With the fallout from the recent US election, many are feeling uneasy about the year ahead. Rising nationalism in Europe, along with a growing protectionist trend towards international trade are certainly a cause for concern.
Resistance to multilateral free trade deals has been gaining ground globally, with many advocates of free trade agreements such as Transatlantic Trade and Investment Partnership (TTIP) and the Trans Pacific Partnership (TPP) facing considerable public opposition. However, this strong opposition has now become a deal-breaker, rather than a constructive negotiating mechanism, in the wake of the new US administration.
A (new) era of protectionism?
Dan Ikenson, the director of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, remarked on the unusually protectionist agenda of the US president, in a recent article on the Bloomberg website: “Never has the president been the one to initiate protectionism or been so vocal about turning inward.”
He also pointed out that since 1934, US trade policy has been “geared toward liberalization and accommodation and internationalism” on a bipartisan basis. It is worth noting that criticism of his trade policies has also come from both sides of the political spectrum.
Nevertheless, while the US has historically been a very public advocate of free free trade, in practice protectionism is certainly nothing new – especially when a liberal attitude to trade did not lie in it’s favour. According to a report by Credit Suisse on globalisation in 2015, the US has consistently imposed far more protectionist measures than any other state.
For the future of multilateral free trade treaties however, the new stance of the US will remain a significant obstacle. President Donald Trump’s openly hostile policy towards free trade poses problems not only in regards to future negotiations of such deals but also the ratification of existing agreements. The US has already opted out of the TPP deal and has plans to renegotiate NAFTA and TTIP, marking a strong contrast to the policies of former President Barack Obama.
But is walking away from these deals really the best option?
Much like the logic behind the Brexit campaign, the reality of an opt-out is not always as simple as it sounds. In addition, hitting out against trade will likely impact those he is claiming to protect the most.
The future looks bilateral
Trump has made it very clear he is not a fan of multilateral trade. The US has already taken steps to pull out of the TPP, signed by the Obama administration earlier this year, causing the deal to become effectively void.