Trump’s midway point and his trade policies so far
Galvin – Trump & Trade – The Galvin Round-Up
We are halfway through Donald Trump’s presidency, and as such, many have been reflecting on the changes he has made and the policies he has put through so far, and how they will affect international business. When it comes to trade, there’s a lot to go through – and there have been a number of significant policies that will, or have already, affected global business.
When Trump came into office, he had already spoke at length about his thoughts on US trade with the world. He made it very clear that he thought the US had a trade deficit and had been importing more goods than it exports, and said this had led to the US being treated unfairly by other countries. He quickly pledged to change that.
Shortly after Trump came into office, he prioritised restricting imports and boosting exports by bringing more jobs to the US and increasing production.
He soon brought the US out of the Trans-Pacific Partnership (TPP), a partnership between 12 countries including Japan, Malaysia, Singapore, Australia, New Zealand, Canada, Mexico, and others, agreed in 2016, and representing around 40% of the world’s economic output.
The agreement aimed to deepen economic ties between the partner nations, decreasing tariffs and trading with each other, and working closer on economic policies and regulation. Many saw it as a chance for the US to bolster its position in the Asia-Pacific region.
Soon after, Trump said he planned to pull the US from the North American Free Trade Agreement (NAFTA), and replace it with a US-Mexico-Canada Agreement – which must be renewed every 16 years. One big change will be the introduction of two measures involving the auto industry.
In order to avoid tariffs, 75% of an automobile’s content must originate within North America, rather than 62.5%. This would reduce the import of components from Asia. And by 2023, the deal will require 40% to 45% of production to come from workers who are paid an average of more than $16 an hour, above current Mexican wage levels.
Critics say this will make cars more expensive and will disrupt supply chains to such an extent, that it could threaten to make the US auto industry worse off.
And then Trump made a series of decisions and actions that led to what is now being referred to as a trade war, with tariffs between the US. and China.
Trump introduced steel and aluminium tariffs and entered into what some would call a game of tit-for-tat with China. Experts have warned that it threatens to damage broader US-China relations. However, it’s predicted that the tariffs Trump has introduced will cut US imports of certain Chinese goods by more than a third, and lower the US’s bilateral trade deficit by 17%.
If you’re looking at how to expand business and are concerned about how US policies might affect you, speak to the experts at Galvin International for advice and guidance. Get in touch to find out how we can support your business in uncertain times.
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