Old Version

Trump's Protective Trade Policies Face Strong Obstacles

Increasing globalization, global laws expected to beat back protectionist moves from the Trump administration

By Han Bingbin Updated Oct.12

US President Donald Trump’s protective trade policies are expected to face strong obstacles from both home and abroad, said Liao Zhengrong, deputy director of the Institute of Peaceful Development under the Chinese Academy of Social Sciences, writing for Guancha.cn, a Shanghai-based news portal.  

The reorganization of the global industrial and value chain has led traditionally protected industries in the US, such as textiles and automobiles, to become globalized and thus retreat from their protective stance, Liao said. Enhanced protection from global laws, such as WTO rules, will also allow various countries to beat back the protective moves of the US.   

Out of so-called national security concerns, Trump has threatened to impose import taxes on steel products from countries like China. But now even Europe, which always aligned with the US to impose sanctions on Chinese products, doubts Trump’s intentions while fearing they might be treated in the same way. In addition, the price hike in local steel products caused by import restrictions will have a knock-on effect on many other industries in the US, the scholar said.   

Heavier import taxes will eventually lead to the appreciation of the US dollar and add to the country’s export costs, Liao said. China and other US trade partners will also suffer huge losses if Trump were to forcefully increase customs duties, which will hurt the recovering global economy. 

Liao said another unfavorable condition for Trump’s protective trade policies is the tighter monetary policies the Federal Reserve is expected to adopt in the coming years. The combination of slack fiscal policy and tight monetary policy will cause capital to flow back, export costs to rise, and the trade deficit to expand.