Trump’s Transactional Foreign Policy

For most of the election , we've really been focused on the domestic and the issues of taxes and tariffs and how immigration is going to influence our economy , but we're starting to see a turnover , or an escalation , in the areas outside of the US .

So , clem , if I was to ask you what's the area that is going to , in your mind , create the most disruption or volatility for the US economy ? That it might be the Ukraine and Russia . But what do you feel about Ukraine and Russia and the other characters on the list of international areas of understanding and potentially misunderstanding ?

Part one is that the people uh , on the foreign policy side that he's surrounding himself with uh , are not necessarily uh as institutional oriented . Uh , as you know , some of the uh , some of the people he had under Trump 1.0 .

The reason for that , you know , is , I know from his perspective , that he thought that the people he had , you know , the generals and whatnot he had under 1.0 , uh , were , um , trying to undermine him and okay , fair enough .

Uh , but you know , you have to wonder about whether the people around him right now are just going to do what he thinks uh , or what he says , and not , you know , do some pushback , which I think we can all say .

That you know , having people who question you know who ultimately will do what you want , but who will question you and raise issues , I think is a good thing . Right . So I think you know , the institutional framework is an important thing .

The other aspect of the other framework through which I look at foreign policy is the one of Trump being more transactional rather than relationship oriented .

And you know , in that , in that perspective , you know he's not going to give as much emphasis to longstanding relationships like NATO as , as he does , sort of transactional you know , what have you done for me lately Kinds of questions .

That doesn't mean he totally supplants the relationships of the transactional , but it means that he leans in the direction of transactional .

So now , when you use those two frameworks and apply them to say the uh , the Russia , ukraine thing , uh , I think he looks at that issue , uh , the Russian invasion of Ukraine , the , the ongoing war uh between the two , uh , I think he looks at that as a uh , you know in , in terms of a transactional framework .

I think he looks at that as a , you know , in terms of a transactional framework . I think he doesn't really care one whit about whether Ukraine is going to end up being part of the NATO alliance eventually , you know , even a junior member , so to speak . I don't think he cares about that .

Uh , I think what he uh , I think what he's is , you know what he's looking for is he's looking for a sort of a near term result . Uh , that works uh somehow , uh to the benefit of the US , even if it means reducing the amount of weaponry that goes to Ukraine .

And I think he takes an approach which sort of puts Ukraine and Russia sort of on the same level , russia sort of on the same level . You know the fact that you know there there's a positive relationship over the last few years with Ukraine and a negative one with with Russia over the last few years .

I think that that matters less to Trump than the fact that he's got two individuals , putin and Zelensky , that he's dealing with and wants to try to reach some kind of transactional outcome with the two of them .

I think the way Trump would interpret that is this is all part of a negotiation and you know he thought the same way with , uh , you know , with uh , north korea and kim kim jong-un , right , he , you know , he , uh , you know they had this battle of words , right , little rocket man and all this , and it ended up being uh , you know he thought about it as

parts of a negotiation and thought of it as transactional , the art of the deal , and that's that's how he looks at foreign policy , that's the framework . And you know institutional relationships are much for him , are much less important than than transactionals .

But that's , you know , it can't work that way in international affairs , because NATO is something that's been built up since the late 40s and you know you just can't throw it away without creating conditions for , you know , a lot more warfare in Europe . I mean , it's been NATO and it's been the EU that has kept .

I think the fact that 100,000 troops from North Korea are getting involved tells me that this is no longer just a squabble for territory between the Ukraine and Russia . This is becoming , I hate to say it , but a much wider problem , disruption and a much wider battle for good and bad in the territories next to Russia .

I don't believe that we're going to see this go away quickly or quietly , and I think what I would say is this is one of those other disruptors that , while we saw it kind of moving along and battling for the two years that this has been happening , I don't see that there's a clear and easy way for this to get resolved by a few phone calls .

I think that you've got very , very different interests here , and I also believe that what we're seeing with an escalation from other parties is not going to be good .

If we use long range missiles and we take out some of the bases that North Korea is training with Russia , I'd see that North Korea would then look to do something against one of our allies , and I think that you know I worry about North Korea and South Korea , and North Korea and Japan .

