What’s next for Trade under Trump?

It won’t be business as usual on trade once President Trump assumes office on 20 January 2017.

The election of an openly protectionist President has uncertain implications for trade and consequently for a small, open trading nation like New Zealand.

Bluster and electioneering aside, the President of the United States has significant powers delegated by Congress, which could, if used, wreak havoc on the global trading system. New Zealand may not be a target but risks getting caught in the cross-fire.

In the short term it’s hard to see a way forward for the long fought for Trans Pacific Partnership (TPP) which Trump opposes.  That is deeply to be regretted for New Zealand which, even with TPP’s short-comings, stood to gain significantly from the agreement, particularly in Japan and the United States.

The issues which TPP sought to address – market access, better rules for trade and investment, enhanced global value chains – will not go away and will doubtless need to be addressed by the partners including the United States. The new President is likely to be less interested in pursuing other progressive aspects of TPP such as environmental and labour protections.

New Zealand will need now to look to other vehicles to promote trade and investment such as the ASEAN-led Regional Comprehensive Economic Partnership (RCEP) and China’s ‘One Belt, One Road’ initiative. China has already signalled a renewed determination to press ahead with regional trade liberalisation. We have work to do still with the European Union, despite growing protectionist pressure there. Our future trade relationship with post Brexit Britain also needs to be secured.

Back in the USA, much will depend on the policies adopted by President Trump, the people he chooses to implement them and the role played by the President himself.

On policies, will disputes and subsequent retaliation become the ‘new normal’ in the US relationship with China?  What are the consequences of declaring China a “currency manipulator”? Will Trump really raise tariffs on China and Mexico and eve rip up NAFTA?  What about multilateral agreements like the WTO – from which he can expect push back – and the Paris Agreement on Climate Change?

On people, who will advise the President on trade?  The head of his trade transition team comes from the private sector, but is an outspoken opponent of NAFTA. Will the Republican policy establishment come back to serve in a Trump Administration?

On the President himself, how will his unpredictable and abrasive character play into global policy?

These are all questions we are asking ourselves the days after an election which has shaken the world.

Meantime New Zealand has a warm and important relationship with the United States to preserve and advance. Key shared interests are at stake. We should certainly not turn our back on our American friends. Hopefully they will not do so to us.

This post has been prepared by Stephen Jacobi, Executive Director, NZ International Business Forum.