Nobody likes them but everybody reads them. That is the crux of these “100 days in office” report cards. Donald Trump clearly feels the same way. To keep public expectation as low as possible, he tweeted that the milestone was a “ridiculous standard.” But at the same time, the political narcissist did all he could to paint his first 100 days in the White House in the best possible light. That his long-awaited tax reform – a solitary A4 page of bullet points in the end – was pulled out of the hat just before the anniversary was certainly no coincidence. In many ways, it symbolized the starting phase of the Trump era: big promises, light on detail and risky. After 100 days, Donald Trump is still unpredictable.
This is particularly true of his trade policy. Mr. Trump ran for president with the threat of making life difficult for countries with large trade surpluses, like China and Germany. Aside from punitive tariffs on steel imports, however, the sanctions haven’t materialized. China has not been branded a currency manipulator, he developed an “unbelievable chemistry” with German Chancellor Merkel, and even the North American Free Trade Agreement (NAFTA) with Mexico and Canada, once lambasted by Mr. Trump as being “the worst deal maybe ever” is now to be improved rather than cancelled. The only thing that fell by the wayside was the Trans Pacific Partnership with eleven, primarily Asian, countries.
But it would be premature to file away Mr. Trump’s economic nationalism as empty threats. If there is one constant in Donald Trump’s life, it is his protectionist knee-jerk reaction to, in his view, “unfair trade.” The slogan “America First” was just as much for his supporters as it was for him. So Ms. Merkel and Chinese President Xi Jinping need to stay on their guard. Danger is lurking for the German economy: Mr. Trump’s tax plans won’t only exacerbate global tax competition; they also risk sending shockwaves through the entire financial system. That is because the US president is prepared to accept high budget deficits that could send tremors through the interest rate and currency markets.