Trade policy has become a scapegoat for deeper concerns, raising questions about the extent to which the next US president will be able to address broader problems that have led to stagnant wages and widening income inequality.
- Trade policy has become a target of voters unhappy with stagnant wages and growing economic inequality. The populist opposition to trade agreements that has emerged during the presidential campaign is serious and reveals deeper anxieties about economic insecurity. This is despite the fact that such agreements help open foreign markets, boosting exports of US goods and services and supporting US job growth.
- Both Hillary Clinton and Donald Trump have taken tough stances on several trade issues, such as opposing ratification of the Trans-Pacific Partnership (TPP) and strengthening enforcement of trade obligations with respect to all partners, especially China.
- Trump differs sharply from Clinton, however, with his threats to tear up existing trade agreements, withdraw from the World Trade Organization (WTO) and impose tariffs as high as 45 per cent on imports from China and Mexico. Such protectionist policies are likely to backfire and hurt the very people Trump purports to want to help. They would make imports more expensive and invite retaliatory tariffs, rendering US exports less competitive. The result of such policies would be not just a weaker US economy, but also a weaker global one.
- Whichever candidate wins, the United States will enter a period of introspection in which current initiatives are assessed critically and new ones developed. There will be pressure to adopt a broader trade agenda that goes beyond traditional issues to address the root causes of growing economic malaise.
- Globally, key partners of the United States will gauge the extent to which the next administration will be ready to engage with them to address common economic and strategic challenges, including the fate of the TPP and the Transatlantic Trade and Investment Partnership (TTIP).