The revolving door at the Trump White House puts me in mind of something a certain close observer of a certain corporate leader once said about the latter’s management style: “He surrounds himself with weak people, because he thinks it makes him strong.”
It was not a compliment.
Granted, Gary Cohn, Trump’s recently departed economic adviser, and more recently Rex Tillerson, the beleaguered and now former secretary of state, might not exactly be fodder for any profiles in competence. But at least on certain substantive issues (trade protectionism, for Cohn; Iran and Russia and some other things, for Tillerson), they had the cojones to disagree with the president. Now they have paid the price for independent thought.
Others are on the rise. Trade advisor Peter Navarro, the heterodox economist who favours protectionism (he calls it fair trade) and thinks value-added taxes are export subsidies, is reportedly in the ascendant now that Cohn is gone. To replace Tillerson, the White House has scoured the best-and-the-brightest to peg Mike Pompeo, currently CIA director, as the next secretary of state, even though the former Tea Partier and Kansas politician has little diplomatic experience. Never mind — neither did Tillerson. And Pompeo fits the job description in the most important way: he agrees with Trump on almost every issue.
All this intrigue in the royal court of the White House makes for fascinating bathroom reading, but will it have an impact in the real world, including financial markets? Bond yields fell and major indexes sold off, albeit marginally, after the Tillerson/Pompeo news, which added yet another destabilizing element to the geopolitical landscape. How big an element remains to be seen. At the least, Tillerson’s departure removes one more barrier to President Trump’s usually ill-advised impulses and prejudices.
As for Pompeo, he might be even more of a foreign-policy hardliner than his boss is. Granted, as CIA director, he hasn’t shared Trump’s blind spot on Russia (give him time), but elsewhere they seem to be in perfect harmony. On China, the soon-to-be secretary recently said it is as big a threat to U.S. interests as Russia is, and on Iran, Pompeo has condemned its proxy war with Saudi Arabia in Yemen and its role in supporting the regime of Bashar al-Assad in Syria.
Iran — and specifically, the Obama-era deal with Western powers to cease its nuclear program in return for relief from economic sanctions — are likely to be the first major flashpoint for the state department’s new direction. Even though international monitors say Iran is complying, Pompeo has been as critical of the agreement as Trump. By contrast, Tillerson broke with the boss on the deal, at least according to the boss himself: “I thought it was terrible,” Trump told reporters Tuesday. “He thought it was OK.”
Now, with an Iran hawk soon to be installed as secretary of state, the barriers to Trump doing what he wants on the Iran deal — “either break it or do something,” as he said Tuesday — are getting lower.
Trump’s next chance to scupper the deal (or at least “do something”) is in May. Given that he only reluctantly agreed to waive sanctions at his last review, in January, don’t bet on him doing it again.