Even short of ex­tremes, Trump pro­tec­tion­ism ‘still dam­ag­ing’

Kuwait Times - - BUSINESS -

WASH­ING­TON: While his ad­vi­sors have played down some of Pres­i­dent-elect Don­ald Trump’s most ex­treme trade threats as ne­go­ti­at­ing tac­tics, econ­o­mists re­main wor­ried about the po­ten­tial to in­flict real dam­age. The Repub­li­can bil­lion­aire has said that on his first day he will la­bel China a cur­rency ma­nip­u­la­tor, has threat­ened to pull out of free trade agree­ments like NAFTA and slap puni­tive tar­iffs of up to 45 per­cent on China and Mex­ico.

And there is no ques­tion the US pres­i­dent has the power to take those ac­tions uni­lat­er­ally, with­out the con­sent of Congress, econ­o­mists say. In a cam­paign sea­son drenched in hy­per­bolic rhetoric, those pro­tec­tion­ist threats have pushed econ­o­mists to is­sue truly apoc­a­lyp­tic pro­jec­tions, warn­ing of job losses of four mil­lion or more, and a deep and dam­ag­ing re­ces­sion in 2018, with neg­a­tive spillovers to the global econ­omy.

Us­ing threats to ne­go­ti­ate

Since his sur­prise elec­tion win Novem­ber 8, Trump’s ad­vi­sors have sug­gested his threats were de­signed sim­ply to push trad­ing part­ners to agree to a bet­ter deal for the US. Even so, econ­o­mists say Trump’s stance al­ready has done dam­age, al­though it is hard to quan­tify what might hap­pen un­til he pro­vides specifics. The Tran­spa­cific Part­ner­ship, which com­prised 12 economies and would have been the big­gest US trade deal, is widely con­sid­ered dead fol­low­ing Trump’s elec­tion.

US Trade Rep­re­sen­ta­tive Michael Fro­man said the deal “is in pur­ga­tory.” “We’ve seen a rise of pop­ulism, not just in this coun­try... pol­i­tics that did not al­ways per­mit a full de­bate on the facts,” he said at a fo­rum late Mon­day. It could be that Trump’s threats have worked to some ex­tent, since Canada and Mex­ico each an­nounced last week that they are will­ing to sit down with the new ad­min­is­tra­tion to re­ex­am­ine NAFTA. But not fac­tored in to the Trump team cal­cu­la­tion is the re­ac­tion of US trad­ing part­ners to Trump’s pro­tec­tion­ist poli­cies.

Mar­cus Noland, ex­ec­u­tive vice pres­i­dent of the Peter­son In­sti­tute for In­ter­na­tional Eco­nomics, points out about US trad­ing part­ners: “They’ve got com­plaints too” about NAFTA. Un­der the rules of the US free trade agree­ments like NAFTA, the pres­i­dent can pull out sim­ply by no­ti­fy­ing the other mem­bers. No­ti­fi­ca­tion trig­gers a 180day clock for new ne­go­ti­a­tions, but ab­sent a new agree­ment-which must be rat­i­fied by all mem­ber legislatures the ac­cord would dis­ap­pear.

SHANG­HAI: A farmer op­er­ates a reaper as he har­vests rice in Moa­gang vil­lage, lo­cated on the out­skirts of Shang­hai.

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