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

White House USA, Washington D.C. © Fotolia/kuosumo

White House USA, Washington D.C. © Fotolia/kuosumo

Almost no other country in the world has had such a strong influence on the multilateral trade system as the United States. But with his “America First” policy, U.S. President Donald Trump is increasingly undermining international trade law. And that comes with huge costs not only for its trading partners but also for the United States itself.

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 WTO Appellate Body and the tariffs on steel and aluminum – U.S. President Donald Trump has clearly broken with the traditional trade policy of his predecessors.

President Trump wants to bring back jobs to the United States. To achieve that goal, he is relying on protectionism, which he justifies on the grounds of safeguarding national security. That Trump’s trade policy diverges widely from that of his predecessors is also evident from the 2018 Trade Policy Agenda , which the Office of the United States Trade Representative (USTR) published in March 2018.

The Five Main Pillars of Trump’s Trade Policy Agenda

The agenda is built on five main pillars:

  1. Supporting National Security: According to the Trump administration, trade policy must focus more on the national interests of the United States and for this reason must be in harmony with the country’s national security strategy. Washington sees no sense in concluding trade agreements that make competitors stronger or weaken the United States.
  2. Strengthening the U.S. Economy: The Tax Cut and Jobs Act (TCJA), which U.S. President Trump signed in December 2017, is seen as the most important tax reduction and reform legislation in more than 30 years. The Trump administration believes this law will strengthen the U.S. economy and contribute to making companies and employees in the United States more competitive on global markets.
  3. Negotiating Better Trade Deals: The Trump administration wants to negotiate what it deems fairer and more balanced trade agreements to promote the creation of U.S. jobs and prosperity. At the top of the agenda stood the trade accord between the United States, Mexico, and Canada (NAFTA, which is known as USMCA in its newly renegotiated form), and the free trade agreement with South Korea (KORUS).
  4. Aggressive Enforcement of U.S. Trade Law: The Trump administration is no longer willing to tolerate unfair trade practices and is prioritizing the rigorous application of national trade laws. One such law is the Trade Act of 1974. Under Section 301 of that law, the president can take retaliatory measures, including imposing tariffs and quotas, if a country denies the United States its rights under a free trade agreement or takes measures that are unjustified, unreasonable, or discriminatory. The Trade Policy Agenda also refers to the investigations into steel and aluminum imports under Section 232 of the Trade Expansion Act of 1962 regarding their national security implications.
  5. Reforming the Multilateral Trade System: The Trump administration acknowledges that the WTO is an important institution of the multilateral trade system. At the same time, the USTR report argues that the WTO has not always worked as expected. Among other things, it criticizes the dispute settlement system for overstepping its mandate and intervening in areas for which the WTO members themselves are responsible. Moreover, the WTO is accused of failing to conclude important agreements.

The United States Itself Will Suffer Most

It is true that President Trump has not yet followed through on all his election campaign threats: the United States remains a member of the WTO and has reached an agreement with Canada and Mexico to update NAFTA. However, Trump’s trade policy is very different from that of his predecessors. The United States is currently blocking the appointment of members of the WTO Appellate Body. It is further undermining the multilateral, rules-based trade system through steel and aluminum tariffs, tariffs against China for theft of intellectual property, which have been announced without prior WTO proceedings, and the increased use of trade defense instruments such as anti-dumping and anti-subsidy measures. This will have considerable consequences – not only for the global economy but also for the United States itself.