secretary Sonny Perdue showed him a map highlighting areas in America that benefit from NAFTA’s agricultural trade. Many of those areas voted for Trump.*
These facts of globalization will not change. The pace may speed up or slow down, but the direction is set and the debate is over. Globalization is the winner and no single administration or country can stop it.
Legal Disclosures: This commentary has been provided to you by Perella Weinberg Partners and its affiliates solely for informational purposes. Neither the information, nor any opinion contained in this commentary, constitutes an offer to buy or sell, or a solicitation of an offer to buy or sell, any securities, futures, options or other financial instruments or to participate in any trading strategy. Nothing contained in this commentary constitutes investment, legal or tax advice. Decisions based on information contained in this commentary are the sole responsibility of the reader.