By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

A FORMER Deputy National Security Advisor of the United States said US President Donald Trump is leveraging the country’s economic position to ensure it benefits from any agreement struck with foreign countries.

Speaking at the RF Bahamas Economic Outlook yesterday, KT McFarland said while no other president has “exploited” the fact that the US is the world’s largest trading market, Mr Trump is prepared to use tariffs and “trade wars” to ensure he gets the best deal.

“The US is the world’s biggest market. Everybody wants to sell in our country and we need their stuff a lot less than they need to sell to us. And that’s a fundamental principle that most political leaders don’t get,” said Ms McFarland.

“He knows that we have the leverage that gives us that other countries need to sell to us more than we need to buy from them, and that gives us an enormous amount of leverage on our trade policy, but really on all of our foreign policy.

“And he’s using that. No presidents have really exploited that before, but Donald Trump is going to use it. Hence when he talks about trade wars, tariff wars, whatever kind of agreements we’re going to have with other countries, he’s going to use that need other countries have to sell to foreign market to get a better deal for us.”

Ms McFarland said while the “jury is still out” on whether his tactics will be successful significant change will not occur without some fluctuations.

“President Trump is using trade wars, not because he necessarily wants a trade war, but he knows that because every country needs to trade with the United States, we have leverage that we’ve not used,” said Ms McFarland.

“Now, does any of the Trump experiment work? I think it will. Jury’s still out. The stock market is going up, it goes down, it goes around. You know, relax. This is big, significant, serious change, and it is not going to happen without a lot of snips and snaps and back and forth.

“Maybe we’ll do this now. Maybe we’ll not do that. But what Donald Trump really likes, and what he thinks is his secret sauce, is his unpredictability, the advantage to that….He’s like a sole proprietor. He doesn’t want to hear what the staff says. He has his own ideas, and then he’s the one who is dictating and driving all of these negotiations.”

She said the US’ new energy policy will focus on deriving natural gas to fuel manufacturing since technological advancements now allow producers to extract natural oil from rocks using a safer, cheaper technique.

“The US has in the last probably 15 years, but much more so in the last five, eight years, has found that we have energy. We get it from shale rock, oil and natural gas. We have enough energy to give electricity and every other form of energy to the world for hundreds of years. And we can do it cheaper, safer, better than anybody else,” said Ms McFarland.

“We’ve always known that you could get oil and natural gas from rocks, but it was never economically feasible. It was too expensive, it was too dangerous. In the last 10/15 years, that technology has become safer, better, cheaper, et cetera. We’ve realised that the US not only has these rocks, but we have the best rocks in the world. We have far better ability to get oil and natural gas out of rocks than any other country except maybe Eastern Ukraine.”

She said the energy revolution will also allow the country to tackle inflation as one of the main drivers is high energy costs.

“We feel that American, definitely American natural gas is the best way to go because it is cleaner and it is safer and it is cheaper. It really is a triple win this energy situation. It’s not only better for the American manufacturing and the American economy, it’s better for American foreign policy and security policy, but frankly, as an interim fuel, maybe that interim period is like ten years, maybe it’s 30 years as an interim it’s better for the environment,” said Ms McFarland.

She suggested that China is more likely to pursue economic warfare than direct military conflict, particularly regarding Taiwan and Trump’s strategy might involve trying to break the Russia-China alliance.

Ms McFarland said China has not recovered from the pandemic and the country’s economic growth is “stagnated”.

“China has not recovered from COVID. Their economic growth is stagnated. They have a lot of internal problems. They have very high unemployment, youth unemployment, I think some 30 percent under the age of 25 are unemployed and no good prospects,” said Ms McFarland.

“They have a demographic time bomb, where they had the one child policy, and most Chinese wanted a male child, so they had disproportionately more men than women in the sort of age 25 to 40 cohort, and no jobs, no wives, no life. That’s kind of a recipe for really the big disaster.”