Question

The impact of Trump policies on international trade.

 

Answer 1

Donald Trump has consistently made headlines with unusual and potentially dangerous economic policy proposals, including threatening to pull out of the WTO, renegotiating trade agreements, and imposing tariffs on imports from Mexico and China.

If turned into actions, Trump’s trade threats would attract numerous legal challenges by business firms and even states, but his actions would likely survive court challenges. Moreover, Congressional protests would have little effect unless super-majorities amended the statutes over Trump’s veto.

Trading partners harmed by US measures would likely challenge his moves, and claim compensation through the WTO. But rather than wait for vindication in the WTO, they might simply retaliate against US exports, intellectual property, or investment interests.

For e.g

The first scenario is the full trade war, in which Mexico and China respond reciprocally to Trump’s new tariffs with equivalent tariffs on US exports. In the second scenario, asymmetric trade war, China retaliates against specific US exports of goods and services while Mexico imposes its MFN tariffs on all US exports. In the third scenario, aborted trade war, US tariffs are unilaterally imposed for only a single year, and Mexico and China retaliate for the same period.