The next four years are going to be rough.
Trade is one of many areas where Donald Trump has said some things that are far out of the mainstream. Some of his statements just carry on current policy ("I am going to instruct the U.S. Trade Representative to bring trade cases against China, both in this country and at the WTO"), but others push the boundaries ("I will use every lawful presidential power to remedy trade disputes, including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962"). The question is, to what extent will he try to, or be able to, follow through on his statements?
One part of the uncertainty is that neither he nor his advisers seem to know much about trade economics or trade law (Trump has some people who know a bit more, but I'm not sure he's listening to them). They are obsessed with trade deficits, but don't have an understanding of what's in trade agreements. As a result, it's not clear to me that we can take their campaign statements very seriously. Ultimately, they will have to hire someone who knows the details in order to implement their trade policies. Who will they be able to find to do this work for them? Which new high-level people will agree to come on board? Will the existing trade policy folks and trade negotiators stay on? How long will it take them to hire these people and sort out a clear policy?
In terms of the substance, they have proposed taking various unilateral actions, many of which may be challenged in court and at the WTO. How far will they go with this? There are some minor things they can do (e.g. tougher anti-dumping enforcement). Will that be enough for them, or will they try to use avenues such as Section 232?
They have also emphasized some long-standing, complex issues such as exchange rates and VAT taxes. Can they come up with responses that U.S. government agencies will agree on, and that our trading partners will accept?
On trade negotiations, they clearly want to abandon existing talks such as the TPP. They have talked vaguely about focusing on bilateral trade agreements, perhaps with the UK. Is that a real possibility? What would be in their trade agreements? Are there any countries who would want to engage in these negotiations?
And they suggest renegotiating, or withdrawing from, existing trade agreements such as NAFTA. Will they really pursue this? What parts of NAFTA do they want renegotiated?
Can Congress act as a check on this?
And can the world trading system survive all of this?
To repeat: The next four years are going to be rough.