I think those two issues in two areas now become on the paper as something that we have to be concerned about , and I just see more and more of these potential areas that , instead of being ameliorated or lessened , are going to be accelerated as potential risks .

So if we have more risks , we have more chance for failure , and that's the way I would view what's happening with this expansion going on in the Ukraine . And then I look at Israel and say is it expanding or contracting ? And I would say it seems to be expanding .

We've gone from we must eliminate Hamas to we must eliminate Hamas , we must eliminate Hezbollah , we must eliminate Houthis . I think that Israel is trying to get back a lot of the past injustices , which will make it much more difficult to come to a resolution .

I thought we were close to a ceasefire and it ends up that there's more injustices that need to be overcome and Israel is not going quietly . And therefore , what is your ?

And I think that's because in the latest attack by israel there was a pretty effective destruction of some of the air defenses uh in , and it turns out there was a bomb attack on one of the nuclear facilities which I guess everybody thought was an old one that had been no longer in use .

But I think that suspect the Israelis might have had some intelligence that there was at least some use of that for their nuclear program . So I think that this proxy war is slowly being eroded between israel and iran .

You know the , you know hamas , obviously , uh , hezbollah , um , you know the houthis have become very powerful in terms of being able to develop their missiles , which is kind of surprising . You think you know yemen is one of the poorest countries in the world , certainly in the middle east , and uh , it's got this very advanced .

to be used in the event that you know that there is some kind of reduced support from the West for , you know , for the war , for Ukraine's defenses in the war against Russia . There's some talk about that . I don't know . You know Ukraine . There used to be Soviet nuclear weapons in Ukraine and then Ukraine gave them up after the Soviet Union fell .

But you know , maybe there's some capability left in Ukraine that can be leveraged up to create a , you know a nuclear weapon . Who knows ?

And ultimately , you can see that that's the avenue that Trump's going to go down and say all right , let's just agree that these two territories , which were previously Russian , are now going to become Russian again , and let's have a ceasefire and agree that we're not going to burn a lot of resources and we need to rebuild .

Even if Ukraine , you know it , controls a lot of territory , they still want Ukraine to give up the parts of those provinces that Russia , uh , that Russia Russia has not taken over as yet . So , um , and then the other .

The other issue I wanted to mention was if you go by the principle that Russian speaking areas should be part of Russia , uh , then you know half of Latvia is , uh , is , russian speaking . You've got significant Russian speakers in northern Kazakhstan .

It's just not going to work because you're creating the precedent for Russia to take over significant parts of other countries .

I think the Ukrainians would be unhappy , and isn't that what most agreements end up ? Everybody has to be a little bit unhappy , or else we're not really moving things to a degree that , if it satisfies everyone , then it would have already been agreed to MICHAEL .

I think there's a , you know , a different situation where you're talking about , uh , a an attack on one side , right , and a defense on the other side .

So I think you can make arguments that you know in , in Korea and in Vietnam , for example , you know there were , you know it's't have this outright kind of you know one side is evil and the other side is not evil , right , as you have a perspective like that in Russia , ukraine , right , I mean the Ukrainians think of the Russian empire , so to speak , as

being evil and the Russians think of the Ukrainians as being Nazis , or at least Putin does , and so it's more of an evil versus good thing , and it's hard to . I think it's hard to come at a stable settlement when you're talking about that kind of situation . Or take , you know , you mentioned Berlin Wall and East and West Germany .

You know the Soviets and the Americans and the French and the British , they were all allies during World War II , and so all that was was a question of how do you divide up the spoils , and Even that brought about , you know , sort of wartime or a potential for war . But I think Russia , ukraine , is different .

Russia Invaded a sovereign country Whose borders it had already acknowledged that and I don't think it acknowledged that it controlled .

So you know , this is uh , this was a sudden change uh that putin implemented in order to try to create conflict around its borders that it could exploit . Right uh , and they did the same thing with azerbaijan they did it with georgia .

The Ukrainians have had trouble for that 10-year period maintaining the absolute and accurate border with where the Russian has troops and support going in to Russian-speaking Ukrainians . So this has been a problem for centuries , not for days , months or years . I think that we know this problem is probably going to persist .

