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Beware of US mercantilism
US trade partners should take seriously and consider measures to contain the negative effects of Trump's trade policies.
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US trade partners should take seriously and consider measures to contain the negative effects of Trump's trade policies. (Shutterstock/File)
I
n the first year of his administration, United States President Donald Trump has failed to back up his words with real action on a variety of issues that he promised in his presidential campaign. However, the world’s governments, especially those in Europe and Asia, should be cautious given his “America First” trade agenda.
It would be a mistake to assume that he will not follow through on this pledge. Is Trump a toothless tiger and should his noisy tweets be ignored? Over the North Korean nuclear issue, that question has been the most relevant. Yet, after Trump’s 12-day tour of Asia, fears of a war on the Korean Peninsula have receded.
Nonetheless, Trump raised another threat while on tour, which US trade partners should take seriously and consider measures to contain the negative effects of his trade policies. It is certain that in the second year of his administration, Trump’s government will emphasize its trade policy, implying looming trade wars. In the first year of his administration, Trump often complained about trade partners unfair trade practices, just as he claimed in the 2016 presidential campaign. So far, he has yet to turn his words into action. This inaction is understandable.
Trump is relying on China, one of America’s largest trade partners, to pressure North Korea.
Reforming trade is one of Trump’s priority policy areas that was promised to constituents. Therefore, his apparent restraint on trade policy cannot be expected to last any longer.
In his view, the US account deficit is proof of unfair practices by other countries, and it will be met by tough and decisive measures.
Trump’s trade policy is one of his strongest arsenals. It is never too early to begin campaigning for re-election in 2020. Until now, he has been willing to hold back on trade reform until the Republican Party’s tax reform policy passes through Congress. Trump does not want to disrupt his party’s last opportunity to secure a real legislative victory this year, given the Republican’s failed attempt to repeal and replace Obamacare earlier this year. Once tax reform legislation is approved by Congress, Trump will pursue his promise on securing fairer trade deals.
