Since the end of World War II, America’s economic policies have revolved around trade liberalization. The US became the leader of the capitalist agenda. Instead of taking an explicit hegemonic role, it campaigned for capitalism by creating the Bretton Woods Institutions, which other countries of the developed world followed.
However, now the US electorate has chosen someone who is against free trade and free markets. Donald Trump, the 45th president of the United States of America, has come up with a protectionist agenda under the mantra of “America First”. Tapping into popular displeasure with the current economic system, Trump has advocated protectionist economic policy and stressed that decades of trade-liberalization policies were to be blamed for the decline of the US economy.
Trump’s anti-globalization mantra might spread protectionism around the globe, put up trade barriers and curb global economic growth. Trump has already backed out of the Trans-Pacific Partnership, and on August 27, he tweeted that it was very difficult to negotiate with Mexico and Canada and he might terminate the North American Free Trade Agreement. He has also termed NAFTA the “worst ever” trade deal. Commerce Secretary Wilbur Ross backed Trump and said such a withdrawal would be “the right thing” to do if trilateral talks among Canada, Mexico and the US were not successful.
Protectionist trade policies such as those advocated by Trump threaten to help derail a projected slight increase in global economic growth, the Organization for Economic Cooperation and Development warned in its latest economic outlook report.
China too has taken steps to counter Trump’s protectionist agenda. At the Group of 20 summit in July, President Xi Jinping called on the G20 nations to carry on with an open world economy, and at the World Economic Forum in Davos, Switzerland, in January, Xi offered China’s leadership to take the responsibility for trade liberalization.
Furthermore, at the recently concluded BRICS (Brazil, Russia, India, China and South Africa) summit, the Chinese leadership reiterated its support for trade liberalization. Defending open markets, Xi said: “Recently, the world economy has taken a turn for the better. International trade and investment has picked up.”
Trump’s rhetoric has provided a vacuum in which China can counter the United States’ domination of the global stage, especially by increasing global reliance on the Chinese economy. China has already starting taking measures to present itself as an ardent defender of globalization and trade liberalization.
Although Trump’s changing polices have drawn criticism by many global leaders, the US taking a step back from the global platform is not necessarily all bad: It may turn out to be a blessing in disguise as long as international consent can be pulled together around mutual economic and security interests.
However, the United States still holds great control over the economic as well as other realms of global politics, and the effect of the changing US politics still cannot be clearly predicted.