Donald Trump used harsh anti-trade rhetoric during his campaign, leaving many to wonder if tariffs and other trade barriers will be implemented at the expense of export and logistics jobs.
Despite predictions in last minute polls, Donald J. Trump won the U.S. election for president early Wednesday morning, sending shock waves around the world and heightening pre-existing worries in foreign capitals about what will happen to America’s role in anchoring global institutions and alliances that have helped maintain stability since World War II.
Among the primary questions now in play is: What will happen to U.S. trade policy under a Trump administration?
A centerpiece of Trump’s campaign was that the U.S. manufacturing sector has been destroyed by outsourcing and international trade. He said he would significantly raise import tariffs to protect American jobs, withdraw from the Trans-Pacific Partnership Agreement negotiated by President Obama and waiting congressional approval, and opened the possibility of discarding the North American Free Trade Agreement if Mexico and Canada don’t renegotiate terms that are more favorable to the United States.
A pullback in U.S. import and export activity would present yet another challenge for the shipping and airline industries, as well as other transport companies that are struggling because of a slowdown in trade and massive overcapacity. Shares of A.P. Moller-Maersk A/S, the owner of leading container shipping line Maersk, fell on the Danish stock exchange amid fears that protectionism could proliferate. Analysts and economists said new protectionist policies in the United States could spread and diminish prospects for a recovery in trade. Many observers and officials in Europe said the fate of the Transatlantic Trade and Investment Partnership, the free trade agreement being negotiated by the Obama administration and the European Union, is now in question as well.
Lars Jensen, chief executive officer and a partner at SeaIntelligence Consulting in Copenhagen, said if a Trump administration delivers on protectionist measures, “then clearly that is negative for shipping both directly because you will have less shipment into the U.S., and indirectly there is a risk if a major country starts down a protectionist route for a domino effect of other countries also becoming protectionist.” But he cautioned that other presidents, including President Barack Obama, have campaigned about renegotiating trade deals and taking steps to protect domestic workers, and took a more cautious approach once in office.
“America became the world’s dominant economy by becoming the world’s dominant producer. The wealth this created was shared broadly, creating the biggest middle class the world had ever known,” Trump said during a recent rally in Pennsylvania. “But then America changed its policy from promoting development in America, to promoting development in other nations. We allowed foreign countries to subsidize their goods, devalue their currencies, violate their agreements, and cheat in every way imaginable. Trillions of our dollars and millions of our jobs flowed overseas as a result.”
Trump has said he will direct his Secretary of Commerce to identify every violation of trade agreements and use every legal means to end them. He has also said he plans to label China as a currency manipulator and instruct his Trade Representative to bring trade cases against China, both in the United States and the World Trade Organization (WTO).
The United States already brings many anti-dumping and counterveiling duty cases against Chinese products.
Trump also said that if China doesn’t stop taking advantage of trade rules and stealing intellectual property, he would hike tariffs on Chinese products by as much as 40 percent.
The president-elect blames NAFTA for the loss of one-third of U.S. manufacturing jobs, the South Korea free trade agreement for the loss of 100,000 jobs and a doubling of the trade deficit with that nation, and China for sucking up 50,000 factories since joining the WTO. In addition, he said the U.S. trade deficit with TPP member countries has cost more than 2 million jobs and that implementing it would be the “death blow” to U.S. manufacturing.
In campaign speeches, Trump has extolled the original Constitution, saying, “it did not even have an income tax. Instead it had tariffs, emphasizing taxation of foreign, not domestic production.”
But billionaire investor and Trump policy advisor Wilbur Ross, speaking at a shipping conference Wednesday morning in New York, played down fears of protectionism, according to reporting by TradeWinds. High tariffs on Chinese imports would only be considered as a last resort if China doesn’t address its undervalued currency and trade subsidies, said Ross.
“What there will be instead is negotiations product-by-product and country-by-country in a very systematic way, and our country adopting the mentality of a large industrial customer,” he said, as quoted by the marine publication. “One thing he’ll do is play off suppliers against each other.”
Trump victory raises specter of protectionism