The question is whether we keep fighting for a resolution or we come to some other resolution that is going to make some people unhappy . Yeah .

There were two agreements made between Russia and Ukraine , with with the U S , germany and some other countries being so-called guarantors , and they were called Minsk one and Minsk two , and in it there was international recognition of Ukraine's borders , and Ukraine has said there will not be a Minsk three because Minsk two uh , russia completely ignored .

So if there's any agreement now , who's to say that Russia is going to abide by that ? They could take 10 years . We build their forces .

And maybe it takes three conversations or four conversations , but there is some type of a ceasefire and everybody economically is better off If we stop sending $20 billion allocations of weapons to the Ukraine . Maybe that $20 billion can be used for something here the Ukraine .

I mean , these were countries that you know it was relatively easy to make those accords . It's not like an Israeli-Palestinian accord or an Israeli . They couldn't even do an Israeli-Saudi Arabia accord , which would have been actually really significant for the Middle East .

I don't think that Trump really has the understanding of the regions and the motivations to be able to reach an agreement . I think he thinks that others are just as transactional as he is . Are more are just as transactional ? Uh , as he is right that there's there's always a deal to be had and everybody has to give a little bit in order to reach a deal .

That's his transactional perspective on foreign policy , and I think that you know he ignores the fact that most other people think in terms of long-term history , think in terms of relationships , and won't necessarily agree to just oh yeah , let's reach a deal , right , they're just not going to do that . That's not how it works in foreign policy .

They're proxy proxies for for Iran . And if you look at Israeli foreign policy , israeli military policy , it all flows from the position of Netanyahu within the Israeli government , and Netanyahu has been trying to stay out of jail , uh , and he can do so as long as he's prime minister .

He has a government that , uh , where he depends on the support of , you know , pretty extreme right-wingers . You know extreme even to the effect , even to the extent that they would like to expel Palestinians from the , you know , from the occupied territories , west Bank and Gaza . They just want to expel them , right , some of these folks .

Netanyahu doesn't go that far , but you know they're in his coalition , so he has to humor them to some extent . You know , I think that if there were ever , and there were ever , a new israeli election , I don't think netanyahu and his lakud party and and and the right-wing coalition , I don't think they would win .

Uh , I think I think you would have a more moderate coalition , perhaps something led by Benny Gantz , who's a more centrist or center-right politician , and I think that there would be some effort to try to wind down these wars , but without allowing a reemergence of some of the more extremist elements .

and will have its own forces and will not be tried to be reincorporated into the Chinese nation , as Xi has talked about in the past ? Will Trump negotiate freedom and independence for Taiwan ?

To be honest with you , I think he views Taiwan as more of a again , more of a transactional issue , more of a more of a you know , transactional with with China as well . I'm not sure that you know you're not going to have a situation where Trump says you know , if you do this for us , we're just going to hand you over Taiwan .

But I think that has something more to do with how valuable Taiwan is to the US and Western economies . It would take an awful lot for Trump to hand over Taiwan , so I don't think he's going to do that .

the hotspot , while the other two may have hotter activity in terms of military going on . Right now , I see the biggest problem for Trump being that China and these tariffs don't have the desired effect .

They create a more militaristic China and a China that's going to take things instead of try to work their way along and do you know and do things in a more cooperative , internationally focused way . I think they're going to be focused on doing what's good for China yeah , it's good , so it's ultimately control of those chips .

Chinese economy is largely domestic focused now , not export focused Uh and uh , and they have a lot of ties now with a lot of other countries , not just the U ? S , and a lot of that is uh , is high tech , uh , that can absorb tariffs , uh . So I just I don't see tariffs as being a foreign policy lever with China . It's just not .

It's not a foreign policy lever . It wasn't under Trump , one Uh and um , and it's not under . It's not going to be so under Trump too . I just I just see those as being two separate questions .

So I think that the longer term view of China will frustrate Trump always and I think it will be a very difficult situation between the two countries .

