1. NS3040 Fall Term 2017 Protectionism 2017
Federal Reserve Bank of Chicago, Strong Dollar Weak Dollar

2. Overview
During election campaign, Donald Trump criticized decades of US policy and pledged to security better trade deals
Put “America First” strategy
Upon taking office Trump withdrew from the Trans-Pacific Partnership (TPP), but 10 months on his trade agenda remains unclear.
The United States last ran an annual trade surplus in 1975
Trump has focused on the country’s trade deficits
Feels the deficits are a sign the global trade regime is tilted unfairly against the United States

3. U.S. Trade Balance

4. Trump Agenda I North America
Trump administration is attempting to renegotiate the North American Free Trade Agreement (NAFTA)
US trade with NAFTA partners was $1.2 trillion in 2016
While the country’s interconnected supply chains are a source of competitiveness, the United States runs trade deficits with both Canada and Mexico
Trump has attacked NAFTA on a number of grounds
Now he apparently wants to revise NAFTA rather than start again from scratch
Areas of contention include (same objections in TPP)
Digital trade
Cross border data flows and
Labor and environmental protections
Oxford Analytica, United States: Trade Plans to get Nastier Not Clearer, August 1, 2017

5. Trump Agenda II
U.S. would also like to exclude NAFTA’s dispute settlement mechanism
Doing so would make it easier to restrict imports from Mexico and Canada through antidumping and countervailing duties
Canada and Mexico clear that eliminating Chapter 19 is unacceptable.
Other objectives expected to prompt disagreement
Strengthening rules of origin provisions and
Establishing an “appropriate mechanism” to address currency manipulation.
Since the U.S. listed reducing trade deficits as its top objective, may mean trade restrictive measures are under consideration.

6. Trump Agenda III
China
Trump criticized China’s economic policies throughout his campaign
Threated to
Label country a currency manipulator and
Impose a 45% tariff on US imports from China
Upon taking office instead
Launched the US-China Comprehensive Economic Dialogue and
Initiated a 100-day plan to reset the relationship

7. Trump Agenda IV As of October momentum has stalled
Progress limited toward end of year
China’s 19th Party Congress in autumn
Fractious U.S. domestic policies and
Deteriorating relations over North Korea
All creating climate more likely to produce heightened nationalism than cooperation.
Number of Chinese acquisitions of US companies rejected on national security grounds has increased significantly since Trump assumed office

8. Trump Agenda V East Asia
Trump administration turned its focus in East Asia to bilateral agreements
Decision to abandon the TPP has damaged the credibility of U.S. negotiators in the region
The TPP’s eleven remaining countries, particularly Japan expended significant political capital on the agreement prior to US withdrawal and are reluctant to re-engage
Japan
Has not reciprocated US interest in negotiating bilateral talks
Is unwilling to make the extensive domestic concessions U.S. negotiators would ask for while not being able to accomplish objective of countering China’s expanding influence in the region

9. Trump Agenda VI
U.S. negotiators have also brought up the US-South Korea free trade agreement signed in 2012
South Korean government is willing to address US concerns but does not want to reopen talks
Europe
Diplomatic disputes between US and EU suggest dim prospects for the Transatlantic Trade and Investment Partnership (TTIP) for which negotiations started in 2013
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