Donald Trump is doubling down on protectionism. He used his first speech as the 45th president of the United States of America to echo his campaign rhetoric, presenting a dark picture of “American carnage” and decay at his inauguration. He's using it to justify his remedy of ending overseas assistance to focus on growth at home. That, though, is likely to quickly come up against harsh global economic realities.
Trump's unusual candidacy was buoyed by playing on people's fears. During his Republican convention speech in July, Trump railed against foreigners taking American jobs and US companies moving overseas. He also said swaths of criminal illegal immigrants are roaming the nation's streets.
He embellished those points in his inauguration speech on Friday, portraying America as being in “disrepair and decay” while other countries were enriched by US aid. He even adopted a mantra made infamous by US isolationists in the 1930s: America First. “Protection,” he claimed, “will lead to great prosperity and strength.”
As he was being sworn in, his staffers overhauled the White House website to reflect his nationalist stance: his trade strategy starts with withdrawing from the Trans-Pacific Partnership, a pact with 11 other countries; the North American Free Trade Agreement with Canada and Mexico is up for the chop too, if “our partners refuse a renegotiation that gives American workers a fair deal.”
What about China?
Here's the rub, though: Trump's goal of making America great again is largely based on boosting exports, as his top economic cabinet picks repeated this week during Senate hearings. International trade helped propel the US economy to its fastest growth rate in two years in the third quarter of 2016, hitting an annualised rate of 3.5 per cent. That was partly thanks to a 10 per cent increase in exports to China and elsewhere.
China, a frequent target of Trump's wrath, is the third-largest export market for US products, behind Canada and Mexico. While the United States has a roughly $300 billion trade deficit with China, American exports have grown by more than 300 per cent over the past decade. In addition, many imports are made with American products. US-manufactured parts, for example, make up 40 per cent of the total components in goods brought in from Mexico.
Politicians tend to leave a lot of campaign pitches behind as they confront the challenges of governing. Abandoning his protectionist perch to placate the foreign countries needed to buy US goods, though, would be a major policy reversal.