The maverick American president has outraged the world, be it on trade treaties, climate change policies, nuclear deals or moves on IT companies. Can such a protectionist approach help the US?
~By Seema Guha
US President Donald Trump’s flurry of Executive Orders since taking office is causing shock and awe across America and the world. A first-time politician, the maverick real-estate tycoon is challenging everything the free world took for granted.
One of his most controversial orders was banning citizens of seven Muslim countries—Libya, Somalia, Iraq, Iran, Sudan, Syria and Yemen—from entering America. This led to protests across the US and a temporary restraining order by Seattle judge, James Robart. The White House Administration will challenge this order by February 13 and the matter could go up to the Supreme Court.
Trump’s Order has caused world-wide outrage. Anything this superpower with its $17-trillion economy does will reverberate across the globe. And Trump’s actions over the past few weeks have caused a lot of consternation—his anti-immigrant rhetoric, rants against multilateral trade pacts such as WTO, calling into question the Iran nuclear deal, the threat to build a wall along Mexico, dismissing global warming…. These reflect the views of ultra-conservative voters who voted Trump to power. If Trump continues to follow their wishes, the US may just become the fortress rural voters want.
The carefully structured order put in place painstakingly since the end of World War II is now in danger of being overturned. Nothing is sacrosanct for the President. He is questioning every pillar put in place since 1945, be it the mantra of globalisation and free trade stitched together by multilateral pacts, defence agreements like the North Atlantic Treaty Organisation (NATO) or America’s long-held practice of embracing immigrants. Anything that he thinks stands in the path of his “Make America Great Again’’ slogan is being thrust aside. But there is also stiff opposition.
America and the world are fighting back. Protests against Trump’s travel ban and other policies have sprouted across the globe. In London, people have started an online petition to stop Trump from visiting the UK. The Speaker of the House of Commons has declared he does not want this American President to address the British parliament.
American tech companies too are up in arms. More than 100 big names such as Microsoft, Apple, Facebook, Reddit, Netflix, Uber and others have filed a legal brief opposing Trump’s travel ban, arguing that it would give them strong incentives to move jobs outside the US. They said the Executive Order banning citizens of the seven Muslim countries and all refugees “inflicts significant harm on American business”. And Starbucks, in a defiant move, announced that it would hire 10,000 refugees over the next five years across the globe.
Trump even took on NATO during campaigning but changed his stance soon after. Western democracies have long believed that peace in Europe was maintained, thanks largely to NATO. As a presidential candidate, Trump was critical of this organisation, calling it obsolete and ill-prepared to confront modern-day threats. He had said that US military support for NATO member states was conditional on whether they met their financial obligations to the bloc. However, on February 6, he vowed stout support for NATO, even as he insisted that member countries scale up their defence spending on the alliance.
The American establishment is also outraged at what it sees as Trump’s outreach to Russian President Vladimir Putin. With renewed tension between the US and Russia over Syria and Ukraine, Putin has long been the object of hate of the US government and media. Trump shocked patriotic Americans recently when, in reply to comments about Putin being a killer, he shot back: “You think our country is so innocent?’’ Trump is right. The destruction of Iraq triggered by the US invasion of it indirectly led to the rise of ISIS, the most lethal of Islamic terror groups.
While Trump has been supportive of Putin and Russia, he has, in the past, often directed his ire at China. How Washington-Beijing relations pan out will be closely watched across Asia.
As for WTO, Trump had suggested in the past that the US could pull out of it and said the EU had been created largely to compete against the US in international trade. Free trade has been at the heart of American prosperity. It is the mantra of both the Democrats and the Republicans.
Trump abhors multilateral trade blocs. He has already pulled out of the Trans-Pacific Partnership and wants the North Atlantic Free Trade Agreement reworked to America’s advantage.
Multilateral trade agreements, according to Trump, do not help America. Ironically, he himself had gained enormously from free trade. His business spans across 25 countries, including Egypt, Saudi Arabia, UAE, Turkey, Azerbaijan and even India. But many of these are licenses to local businessmen to use the Trump franchise.
Despite investing in foreign countries, he is now threatening American, German and Japanese carmakers to make in the US or face levies to sell in his country. Ford was told to shelve plans to open a new plant in Mexico. During a campaign speech in New York, Trump threatened: “Let me give you the bad news: Every car, every truck and every part manufactured in this plant that comes across the border, we’re going to charge you a 35 percent tax.”
American automakers are falling in line. With the US being one of the largest car markets, no one can afford to lose out. This, together with the promise of bringing down corporate taxes, will ensure that jobs stay in the US. So protectionism will kick in under Trump.
He has succeeded in shaking up things. But will he replace the old world order? The verdict is still out.