Just like Donald Trump’s presidency, his trade policies are no less chaotic than anything else produced during the first 10-months of this administration. Because to even credit “the Donald” with getting trade policy right (by getting it wrong) that would serve the US globally, is more credit than he’s earned.
Since entering the Oval Office, Trump’s administration has threatened to undermine various global contracts. The North America Free Trade Agreement (NAFTA) made between Canada, Mexico and the U.S. is once such example. This spring saw the President reimpose tariffs on the Canadian lumber industry which was viewed by most as bullying.
The New York Times refers to this as the Trump administration picking on an easy target. The OpEd piece pointed out that Canada buys more products from the US than any other country. It also pointed out that even though our neighbor to the North does not make a plane that competes with Boeing, the American airline manufacturer was able to complain to Trump’s Commerce Department to suggest a 300 percent punitive tariff against trading Canada’s Bombardier CSeries planes.
But a good place to start with Trump’s destructive trade policies is with his five-nation tour through Asia this month, where his effort to withdraw the US from the Trans-Pacific Partnership (TPP) deal will be viewed by commerce chiefs as an obstacle that will prevent him from delivering any wins for his presidency. As bad as the TPP would be, it would have allowed 11-nations in the Pacific Rim to take advantage of a free trade agreement that President Trump’s wealthy donors all but support.
Trump seems to be against all of these free trade agreements so far, no matter which country they’re with. He’s also threatened to break the Free Trade Agreement with South Korea, perhaps driven by his conflicts with North Korea. But through it all, it’s still unclear whether he has a sturdy grip on understanding how these deals work, if he even wants to, or if he even has a sturdy grip on reality overall.
In recent months, the President also signed a memo that sought to go after China for intellectual property violations and he’s threatened Germany and the European Union with tariffs as well. Overall, President Trump appears to be actively promoting the breaking of these agreements rather than renegotiating them or building new ones from them. As a result, he’s also challenging the US’s relationship with its allies.
President Trump has targeted South Korea and Japan as problematic with unbalanced deficits. It is said that last year’s figures for imported cars and electronics from Japan have created a $69 billion trade deficit. This contributes to what is estimated to be a $500 billion dollar global trade deficit overall.
last year, Tim Worstall who is a Fellow at the Adam Smith Institute in London, published an OpEd with Forbes arguing that then candidate-Trump was wrong about the US trade deficit being at $800 billion. He argued that Trump left out the fact that the surplus (what the US gets back) is at $300 billion, making the deficit more like $500 billion. This is just one example of Trump’s deliberate misunderstanding or manipulation of the facts. But what many have argued was a hardball tactic of negotiation is having different and more catastrophic results.
The US has already been engaging in talks with Japan over their trade differences, such as the tariffs that Japan puts on the US which has apparently moved from 38.5 to 50 percent. Specifically, on frozen beef from the US which has resulted in a significant 26 percent drop in imports in recent months. Those representing the Trump administration are looking to remove safeguards on American imports which has apparently resulted in the increase of those tariffs from Japan.
Along with wanting to end deals, the Trump administration appears to have frustrated many nations with regards to overall trade. The administration has been promoting its effort to negotiate more bilateral agreements with these nations but as a result of the Trump administration’s trade tactics, Japan – as well as other countries – are alread looking to strike deals with other countries rather than with the US. Until we can see past these obstacles or even confirm that Trump knows anything about trade policy, the US doesn’t benefit at all and will have it playing in the corner by itself.