Trump Has Just One Trick—And It’s Not Working Anymore

The president has a single negotiating move: Take an aggressive position, and then retreat when the bluff is called.

During the 2016 campaign, Hillary Clinton often warned that Donald Trump would do to the United States what he had done to his businesses.

She was thinking of his record of debt, failure, and bankruptcy—about which The New York Times offered grim new details this week.

But there is an even more disturbing way that Clinton’s warnings are being fulfilled. North Korea has resumed missile testing, disregarding both Trump’s wooing and his threats of “fire and fury.” It has taken the U.S. president’s measure—and found him weak and empty.

The Times story of the tax returns showed how stock markets did just the same thing in the 1980s. From 1986 to 1989, Trump earned $67.3 million from short-term stock speculation. His method? He would acquire a substantial position in a company, then boast of his takeover intentions. Trump’s words would drive the stock price up. He would then sell at a profit.

The trick worked as long as Trump’s credibility lasted. Which was not long.

In September 1989, Trump tried that familiar trick once too often. He bought a large stake in American Airlines, talked takeover—and was jeered:

“I’m very skeptical of everything this man does,” Andrew Geller, then an airline analyst at Provident National Bank in Philadelphia, told The Associated Press.

Mr. Trump was rebuffed, and the stock price fell sharply. Though at the time his losses were reported to be modest, the new tax return figures show that in 1990, the year he sold his American Airlines stake, Mr. Trump lost $34.9 million on short-term trades, wiping out half his gains from the previous four years.

In the 1980s, Trump was burning through his own money. As president, he’s playing with the wealth and lives of nations. That greater responsibility has not in any way improved his behavior. Greater power has also only temporarily restored his credit. The North Koreans see through him on missile testing. Now the Chinese seem to be doing the same on his trade threats. Trump’s current round of trade threats is failing to elicit trade concessions.

U.S. stock markets slumped Tuesday. Markets had been expecting a trade agreement this week, and were taken by surprise by a suddenly harder Chinese line. A new round of U.S. tariffs is scheduled to go into effect Friday unless a deal is reached. China balked at U.S. proposals, and Trump returned to Twitter for another round of threats. But those threats also revealed Trump’s fears. He wanted to score a domestic political point off his freer-trade Democratic rivals. But he showed international leaders how worried he is that trade disputes might cost him reelection:

The reason for the China pullback & attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to “negotiate” with Joe Biden or one of the very weak Democrats, and thereby continue to ripoff the United States (($500 Billion a year)) for years to come ….

The big question in a trade dispute is which side can stand more pain. At the same time as Trump has threatened China, he has pleaded with the Federal Reserve to cut interest rates. The Chinese have noted the juxtaposition. The Wall Street Journal quoted an analyst at a Chinese government-backed think tank: “Why would you be constantly asking the Fed to lower rates if your economy is not turning weak?”

The world is absorbing the lesson that Wall Street learned in the 1980s. Trump has only one negotiating move: Take an aggressive position, try to deceive others and maybe yourself about your own strength, issue threats you cannot fulfill, and then retreat amid losses if the bluff is called.

But whereas once those losses were denominated in the millions, today they rise to the hundreds of billions. Where once he troubled only those investors credulous enough to take seriously his tycoon image, today he troubles the peace of the world.