“America First” – U.S. Trade Policy under President Donald Trump



Federation of German Industries | BDI

The withdrawal of the United States from the Trans-Pacific Partnership (TPP), the renegotiation of the trade agreements with Mexico and Canada (NAFTA) and South Korea (KORUS), the blocking of the appointment of the members of the Appellate Body of the World Trade Organisation (WTO), the tariffs on steel and aluminum, as well as the escalating tariff spiral between the United States and China – U.S. President Donald Trump has clearly broken with the traditional liberal trade policy of his predecessors.

President Trump seems to perceive trade as zero-sum game. For him, a negative bilateral trade balance seems to indicate that the respective trading partner is not playing by the rules. The President and his team compare country-by-country, sector-by-sector, and product-by-product. At the top of his agenda stands China; but he is also highly critical of the trade policies of close partners such as the European Union (EU) and Japan. To achieve his goals, President Trump focuses on bilateral and quid-pro-quo solutions rather than multilateral cooperation. Being more interested in “deals” than enforceable international trade law, his approach is very transactional. He furthermore fully advocates the use of tariffs to put “America first” in the global trading system.

Opinion polls show that not everybody is happy with Trump’s trade policies. According to a 2019 Gallup poll on the first round of tariffs imposed between the United States and China in July 2018, more than twice as many Americans believed that the tariffs would hurt the U.S. economy than those who believed they would help it, while nearly the same number believed the tariffs would have no effect. Also, 45 percent of respondents predicted that the tariffs would have adverse long-term effects on the economy compared with 31 percent who foresaw positive effects; in this case. While traditionally, Democrats were more skeptical towards free trade than Republicans, recent polls show that their support for trade now surpasses that of Republicans who have become more critical. This can be attributed in parts to the opposition to and support of the president as well as the high level of polarization in politics and society.

Whether or not Congress will reign in the president remains to be seen. While support for the Trump tariffs is less decisive, it remains to be seen whether Congress will reel in the president. For Republicans, it will be difficult to go against the president in the run-up of the presidential elections in 2020. For Democrats, it will be difficult as one of their most important stakeholders – the unions – is still skeptical about free trade, although support for trade has increased in the voter base of the Democrats.

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