Trampled by Trump – The Hindu BusinessLine

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Globalists often bemoan that the US under President Donald Trump is turning globalisation on its head by cancelling multilateral existing agreements, not joining others, and pursuing ‘America First’ policies. They charge that the US is becoming isolationist and is not taking initiatives for the global good. But certainly, no nation engages with other countries where it does not benefit. So if Trump is putting his country first, so are China, India and the UK. Participating in globalisation over the long haul can only be meaningful when it is driven by self-interest. The only difference with the US now is that it is doing it more brazenly under Trump.

Trump withdrew from the Trans-Pacific Partnership, a trade agreement involving 12 countries that had been negotiated by his predecessor, and instead has struck individual deals with China, Japan and South Korea. He believes he can get a better deal one-on-one. Nothing wrong with that, even if the new deals have only marginally improved the US’ position. However, in trade, unilateral approaches in preference to multilateral deals can hurt others because it leads to trade diversion and no net global gains.

That makes those excluded from the deal — usually less powerful nations — worse off. Thus, the US’ pursuit of its own benefit is creating win-lose situations. The least that we should expect from a responsible member of the global community is that it does not harm others’ interests as it pursues its own.

Trump’s unilateralism has been very openly based on leveraging economic strength arising from market size. And these efforts have gone beyond bilateral trade deals to secure American interests. For instance, apart from tariffs on imports to get China to buy more from the US, tariffs were also intended to get China to strength regulations against intellectual property theft; steel tariffs were levied against Turkey partly to pressure for release of a detained American pastor; tariffs were used against Mexico for better control on illegal immigrants trying to cross into the US; and tariffs were used against Thailand for better attention to workers’ rights.

The President gave economic interests as the reason for not considering actions against Saudi Arabia in their execution of Jamal Khashoggi in Turkey. Trump explained that the Saudis were buying a lot of defence equipment worth several billion dollars.

Apart from its market size, the role of the dollar and global dependence on US financial infrastructure such as the US-based SWIFT system for transactions has played an important part in securing leverage. It has been used to infringe on the sovereignty of many countries. A senior executive of Huawei is in Canada awaiting extradition into the US because her company dealt with Iran.

The US is able to enforce its sanctions against Iran because any company or country that violates them will find itself either prosecuted in the US or cut off from US-based financial facilities. The US unilaterally withdrew from the nuclear agreement with Iran even when it was acknowledged to be working and involved other security council members. The US had other objectives in mind and knew it could use its financial controls to squeeze Iran further.

Perhaps one abiding legacy of Trump will not just be his dropping all niceties to reveal the blatant use of the US’ economic strength, but in making it apparent to every other country that unless they develop alternatives, there is a heavy price to pay for US global leadership.

The writer is a professor at Suffolk University, Boston



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