How newly elected U.S. president Trump will affect world trade?
World trade was already stalling before Donald Trump won the U.S. presidential election. Now, one of the main engines of global economic growth could go into reverse.
Trump has promised to rip up major trade deals and slap huge tariffs on goods from China and Mexico, two of the Unites States’ biggest trading partners.
“The global economy, international trade and financial markets face an uncertain new world — with the new [U.S.] leader … likely to take the nation down a new isolationist path,” said Lim Say Boon, chief investment officer of DBS Bank in Singapore.
Global trade is stuck in a deep malaise and may even be suffering from “cardiac arrest,” researchers at the Organization for Economic Co-operation and Development warned recently. The volume of trade between nations even declined in the first quarter of this year.
Britain’s vote in June to exit the European Union, its biggest trading partner, delivered a shock to global business. Trump, who said his victory would be “Brexit plus plus plus,” could make matters worse on a number of fronts.
Canada and Mexico
Trump has repeatedly blasted NAFTA — the free trade deal between Canada, Mexico and the U.S. — claiming it “has destroyed our country.” He says he will entirely renegotiate or “terminate” the agreement.
Experts say tearing up NAFTA would be hugely disruptive for all three economies, and it’s unclear what the U.S. would gain from doing so.
“It is hard to know what he hopes to achieve,” said Paul Ashworth, chief U.S. economist at Capital Economics. He described Trump’s main objections as “economic gobbledygook.”
The Pacific and Europe
Two other huge international trade deals negotiated under President Barack Obama are in even greater danger.
Trump has made no secret of his scorn for agreements like the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).