Trump’s trade war in perspective

US President Donald Trump’s announcement of steep tariffs on steel and aluminium imports seems to have shocked US allies, even though these were among his election promises.

This trade war has been raging for some time, especially since the 2008-2009 global financial crisis. The World Trade Organisation has been helpless in preventing the resurgence of protectionism, or stopping developed countries from effectively sending the WTO’s Doha Development Round (DDR) into a coma.

So, what is so special about Trump’s announcement? With characteristic bluster, he announced transparent tariff measures – rather than non-transparent non-tariff barriers NTBs.

Equally significantly, they were to be imposed on all others – US “friends” and “foes” alike, without discrimination.

The Trump difference lies in his “America First” brazenness. Belatedly realising the likely political impact of treating all other parties equally, Trump later announced possible exemptions for “national security” reasons.

Frustrated by the slow progress of protracted multilateral negotiations, many countries have turned to bilateral and plurilateral free trade agreements (FTAs), especially after the Obama administration and European Trade Commissioners put the DDR on hold.

As Jagdish Bhagwati has long argued, such non-multilateral FTA “termites” not only undermine multilateral solutions, but may – ironically – slow global trade growth.

The plurilateral Trans-Pacific Partnership and its replacement, the Comprehensive and Progressive TPP, for the 11 other TPP countries after the January 2017 US withdrawal, have mainly been about nontrade issues.

These include extending intellectual property protection and non-judicial investor-state dispute settlement, besides limiting state-owned enterprises and public procurement. Such measures involve other types of protectionism sacrificing the national interest, particularly of developing countries, while benefiting influential transnational corporations.

If the developed world really wants to avoid all-out trade war, they must return to and advance multilateralism for sustainable, comprehensive solutions. Fairly concluding the Doha Round, while keeping its development promise, as pledged by G20 leaders, will be prerequisites in this endeavour. – IPS