There are more flip-flops in the Oval Office these days than at the beach on a hot summer’s day. President Donald Trump has switched positions on at least half a dozen major economic and foreign policy issues in the last week alone. The net result: Trump is emerging as a president more acceptable to the mainstream establishment that has been worried (if not terrified) of him — and less the outside bomb-thrower that many of his supporters thought he would be.
Meet President Trump 2.0:
China. During his White House run, Trump skewered Beijing every chance he got, calling the Chinese currency manipulators who were ripping us off and siphoning away manufacturing jobs. On Wednesday, he told The Wall Street Journal “they’re not currency manipulators.” Behind Trump’s sudden decision to play nice with the communist hardliners in Beijing? He needs their help in reining in North Korea. The president’s now more worried about kooky Kim Jong-un and his nuclear and missile programs—which defense analysts say could one day result in Kim nuking Tokyo or our West Coast. His read on North Korea is right; China has leverage—but guess what? It may now have leverage over us on other issues, like the South China Sea and climate change—both of which matter deeply to the Chinese. Look for a possible Trump flip on climate change—he has always called it a “hoax” and talked down the Paris climate treaty, positions that have displeased Beijing.
Tax reform. After his healthcare plan sank quicker than the Titanic (the anniversary of that disaster is tomorrow), the president quickly distanced himself from it, saying he would just move on to overhauling the tax code. “We’ll be going right now for tax reform, which we could have done earlier,” he said three weeks ago. Problem: Trump was counting on his healthcare scheme saving about $1 trillion, which would have been factored into the tax numbers. But those savings no longer exist, which means tax reform—no lay up to begin with—will be trickier and more fought over than ever. So Trump has reversed himself and will now “do health care first,” telling Fox’s Maria Bartiromo that “We have a great health care plan that I think will happen, and if it happens, then I go immediately to tax reform. And that will happen. That will be easier than health care.” Easier said then done.
Delaying tax reform is a huge setback for investors, who saw the combination of a Republican president and Republican Congress as a sure thing for lower rates. When that happens now is anybody’s guess. The “certainty” that this would occur helped power the so-called Trump Trade after the election. But with that now up in the air, plus rising interest rates and growing geopolitical tensions in the Middle East and Asia, the risk-off mentality is evaporating. The 10-year Treasury yield
has inched down to 2.28%, and the VIX
—the so-called fear gauge—has jumped to nearly 16 from 11.79 a week ago.
Also read: How the Trump stock market ranks as he approaches his 100th day in office
But wait, there’s more:
Janet Yellen and the Fed. “I like her, I respect her,” the president told the Journal, walking back vows he made as a candidate that she would not be reappointed in 2018 if he won. She’s “not toast,” he now says. The president added that he likes low interest rates, a huge change from a year ago, when he said that low rates were putting us “in a big, fat, ugly bubble,” and pushing debt up. He also accused Yellen of keeping rates low to boost Hillary Clinton. But that was then.
Also read: Why did Trump flip flop on Yellen? She may be the dove he needs, analysts say
Export-Import Bank. Founded by Franklin D. Roosevelt in 1934, the “Ex-Im” helps American exporters sell good and services by providing credit for overseas customers. Sounds great, right? But some groups, like tea-party types (who say the feds have no business interfering with the free market) have fought to keep Congress from authorizing the bank’s continued operation. Its charter expired in 2015 and Trump railed against it, telling Bloomberg in 2015 that “it’s really not free enterprise.” But the president has gotten an earful for months from executives of companies big and small—from Boeing
and General Electric
on down—that Ex-Im is a huge plus for exports and jobs. Trump has gotten the message, telling the Journal “It turns out that, first of all, lots of small companies are really helped.” And big ones, too.
Surprised by all this? You shouldn’t be. Trump has always said he would be a flexible president, unpredictable and open-minded. He read the Electoral College map (which he also flip flopped on after winning it) and said what would close the deal in states like Michigan, Wisconsin and Pennsylvania. Now—not quite three months into office—the new president is throwing those supporters under the bus. But he may win over new converts with his new, more mainstream positions.