Insight
Trump’s trade policy: Separating the normal from the dangerous by Noah Gordon 10 November 2017
Some of Trump’s trade actions are traditionally American. Others threaten the future of the World Trade Organisation. Europeans should look past his insults and prepare a response. Europeans worry about Donald Trump’s ‘America First’ trade policy. They know that one of the US president’s few consistent political beliefs is that trade relations are zero-sum, and that countries with trade deficits are losers. He prefers bilateral negotiations in which the US is the dominant partner to tricky multilateral arrangements that constrain American sovereignty. Trump uses belligerent rhetoric that alienates America’s main economic partners: he has called the Trans-Pacific Partnership (TPP) a “rape” of the US and said “the Germans are bad, very bad” because of their trade surplus. He told an international summit in Asia on November 10th that he would not “let the United States be taken advantage of anymore”. But a closer look at current US trade policy shows that the Trump administration’s actions so far reflect a mixture of traditional, assertive American approaches and more troubling new ideas that could have serious consequences for Europe. To see which are which, US trade partners have to go beyond Trump’s insults and look at what his administration does. The Bombardier case is the sort of trade dispute that the US has often had in the past. At Boeing’s request, the US government has proposed tariffs on a series of Bombardier passenger jets; the US authorities will take a final decision in February 2018. Boeing alleges that Canadian subsidies enabled Bombardier to sell the planes below cost price. The proposed tariffs are not illegal, as the World Trade Organisation (WTO) allows countries to impose ‘countervailing duties’ on countries that subsidise imports that hurt domestic producers. Countervailing duties and anti-dumping duties (imposed on firms that sell goods at less than cost price to damage competitors) are commonly used worldwide. It was career civil servants who calculated the high tariff rate on Bombardier – up to 300 per cent – not White House ideologues. Bombardier is one of 39 active US countervailing or anti-dumping investigations.
CER INSIGHT: Trump’s trade policy: Separating the normal from the dangerous 10 NOVEMBER 2017
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