The G20 summit in Argentina this weekend brings world leaders together to discuss two things: politics and economics. Due in large part to the actions of Jay Powell, President Trump is poised to enjoy success in both arenas.
The Dow Jones jumped more than 600 points yesterday after Powell signaled that interest rate increases will be ending; this provides an appearance of a strengthening economy in direct opposition to the recent market drops. As has been noted elsewhere, stock markets are not a true indicator of economic strength; that said, they do tend to reflect a national view of such, and a national perception is politically important.
Trump is scheduled to meet with China’s leader Xi Jinping to discuss trade. Both countries are being hurt by Trump’s tariff war, and Trump would like to end it but only after receiving something which he can present to his supporters as a material success. China has, thus far, been unwilling to give him any such concession, not even a meaningless concession like those provided in the “New NAFTA” or South Korean deals.
The meeting with China is the most critical talk on Trump’s agenda, economically. If he is seen as strong, it may provide him with the leverage he needs to finally get his desired “success”.
The other key meeting is likely to be with Putin. Russia’s strength has been growing in recent years and their recent escalation with the Ukraine signals a desire for the continued expansion of their influence. Their trade deal with China, if it is finalized, could severely damage American interests by introducing a long-term threat to American economic strength. Their activities in Syria and their arrangements with Turkey and Iran make them a key player in the Middle East. Politically, Trump has a difficult, complex negotiation ahead with Putin, and he needs the appearance of strength… particularly after the abject weakness shown in their prior summit and the continued investigation into Russian aid during the Presidential election.
Whether Trump has the ability to successfully promote American interests even with a comparatively strong starting position remains to be seen.
Recent statements by his representatives indicating that Trump runs the U.S. economy or Trump’s attack on Jay Powell may demonstrate an authoritarian streak that concerns Americans who believe in personal liberty. They serve him well going into the G20, however, where the majority of his meetings are not going to be with traditional allies who might be distressed at his abandonment of American values but rather with countries who have dictatorial streaks; even those who are allies are from countries with strong nationalist streaks. His scheduled meetings are with the leaders of China, Russia, Turkey, Argentina, South Korea, India, Japan, and Germany.