Submitted by Saxo Bank's Martin O'Rourke via TradingFloor.com,
- UK prime minister Theresa May flies to US for meeting with Donald Trump Friday
- May hoping she can use the talks as leverage in UK's Brexit negotiations
- Trump likes to cut his deals on one-to-one basis making UK an ideal first meeting
- Already shown he is gunning for EU 'head' Angela Merkel in incendiary interview
- Brexit-bound UK a useful tool in battle against supranational organisations like EU
- Desperate May unlikely to get a deal anywhere close to her hoped-for terms
- Trump could look to send clear message to Merkel and, down the line, China
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It's hard to escape the feeling that Theresa May would much rather be dealing with the likes of former secretary of state John Kerry than president Donald Trump.
Three months ago, we published a piece on TradingFloor speculating on 10 potential scenarios that could arise from a Donald Trump presidential election victory including a final point that UK prime minister Theresa May and German chancellor Angela Merkel would keep their distance if Trump emerged victorious.
The point was flippant, of course. This is, after all, the president of the US we are talking about here and May, true to form, flies into Washington for high-level talks this Friday which will no doubt solidify the 'special relationship' that exists between the US and the UK.
Or not, as the case most probably will be. The UK is in a better position than many of its neighbours on the continent to come to some sort of accord with Trump given its decision to exit the European Union last June, but to extrapolate that London is in pole position for an advantageous trade deal is an enormous leap in logic.
Nature of the beast
Such a premise fundamentally misunderstands the nature of the beast May confronts on Friday.
The president has been unambiguously clear as to how he goes about business. He prefers to deal on a one-to-one basis so that he can back the other party into a corner and get exactly the type of deal he wants. As part of that process, he will drive home any advantage probably also ruthlessly exploiting the breaking news this weekend of a nuclear test that went horribly wrong for the UK last summer and unintentionally sent an unarmed Trident missile towards the US mainland.
The bully-boy tactics of the schoolyard chime precisely with his 'America First' inauguration speech and Britain's isolation from its European partners as a consequence of the June 23 decision to go-it-alone, makes it an absolutely ideal target for Trump to flex muscles in the first week of his presidency. For Trump, it will be less a case of looking for chinks in the armour and more a search for armour among the chinks given the UK's relatively fragile guard.
Of course, the usual banalities regarding the 'special relationship' and the prospects for a trade deal (a pointless soundbite that London can't even begin to act on until the negotiations on an exit are completed by mid-2019 at the earliest) will almost certainly ensue.
Trump will probably point to his Scottish ancestry as a symbol of the bond between Washington and London (much to the chagrin of the Scottish nationalists), May will push out a message about the frank and useful discussions between the two and the illusion of a mutually beneficial meeting will be cocooned to be forever trotted out whenever required.
A Trump ancestry website will surely get the Glenfinnan Railway Viaduct on board.
The reality is likely to be something different. May will get concessions from Trump who is neither anti-trade nor even particularly anti-globalisation, but any concessions she wins will be totally in the context of Trump's coming battle with the European Union.
Absolute solutions
A clear and consistent cornerstone of Trump's foreign policy throughout the campaign, and it seems since his victory, is an absolute antipathy towards supranationalism. Trump believes in the nation state absolutely. Already he's taken the US out of the Trans-Pacific Partnership potentially handing Asia to China on a plate, railed against "obsolete" Nato and, once he got it clear in his head on what the implications of Brexit actually were, became a cheerleader for the cause forming an unlikely bond with UKIP leader Nigel Farage in the process.
Trump prefers the one-on-one negotiation. He stated that absolutely in his book, The Art of the deal, and he would much prefer to see disunion in Europe so that he can take on the continent not as a single entity, but in its individual components where he can extricate the kind of deal he wants to America's absolute advantage.
Absolute, you've probably guessed, is the operative word here. Normally, and this is where he is likely to prove incredibly damaging to globalisation, such a negotiation will be premised on zero-sum strategies. An 'I win, you lose' strategy in effect.
In that context, Trump's real target in Europe looks to be Angela Merkel, the German chancellor. Merkel, whether she likes to be perceived this way or not, is unambiguously the leader of the EU and that's certainly how he sees her. In interview with The Times and Bild last week, he made his position abundantly clear.
"I've had great respect for her, I felt she was a great, great leader," the president said, using the past tense. He then went on to attack her by proxy slating BMW for building a plant in Mexico and then lambasting Merkel for a "catastrophic mistake" in opening Germany's borders to 1.5 million immigrants.
Intriguingly, he has no intention as of yet of meeting Merkel before the G7 summit in May.
A wholesome, traditional view of Germany probably appeals more to Trump than the multi-cultural, modern state it has become.
The pivot to Moscow might also be seen in this context. Trump swerved questions at his January 11 press conference on Russian interference in the election process and has mooted the possibility of a trade deal with Russia on several occasions, which would fatally undermine EU sanctions on the back of the invasion of the Ukraine.
Neither May nor Merkel are fools and behind the scenes, the two will probably have put out feelers to each other on dealing with Trump. May stated this weekend she will pursue a free-trade agenda with the president and steer him away from protectionism and the longer-term threat of currency wars, hoping to exploit some of the fissures that already seem to be apparent within Trump's team.
Where they differ and where May might seek to leverage any common ground with Trump will play out through the Brexit negotiations. But the reality is that the two European leaders will probably have more uniting than dividing them, given what Europe can expect from Trump.
Merkel will listen intently to what May has to say on her return and, despite their obvious differences, are likely to find their Trump position aligned. But, in the manner of a warm-up bout, the May/Trump summit is the appetiser for the more serious battle ahead between Merkel and Trump.
Merkel knows it, May probably knows it and Trump is already sketching it out in his mind.
Meanwhile, the confrontation with China — played out in part last week over a globalisation spat between China's president Xi Jinping and the new secretary of trade Wilbur Ross — remains the big one. When that comes, it will be seismic.
A president with whom Angela Merkel probably felt more comfortable.
The post May Is Just A Pawn – Trump’s Real Target Is Merkel appeared first on crude-oil.top.