Trump’s new trade wars—and the Philippines
Alongwithviolentdomesticdivisionsandnewnuclearrisks,theWhiteHousehasbegunto“unilateralize”thepostwarmultilateraltradingregime.WhatwillbetheimpactonthePhilippines? ECENTLY, President Donald But in the past week or two, so it The investigation process rethe Philippines’ exports go to will cause broader repercussions— Trump called for an investigaseems, the White House has opted - Japan, the US, China and Hong not to speak of retaliations—in tion into China over US intellecfor a trade war scenario. tween the investigation and the Kong. The US is the country’s global trade, investment and tual property (IP) practices and US intelligence community. The second- largest export market, migration, the status of Filipinos technology transfers. IP ceremony was attended by with which it has almost a $ 1 could become more fragile in
In turn, US Trade RepresentaAdmiral Dennis Blair, co-chair of billion surplus. Europe as well. tive Robert Lighthizer, a veteran the Commission on the Theft of As President Trump is rebuildHowever, President Duterte’s Reagan administration trade hawk, American Intellectual Property. ing US trade policy on deficit re-balancing of the Philippines’ opened an investigation against Blair is former US director of natargeting, all countries that have foreign policy is likely to reduce China under Section 301 of the tional intelligence and a retired a major surplus with the US are adverse pressures in trade and Trade Act of 1974. The investigaNavy admiral who served as the under scrutiny, particularly Caninvestment. Increasing trade and tion will not immediately impose commander of US forces in the ada, Mexico, China, Japan, the investment with China and the sanctions but it could lead to steep UK, Germany, and South Korea. Asean nations has potential to tariffs on Chinese goods. Following Trump’s order, the Relative to this group of economake the Philippines less vulner
Trade pragmatism is now dead Chinese commerce ministry commies, the Philippines’ surplus is able to policy shifts in the US and and the path has been paved for plained that it represented “strong relatively low. other advanced economies. trade wars. unilateralism” that violated the The new trade pressures are In the near term, unless Presispirit of multinational trade agreelikely to reverberate in foreign dent Trump’s new policies are ments. Yet, that’s precisely what undermined ( in this scenario “America First,” Trump’s trade well. In FDI, the US has historically the Mueller investigation would platform, is all about. been a major player in the Philipresult in calls for Trump’s im
“This is just the beginning,” pines and remains the third-largest peachment), the post- 1945 Trump told reporters after he investor in the country, along with world is about to change— and signed the executive memoranthe Netherlands, Australia and Janot for the better. dum. It sounded like a warning. pan. Since the Philippines remains
As the US opened the Nafta talks vital to the US strategically, US FDI only a few days later, the Trump White House set a tough tone with Moreover, Trump is dramatically Canada and Mexico. tightening immigration policy. Since most overseas Filipino workers and residents live in the US, they will be exposed to headwinds, especially those who are considered “illegal.” If the new US policy
RToward trade conflicts with China, Nafta, and NATO
After the Trump- Xi Florida summit in early April, the US and China announced a 100day action plan to improve strained trade ties. Yet, only two weeks later, Trump issued a presidential memorandum, which directed Commerce Secretary Wilbur Ross to investigate the effects of steel imports on national security.
That caused extraordinary unease in Europe’s NATO capitals. By mid- June, European NATO leaders launched a highly unusual lobbying campaign against an anticipated US crackdown on steel imports which, they said, would hit US allies more than China. Some EU leaders suggested retaliation, and consensus crumbled at the G20 Summit.
When the Trump administra Economic Dialogue (CED) ended in Washington in late July, no joint statement was released.
A simple scenario was that a ma the US-China ties. A more nuanced scenario was that, while the Trump administration was willing to penalize the Sino-US economic dialogue over slow progress and North Korean geopolitics, it was willing to capitalize on the CED’s “demonstration effect” in the North American Free Trade (Nafta) talks and bilateral trade reviews.
Yesterday deficits, today tariffs, tomorrow technology
If the Trump administration plans to use steel as a national security threat, the focus will be more on Nafta rather than China or Germany. China produces half of the world’s steel, but its US market share in steel is less than 2 percent. The major steel players in the US market are Canada (17 percent) and Mexico (9 percent).
However, if Trump plans to move further to imported aluminum, semiconductors, paper, and household appliances, China and other major importers will become targets as well.
The new debate about intellectual property and technology transfers suggests that the friction is escalating and broadening. When President Trump directed the US Trade Representative Robert Lighthizer to open an investigation into China’s intellectual property (IP) practices, including forced IP transfers and theft, he opened a Pandora’s Box.
The impact on the Philippines
Today, more than 60 percent of