The Prospects for U.S. Trade Policy under the Trump Administration

IntroductionAfter a long campaign, Donald Trump won the Republican Party presidential nomination in July 2016, and then on 8 November, defeated Democratic candidate Hillary Clinton in electoral votes, 306 to 232, despite lower popular support (63 million votes against 65 million cast for Clinton).1 One of Trump's major campaign rallying cries was the need to revise current U.S. trade policy, namely to re-negotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico; to withdraw the U.S. from the Transpacific Partnership (TPP); and to take retaliatory measures against trade partners engaging in unfair practices (with direct reference to China).2 Then, on 20 January 2017, in his Inaugural Address,3 the president reaffirmed the importance of trade policy to the agenda of the new U.S. administration, describing it as a priority area of his America First pledge and its principal goals, including the creation of 25 million new jobs.4 The new trade policy will rely chiefly on measures subject to his Buy American and Hire American5 principle and, on the one hand, promote businesses in the U.S. while, on the other, taxing U.S. production abroad, as well as targeting major trade partners to improve the trade balance.Trump's vision of trade policy diverges strongly from the Republicans' traditionally liberal course of expanding the free trade area, an integral component, based on bilateral, macro-regional (NAFTA, TTIP, TPP) and multilateral (World Trade Organisation, or WTO) agreements. It converges with the direction of a recent change in public perception of trade agreements. Pre-election polls reflected protectionist tendencies in American citizens' attitudes. A Politico-Harvard survey showed that 47% of the Republican electorate believed trade agreements entered into by the U.S. had adversely affected Americans' living standard in the past 10 years while 18% felt those treaties had contributed to an increase in welfare (among the Democratic electorate, the figures were 24% and 33%, respectively).6 An October 2016 Pew Research poll also confirmed the preponderance of anti-trade attitudes among the Republican electorate, with about 68% of these respondents stating free trade agreements were detrimental to the U.S. Scepticism about free trade ran the strongest amongst Trump supporters (67% in the primaries, according to polls conducted in March 20167 and 68% in August 20168 following Trump's nomination as the Republican candidate). This shiftin the preferences of the Republican electorate, a majority of whom as recently as in May 2015 had been in favour of entering into trade agreements with third countries (with barely 36% of respondents pronouncing such a policy unfavourable) was due, among other things, to the climate of opinion on trade agreements fostered by Trump as well as by Democratic candidates Bernie Sanders and Hillary Clinton. However, the split over trade policy in the Republican camp already was increasingly noticeable towards the end of the TPP negotiations.Trade to the U.S. EconomyIn 2015, the U.S. was the world's greatest trade power, accounting for 12% of global trade in goods and services, slightly ahead of China, which ranked first in global exchange of goods.9 In 2016, the value of U.S. trade stood at $4.9 trillion, with imports of $2.7 trillion in excess of exports of $2.2 trillion.10 At 28%, trade's share of U.S. GDP is well below the global average of 58% (compared to 83% for the EU, 73% for Mexico, 65% for Canada, 41% for China, 36% for Japan). This reflects the strength of the American domestic market as the foremost driver of the economy, with exports accounting for 13% of GDP, compared to the global average of 30% of GDP.11Despite the strong position of the U.S. economy on the global market, the asymmetry in U.S. trade with its chief partners remains a problem. In 2016, the U.S. had the largest nominal trade deficit in the world, of $500 billion.12 However, the U. …

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