Question

In: Economics

What changes have taken place in trade policies and agreements in the current political environment? how...

What changes have taken place in trade policies and agreements in the current political environment? how might that impact U.S. relations globally?

Solutions

Expert Solution

These are the three major changes that have taken place in the trade policies of US

1) Higher Tariffs on Chinese goods: The US government has announced that they will increase the tariffs to almost 25% for Chinese goods as a retaliation to the protectionism carried out by China for the US companies. The total import of US stands at 21.2 % as per 2018 data. In response China has also raised the tariffs to additional $60 million of US goods.

Impact: While this trade war is affecting prices all over the world, the two giant countries in term of GDP and growth prospects will topple the global economy. In terms of bilateral relations and US and its image at the global relation, is sure decreasing and tarnished. The G-20 summit and further talks between the two country leaders will further shape the relationship.

2) Iran Isolation: The hegemonic nature of US has once again surfaced in the middle east with Iran at its center of the exploitation. With no specific reason but with drawl from the 2015 nuclear treaty, Iran is facing wrath of US. But this is no bilateral issue as it has now resulted in rise in oil prices, which will further rise goods in the consumer basket.  

Impact: US is now seen as an annoying monitor of the class who punishes his peer for no reason. It has brought a questionable image for US where other nations are trying to advice the two countries to practice restrain. Other major powers are not finding alternatives or clubbing together to fight back the US which is constantly operating on its whims and fancies.

3) India and the GSP - With almost half of its work force hailing from India, US has recently removed India from the Generalized preference system on the account of trade in oil with Iran, which is India's third biggest oil importer. Also, the expulsion is on the ground that India is not allowing US companies to penetrate its market.

Impact: US in this way has brought great trouble in trade and ties between US and India. India in its retaliation has also increase custom duties and tariffs on the US imports.

Making it a difficult ground to play on, US is losing its image as a genuine global economy peace maker, which it always projected. The "America first" policy of the Trump government is seen selfish and ignorant to good of the global community.


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