Non-Credible Commitments: The Weakness of Trumpian Trade

Republican Presidential Nominee Donald Trump has expressed his dissatisfaction with America’s position in world trade through his famous line, “[The United States] doesn’t win anymore!”

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He claims that free trade not only harms American workers, but also leaves them exploitable by “much smarter” negotiators from Mexico, China, and other foreign countries. The rise of powers in Asia portend doom for the United States economy too, as more treasonous businesses move production centers abroad.

While the real economic woes he highlights should have a place in legitimate political discourse, his proposed solutions may be even more dangerous, calling into question the strength and economic stability of the United States.

Trump proposes America leave the World Trade Organization (WTO), the world’s largest and most influential body of trade negotiations. He wants to end NAFTA and prevent the ratification of the pending Trans-Pacific Partnership between America and thirteen Pacific economies. He occasionally suggests instituting new tariffs on foreign goods from China, Central America, and Europe, with figures ranging anywhere from 30% to 45% (Trump’s the kind of guy that doesn’t have time for specifics). Countering protests that the United States has agreed to these arrangements through nothing less than serious treaties, democratic legislation, and international law, Trump argues that as president, he could abolish it all and start from scratch.

But could he?

Maybe… but probably not. The trade deals Trump references have been negotiated over decades, with incredibly complex legal language worked out by bureaucracies worldwide. In fact, the current round of WTO discussions has persisted since 2001 without a fully finalized agreement. World leaders have never seriously discussed the mechanisms necessary to effect a full-scale withdrawal from these complicated agreements because all sides assume the others will follow through on the deals. U.S. presidents do have the ability to unilaterally withdraw from NAFTA, the free trade agreement between America, Mexico, and Canada, but the consequences of such an action—especially the potential retaliations from the other two member states—are impossible to fully predict. It is no surprise that many economists are in general agreement that Trump’s protectionist “policies” would actually plunge America into a new recession before providing any sort of economic boost.

Additionally, Trump’s brazen proposals are dangerous to America’s place in the world. They recklessly dismantle the years of trust America has built in the international system. NAFTA, the WTO, and the United Nations do not disappear at the whims of the American president. They are complicated, binding documents that confer consequences on all parties if someone backs out. Never before have world leaders seriously considered the United States might be the dead weight.

Take the World Trade Organization, for example. In a 1994 Agreement, the United States and 123 other nations agreed to legally bind themselves to lowering taxes and tariffs on each other, molding this deal into the WTO in 1995. As a result, the WTO facilitates “concessions” between member countries, easing the transport and sale of goods from America abroad. As part of this system, countries can charge other nations for infringements on these fair trade laws, a system which is regularly utilized and widely respected. In recent years, Obama’s administration has filed 13 complaints against China for unfairly pricing goods and raw materials in American markets.

Nonetheless, what if America spontaneously announced it would no longer respect the legality of the WTO’s highly regarded adjudication? Furthermore, what if America simultaneously announced it would no longer protect its allies, or would consider defaulting on its debts for the first time in history? The result of these deleterious declarations—all Trump policies—would be a sidelining of the U.S. in international discussions while allies and partners wonder what promise America would break next. In short, Trump’s policies wouldn’t make America “great” again, but weak and irrelevant again.  

It is fascinating that many American political discussions rarely mention the miracles currently playing out in China, Mexico, and the rest of the developing world as a result of their governments’ trade policies. For example, in the past century China has largely succeeded in lifting one billion workers out of extreme poverty and placing them into relatively well-paying jobs. Production centers and factory work in Asia, Africa, and South America have begun to change the trajectory for millions of workers striving for decent lives. Where this has meant losses for American workers is lamentable, and warrants discussion on future measures for truly equitable progress. However, we only harm ourselves by giving foreign leaders reason to question whether the world’s most powerful nation will follow through on a commitment.

In this way, Trumpian trade is not based on strength. If it were, the Republican nominee would be discussing how to improve American incomes with legal, practical, and promising proposals. A strong president would lean on America’s indispensable involvement in the global economy to direct thoughtful measures to actually benefit American businesses.

Instead, Trump’s reckless, inconsistent, and unbelievable calls to pull America away from its powerful place in the world represent the most Trumpian traits of them all: fear, bluster, and overwhelming cowardice.

Kyle Rinaudo