Donald Trump’s views on the trade deficit are not a passing fad. But his preoccupation with the deficit is widely regarded as misplaced – it focuses only on America’s merchandise trade deficit while disregarding the services surplus, and it ignores that the overall US trade deficit is largely due to macroeconomic forces. Despite this misguided fixation, Trump’s obsession with it has only seemed to grow.
Notably, the president’s recent decision to help the Chinese telecommunications giant ZTE ‘get back into business’ shows how his concern over the trade deficit takes priority in his thinking. His move came after the Commerce Department banned American companies from selling components to ZTE for seven years because it broke the terms of a sanctions violation settlement.… Seguir leyendo »
Now that Wilbur Ross has been confirmed as the US commerce secretary, he will likely emerge as the most important player on Donald Trump’s trade team.
Peter Navarro, director of the newly formed National Trade Council, had held the reins until now because he did not require Senate confirmation. But going forward, Navarro’s influence will likely be weaker, since the National Trade Council is still a novel entity and will not have the same resources available as the Commerce Department. Similarly, the Office of the US Trade Representative, which was regarded as the main trade architect and trade negotiator under Barack Obama, is likely to be overshadowed.… Seguir leyendo »
With Donald Trump in the White House, US trade policy will probably look very different from the past 70 years – seven decades across which successive Republican and Democratic administrations have participated in and led global trade liberalization initiatives. If the president-elect delivers on his major campaign promises on trade, the negative effects on the American economy would be severe and the United States would give up its role in shaping the global trading system.
But there is no need to panic. Trump will likely leave behind the rhetoric of the campaign trail once he sits in the Oval Office. Trump will probably moderate his proposals, because a faction of the Republican-dominated Congress continues to support free trade.… Seguir leyendo »
Though every presidential election comes with a degree of uncertainty, this one is unusual in the sense that the new president-elect actually values unpredictability. A Trump trial-and-error presidency has the potential to impede confidence and thus investment as well as unsettle global financial markets. Another layer of uncertainty is to what extent Trump will be able to implement his suggested proposals. Though the Republicans won the presidency and will continue to control the House of Representatives and Senate, Republicans might not back all of his plans – particularly his protectionist ideas or increased spending proposals.
The US is Europe’s most important trade and investment partner.… Seguir leyendo »
The US election is less than a month away. With so much focus on the large gap between the rich and the poor in this year’s race, a slightly altered version of James Carville’s 1992 mantra captures the election quite well: ‘It’s the inequality, stupid.’
Inequality divides the United States. In 2015, the top 5 per cent of Americans earned about 16 times more than the bottom 10 per cent. There has been some recent positive news on closing the income gap from the Census Bureau, indicating that the median household income rose by 5.2 per cent between 2014 and 2015. … Seguir leyendo »
Even though President Barack Obama cautioned that the UK would be at the ‘back of the queue’ for a trade agreement with the US if the country chose to leave the EU, in the post-Brexit world a deal might be struck more swiftly. Various ideas for bringing the UK and US into a formal trade arrangement have been floated – ranging from a bilateral UK-US trade deal, or the UK joining NAFTA (the North American Free Trade Agreement between the US, Canada and Mexico), to the UK becoming a part of the TPP (the Trans-Pacific Partnership that the US is pursuing with 11 other countries along the Pacific Rim).… Seguir leyendo »
With Britain’s decision to leave the EU, the clouds of uncertainty hanging over the proposed US-EU free trade deal (known as the Transatlantic Trade and Investment Partnership or TTIP) have become darker. The negotiations were formally launched three years ago and have stalled because of transatlantic differences (for instance over issues of investor protections and public procurement) as well as growing public opposition. For now, both the US and the EU negotiators are determined to weather the storm and continue talks when they meet in Brussels from 11-15 July.
The result of the UK’s EU referendum will blow a strong wind into the face of TTIP negotiators on three fronts.… Seguir leyendo »