PETER BRUCE: World on tenterhooks as Trump has one last shot at power

Most of the world is leaning forward, slack-jawed, as US President Donald Trump begins his second term in the White House.

The mixture of showmanship and rage he has been threatening for months is finally being served, and it isn’t pretty, perhaps particularly if you have until now counted yourself a US ally.

He doesn’t care what you think, and he is often so ignorant of the world that he doesn’t always know what he is saying. That also doesn’t matter.

Two days before his inauguration Trump and his wife, Melania, launched meme coins, a form of crypto currency, which in his case almost immediately — in theory — doubled his wealth. It means that for the first time it is now in effect possible for anyone to deposit cash directly into the bank account of a sitting president.

There’s little point detailing the executive orders he signed immediately (and in front of a cheering crowd) after being sworn in. He swiped at political enemies, took away people’s birthrights, threw out decades of science on climate change, and set about a fundamental reordering of the politics of the richest and most militarily powerful democracy on earth.

He’s a man in a hurry, and little wonder. In just under two years the US holds midterm elections for both the Senate and the House of Representatives, where his Republican Party holds working, but slim, majorities. Even tiny shifts could see him lose in one or both houses, either of which would be a setback.

But once that election is held he also becomes a lame duck. He won’t get another term, and unless he has been able to make a really big impact on the quality of the lives of the working people who voted for him, they’ll be open to other offers. That’s where Trump and his followers are vulnerable. This is a one-term presidency, and even though he may now be better prepared, the world has fundamentally changed from when he first won in 2016.

America’s allies have different leaders now, some of whom, such as Emmanuel Macron in France, are virtually powerless. The US economy is far more dynamic than it was back then, despite the rise of China. India is now a significant power. The Brics grouping is growing, even though it is still hard to define what its role might become. The Middle East is on fire and Russia has invaded Ukraine, bringing war to Europe’s doorstep.

The world is a rougher place, but faced with these changes Trump’s team this time around is less worldly and experienced than it was at the start of his first term. The risk is that they will make more mistakes. And Trump, for all his bluster, cannot simply have whatever he wants. People and countries and blocs will push back.

His foreign policy positions are bewildering and entirely contradictory. He can’t be isolationist and at the same time demand the world’s fealty to the dollar. He can’t take away the citizenship birthright of people born in the US by decree, as he tried to do on Monday. He will have to fight long and hard, in the courts and in Congress, and it won’t be done by the time the midterms come around.

He cannot escape the entirely predictable consequence of deporting migrants and raising tariff barriers, both of which will quickly translate into higher inflation, higher interest rates and a lower standard of living — the very hill on which he won re-election last November.

Yes, Trump may threaten the Federal Reserve if it raises interest rates, but the moment he does, and interferes, he risks fatally wounding the giant US capital markets and the dollar, and that will be the end of him and the entire Make America Great Again scam.

And it is a scam. Trump is going to use his new muscle to secure wealth for himself and his family, just as he has always done. The trouble is the people around him think they’re involved in the serious business of forging a brave new American epoch. His cabinet appointees are going to take their jobs seriously, which is not necessarily good news for SA.

Marco Rubio, the new secretary of state (their foreign minister) is a hard-driving, rational man with a point of view. He is strongly pro-Israel and already a critic of SA. He resents our government’s accusations of genocide against the Jewish state and, as a China hawk, strongly criticised SA last year for demanding that Taiwan move its representative office out of Pretoria at Beijing’s request. “SA should not fall victim to communist China’s diplomatic bullying tactics,” he declared at the time.

But our weak point with Trump isn’t the African Growth & Opportunity Act (Agoa), the US trade programme under which favoured African countries get some exports into the US duty-free. The usual rather wild estimates of the dangers of losing Agoa privileges aside, the actual saving amounts to about R2bn a year, which is not much. In fact, if the rand were to depreciate as a result of Agoa benefits being withdrawn the move could end up making no difference at all in rand terms.

Our big problem with Trump or his team is whether we lied to Washington about the true purpose of the docking of the Russian freighter Lady R at the Simon’s Town naval base in December 2022. The recently departed US ambassador to SA, Reuben Brigety, announced in public back then that “we are confident that weapons were uploaded onto that vessel and I would bet my life on that assertion”.

In the uproar that followed Brigety was forced to apologise and retract the accusation that SA had supplied weapons to the Russians. But he was never reprimanded by his own government and remained in his post. Why was that? Did the Americans see something former president Joe Biden, whose chief of staff is married to the daughter of a powerful SA family, chose to turn a blind eye to? A judicial inquiry ordered by President Cyril Ramaphosa found in our favour, but then it would, wouldn't it? And it was never made public.

Heaven help us though if someone trawls through the SA files in Washington now and turns up the evidence a full US ambassador was willing to bet his life on.

• Bruce is a former editor of Business Day and the Financial Mail.