COMMENT:

"We should beware of the demagogues who are ready to declare a trade war against our friends—weakening our economy, our national security, and the entire free world—all while cynically waving the American flag. The expansion of the international economy is not a foreign invasion; it is an American triumph, one we worked hard to achieve, and something central to our vision of a peaceful and prosperous world of freedom."

- Ronald Wilson Reagan

Shame on Chris Liddell. Along with academics, business leaders and the Herald, the then Carter Holt chief executive led 2001's Knowledge Wave conference about a country succeeding in the global economy while preserving its way of life.

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Donald Trump's several trade wars - which he says are
Donald Trump's several trade wars - which he says are "good, and easy to win" - have grievously harmed the post-World War II economic order. Photo / AP

Now, as Donald Trump's deputy chief of staff for policy, Liddell is aiding and abetting the most dangerous mercantilist attack on the international economic order since 1930's Smoot-Hawley Tariff Act, a leading cause of the Great Depression and the global catastrophe that followed.

Liddell is Trump's last remaining original senior staffer, suggesting his survival is related to his passivity.

According to US reports, he remained largely silent as Trump decided whether to launch a trade war against China, meekly advising the President to hang tough.

Trump's several trade wars — which he says are "good, and easy to win" — have grievously harmed the post-World War II economic order, with early warnings they will also undermine the high-value end of the US economy.

Most notoriously, Trump's tariffs have disrupted the global supply chains built up over 70 years by Milwaukee's Harley Davidson, prompting some operations to move to Europe.

Nearly as iconic is North Carolina's Moog synthesisers, critical to the development of 20th century music from the Beatles to The Doors, but is now expected to move overseas because of disruption to its supply chains.

Trump is undeterred, with another US$34 billion ($50.2b) of tariffs going on China today with Beijing set to respond immediately.

In the short-run, the US economy is protected by Trump's tax cuts but his trade policy is already shifting the US away from being the developer and owner of knowledge-based products, as Liddell advocated for New Zealand, towards being a supplier of subsidised commodities.

That's a problem for the US. Far more dangerous is Trump's attack on the global rules-based system launched by Harry Truman in the 1940s and advanced by Ronald Reagan and other 1980s visionaries.

Much is said about Trump's withdrawal from the Trans-Pacific Partnership (TPP) and the UN's corrupt Human Rights Council but infinitely more alarming are reports he has drafted legislation to effectively withdraw the US from the World Trade Organisation (WTO).

That would risk a contagion, collapsing the rules-based trading system and causing a full-scale global trade war.

Based on history, that would lead ultimately to gunfire.

President Ronald Reagan and British Prime Minister Margaret Thatcher stand together at the White House on Wednesday, Nov. 16, 1988. Photo / AP
President Ronald Reagan and British Prime Minister Margaret Thatcher stand together at the White House on Wednesday, Nov. 16, 1988. Photo / AP

WTO withdrawal is unlikely, but Trump is achieving a similar outcome by preventing new adjudicators being appointed to its appellate body. Like our own Jane Kelsey, Trump knows the best way to undermine trade arrangements is by attacking the disputes settlement process.

The equity markets, which are at record levels, partly as a result of exuberance over the Trump tax cuts, have the feel of 1929.

Trade and foreign policy risks do not appear priced in.

All this has local implications. New Zealand and the US have recently won a WTO meat case against Indonesia, but why would Jakarta feel obliged to comply given Trump's antics? If Indonesia complies anyway, Joko Widodo will cement his place as an Asia-Pacific statesman.

Jacinda Ardern's Government is handling the Trump situation astutely.

By standing firm against the Labour left and signing up to the revised TPP, she and Trade Minister David Parker have ensured New Zealand has a high-quality lifeboat should Trump collapse the WTO system. The world's third largest economy, Japan, is now leading the TPP process, coming of age as a global power.

Along with other foreign policy ministers, Ardern and Parker have wisely kept away from Washington, judging that New Zealand is currently best to focus on TPP, China, the EU and the UK.

Unlike Theresa May, Emmanuel Macron and even Shinzo Abe, who all thought they could charm Trump, our leadership quickly worked out there is nothing to be gained from engaging with the current US Administration.

Trump is entirely transactional. He places no value on relationships, even with the US's oldest allies. He is more comfortable with Vladimir Putin and Kim Jong Un whose foreign policy he seems to be emulating — even though Kim has humiliated him by flagrantly increasing North Korea's production of nuclear fuels almost immediately after the Singapore photo-op.

For anyone whose political consciousness was inspired by Reagan and the other great reformers of the 1980s, perhaps most sickening is the attitude of some on the political right towards the Trump regime.

The President is running trade policy that could have been written by Kelsey or Bernie Sanders, and foreign policy seemingly issued from The Kremlin, yet some right-wingers still cheer him on.

You have to choose. If you support Trump, you cannot claim to admire Reagan, or vice versa.

Liddell has chosen his side. History will judge him accordingly.

Matthew Hooton is the managing director of PR and lobbying firm Exceltium