Ultimately , in my mind , I think there will be some form of aggression in the next four years by China towards Taiwan and I 100% , 100% agree with you on that , that aggression will cause serious implications for people's portfolios and the overall economy of the world , because the dependence on semiconductors has only increased and therefore , if we have a disruption ,

it's going to be a larger disruption than what we're used to .

which was intended to bring some of the advanced semiconductor production back into the US .

After what's happened with COVID and we realized how we depended upon other people that we shouldn't need to depend on . I think that onshoring will be the issue that's not talked about right now . That will be talked about as we go forward in this administration . Now , can I do the mailbag ? Yeah , let's do mailbag .

All right , mailbag has a question and it says where will be the greatest impact of the Trump administration ? Where will be the greatest impact of the Trump administration ? Will it be domestically , on our economy , or will it be internationally , on our relationship with some of the hot spots around the world ? What will be the biggest impact ? I'll go first .

I think the biggest impact is going to be on regulation . I think regulation domestically has become more intrusive for companies , more difficult for small business , and I think that we have a huge opportunity to try to change that .

I would love to see an immigration bill where we help some of the people who have graduate degrees stay in this country and that , along with supporting small business whether it's small business , tax relief or other , I think that onshoring will offer us a huge potential for growth in our economy . Hopefully , we resolve our immigration policy to some degree .

I don't think any bill is going to be comprehensive or complete , but I think there will be some point that that becomes the moment for the administration . I hope they don't have other distractions which prevent them from doing this , but , as Steve the optimist today versus Steve the skeptic , that's where I see potentially the greatest impact . How about you Trump ?

Where do you see Trump having the biggest impact ?

But , with regard to unemployment , if you send back , if you remove 8 million employed , gainfully employed illegal immigrants , if you remove them from the US economy , your unemployment rate goes up by 5% . I think , by any measure , that's a recession .

Now , whether it's going to be 8 million or more , like 1 million or 500,000 , I think you know obviously scales back that 5% number .

On tariffs , I think if you have tariffs that are broadly based not just China , but broadly based across multiple regions , including Europe , and even some negation of NAFTA I think that you're going to have very serious impacts on consumer spending in this country , spending in this country , and I think that's going to um , to also , uh , uh , make a recession more

likely . And um , and you know , whenever you increase costs like that , uh , it also uh , you know , adds to , uh , to inflation . And then the .

The third thing I would say , just on top of that , is , you know if , if there are additional tax decreases on top of just extending the prior ones from Trump 1.0 , I think that will lead to a widening government deficit , which is also not good for , you know , for the economy .

I'll just add on that one that you know some some might say well , clem , what about ? What about Doji Right and Elon Musk and Vivek Ramaswamy , what do you ? What about their efforts ? Aren't they going to like slash government ? And my answer to that would be there's so many institutional impediments in the U S , uh , to slashing spending , uh , that I don't .

I just don't see that that is ever going to happen . I mean , for one thing , you're going to have all these Congress , you know Congress people saying , well , don't cut the spending in my district , you can cut this other guy's district , but don't cut my district . Well , that's an obstacle by itself to any sweeping reductions in government spending .

Any reductions in government spending are all going to be on the edges .

I think they're going to be difficult to overcome and I think , because they involve negotiating and working cohesively and patiently with other countries , that neither of those two things look to be present in this administration . So I would say they're going to be , impetuous . They're going to be in a rush to get things done . And guess what ?

I think most of their opponents will know that they need to get these things done and they'll extract too large a price in the negotiation for them to go forward . So they will point the finger at why things don't get done , which is politics 101 . I think that we're going to revert back to that .

I think Trump's going to have a very short window in the first six months and if he wastes any of that time , I think those midterm elections are going to come and all of a sudden , the circus is going to come and all of a sudden the circus is going to come to town and we're going to see the normal election day .

I don't want to make a decision , I don't want to do anything . I don't want anything to sacrifice my house seat . So in my mind , the answer is that we will have a hard time finding impact , because unless they can really bear down and try to get something done early on , before people start thinking about the midterm .

So that's my two cents , or half half , two and a half cents , anything else you want to add , clem ?

, but I think a lot of these domestic issues , which are more at the forefront , are going to create a lot of volatility on the economic front and on the investment front , and I would just recommend that people take a more defensive position with respect to their portfolios .