Photo: iStock / Getty
Photo: iStock / Getty

US President Donald Trump is doing what every leader is or should be doing, putting their national interests first, maximizing their country’s economic, political and social well-being and keeping the population safe. But putting “America First” is not a zero sum game, as Trump’s creating conflicts with other countries seems to imply.

For example, in protecting Boeing’s domestic market share, the Trump administration is threatening a 220% tariff on Canada’s Bombardier CS100 passenger aircraft, claiming the company has received heavy subsidies from the Canadian federal and Quebec provincial governments. The premier of Quebec, where Bombardier is headquartered and where the CS100 is built or assembled, has vowed  retaliation (but did not specify how) because if imposed, such a high tariff could cripple the company. As Bombardier is a major employer in Quebec’s important aviation industry, the provincial economy would take a hit.

Trump’s other “executive orders” with respect to putting “America First” are equally provocative and divisive. The nixing of former US president Barack Obama’s Trans-Pacific Partnership (TPP) and the Paris Climate Accord, renegotiating the North American Free Trade Agreement (NAFTA), threatening to cancel the Iran nuclear deal, refusing to negotiate with North Korea and threatening to “wipe it off of the map”, and investigating China’s trade practices could turn the world into a more dangerous place and further exacerbate global economic woes, including those of the US itself.

Attacking trade pacts

It is difficult to see how tearing up or renegotiating trade agreements reached by previous administrations is putting “America First”. Written by and for US corporations, the TPP, an agreement reached with 11 other Asia-Pacific nations during the Obama presidency, was intended to benefit the US. For example, the intellectual-property protections, labor standards and environmental-protection provisions were so tough that countries such as Vietnam might not have been able to comply. What’s more, Obama got his wish: The US wrote the TPP’s rules.

There is no reason to believe that renegotiating NAFTA would improve the United States’ economic prospects. Its harsh concession demands – Canada and Mexico allowing US ownership of agriculture, banking and telecommunication industries, new rules on government procurement, tougher labor standards and environmental rules, tougher rules on origins, etc – might prove bitter pills for Canada and Mexico to follow. These demands are one-sided, favoring the US. Moreover, the US is demanding that the NAFTA dispute arbitration mechanism for trade conflict resolution be dismantled and future disputes be settled in a US court of law.

US trade with Canada and Mexico was valued at more than US$1 trillion in 2016. Canada and Mexico are America’s biggest and second-largest export markets, estimated at more than $260 billion and $250 billion respectively last year. According to the US Chamber of Commerce and other agencies, NAFTA is responsible for the creation of 5 million jobs, adding 0.5% to the US economy, improving manufacturing efficiency, and reducing Americans’ cost of living. Clearly, trade conflicts between the US and Canada and Mexico could undermine all three countries’ economies.

There lies the irony: Trump’s divisive messages may put ‘China First’ as America’s trading partners are driven into the Chinese camp

Other nations that have free-trade agreements with the US are also anxious over Trump’s trade policies. The United Kingdom has been shocked to find that its “special relationship” with the US has little substance. Imposing a 220% tariff on Bombardier would cost Northern Ireland 4,000 jobs. It would seem the US-Korea Free Trade Agreement is facing an uncertain future in that Trump is threatening to tear it up, considering parts of it unfair to the US and decrying South Korean President Moon Jae-in’s diplomatic gestures to North Korea.

Not surprisingly, many nations, including staunch US allies such as Canada, Australia and the UK, are looking elsewhere (read China) to improve their economic well-being. There lies the irony: Trump’s divisive messages may put “China First” as America’s trading partners are driven into the Chinese camp. China’s increasingly huge economy and and financial toolkit prove too lucrative to ignore. Canada and Mexico are in fact pursuing closer economic relations with the Asian giant.

Immigration policy

Judging from the increasingly frequent and severity of “terrorist” attacks on both sides of the Atlantic since Donald Trump became US president, restricting immigration from nations that are said to be the sources of terrorism may subject Americans to greater danger. Resentment over how they are being treated and marginal employment prospects in the West are perhaps a major reasons many young Muslims are being “radicalized”.

Because terrorist acts harm or kill innocent people, the general public will heighten its resentment or even hatred against the wider Muslim community, perpetuating a vicious cycle. Xenophobic groups in the West will carry out “hate crimes” against Muslims. The North Atlantic Treaty Organization will increase bombing of Islamic states. More Muslims will join jihadist groups like ISIS.

Ignoring climate change

The frequency and severity of natural disasters – horrific hurricanes in the US and Caribbean, melting of the polar icecaps, droughts, etc – are said to be largely caused by man-made climate change, which the US- and China-sponsored Paris Accord was intended to address. But Trump complains that climate change is a “Chinese hoax” and that smaller nations want to squeeze US taxpayers for more money.

His primary motive might be to fulfill a campaign promise to restart the coal industry and increase gas and oil production. However, pulling out of the Paris Accord and rejuvenating fossil-fuel production would produce only a limited number of jobs, while putting at risk a higher number of jobs in the green energy industry.

The failure to address climate change continues to put economies, human lives and property at risk. In the US, hurricanes have destroyed much of Houston and Puerto Rico and parts of Florida. The cost of rebuilding them, at almost $200 billion, will prove to be a huge challenge for the US federal and state budgets, resulting in underfunding of much-needed social programs and infrastructure repair in other parts of the country.

China probe

Investigating China’s trade practices under the auspices of the rarely used Section 301 of the US Trade Act is meant to give Trump an excuse to to impose stiff tariffs on Chinese exports if that country does not “fully cooperate” to rein in North Korea’s nuclear program. Should Trump follow through with his threats and put the more than $660 billion trade relationship in jeopardy, not only the US and Chinese economies will be at risk, but those of many other parts of the world as well. The efficient global supply chain (largely established by US policies) will be distorted, increasing production costs and consumer prices.

Unwillingness to consider a diplomatic solution would only heighten tension in the Korean Peninsula, possibly to the point of an unnecessary war. Kim Jong-un will maintain his nuclear-weapons program at any cost. He is well aware that by giving up his arsenal he would end up committing suicide like Muammar Gaddafi and Saddam Hussein. Given America’s history on honoring treaties and promises, Kim can be forgiven for not trusting it.

The ball is in Trump’s court, to bomb or not to bomb North Korea. If he follows through with his threats, he could risk the loss of millions of lives, an unthinkable amount of property, and World War III. China and Russia have already warned the US that they will intervene if Trump fires the first shot.

The need for dialogue

Regular dialogues defuse conflicts because the stakeholders get to know and understand each other’s issues and the risks involved if not addressed, as proved by the Economic and Strategic Dialogues  established by Obama and his Chinese counterpart at the time, Hu Jintao. Indeed, Trump himself seems to understand that dialogues are important in meeting his “America First” policy, upgrading the E&S Dialogues to four levels: diplomatic and security, comprehensive economic, law enforcement and cybersecurity, and social and cultural.

Promoting trade affords a country access to bigger foreign markets, leading to sustainable economic growth. Restricted by huge consumer and public debts and a lack of effective monetary tools, the US economy has been struggling to recover from the 2007 financial crisis. To that end, putting “America First” requires cooperating with other nations.

Ken Moak taught economic theory, public policy and globalization at university level for 33 years. He co-authored a book titled China's Economic Rise and Its Global Impact in 2015. His second book, Developed Nations and the Economic Impact of Globalization, was published by Palgrave McMillan Springer.

5 replies on “Trump’s ‘America First’ policy is fine but approach is wrong”

Comments are closed.