“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 has 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 the United States’ trade 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), and the blocking of the appointment of the members of the WTO Appellate Body signal a clear break with the traditional trade policy of the United States. 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 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 the U.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 U.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 U.S. 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 U.S. administration wants to nego-tiate what it deems fairer and more balanced trade agreements to promote the creation of U.S. jobs and prosperity. In particular, it wants the free trade agreement between the United States, Mexico and Canada (NAFTA) and that with South Korea (KORUS) to be more advantageous for all parties involved.
  4. Aggressive Enforcement of U.S. Trade Law: The U.S. 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 aluminium imports under Section 232 of the Trade Expansion Act of 1962, which allows the administration to determine whether certain imports threaten the national security of the United States.
  5. Reforming the Multilateral Trade System: The U.S. 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 member states 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 U.S. President Trump has not yet followed through on all his election campaign threats: the U.S. remains a member of the WTO and continues to renegotiate 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. And it is undermining the multilateral, rules-based trade system through steel and aluminium tariffs, the tariffs against China for theft of intellectual property, which have been announced without prior WTO proceedings, and the increased use of trade defence 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.