Trade tariffs as an instrument of international policy

When Donald Trump who made a name for himself in the construction industry in New York decided to enter the field of politics he promised that were he to be elected the country's president, he would make America great again. MAGA became an important slogan for building a large, cult-like political support in the country. Those who became his steadfast supporters put MAGA on their red hats as did Trump himself. He won the presidential election in 2016 defeating narrowly the Democrat Hillary Clinton. He brought significant changes to America he led in the four-year period of his first presidency, 1917-1921. However, he lost narrowly to the Democrat Joe Biden in the elections of November 2020 but refused to accept defeat which he ascribed to massive electoral fraud and rigging. In a speech given at the Ellipse, the ground behind the White House, he encouraged his followers to march to the Capitol, the building that houses the two branches of the American legislature. The result was what has come to be known as the "insurrection" in which some law enforcement personnel were killed. He is now back at the helm. What would happen to America and its relations with the world during his second term?

There is still more than a month and a half left before Trump, elected on November 5, 2024 as America's 47th president, moves into the White House and takes command of policymaking in the US. In his long campaign to return to the residence of the US president and in a study drafted by some of his close associates titled 'Project 2025', Trump has already revealed a great deal about the policies he would adopt once he is sitting in the Oval Office. Several of these will have enormous consequence for the US dealing with the world.

The most important move he will make once he takes over as president is in the area of international trade. The other is the prospect of peace in the highly troubled Middle East. The latter was the result of the work done by President Joe Biden but Trump in his campaign speeches had declared that he would bring peace to the Middle East on the first day he was in the office. That would be on January 20, 2025. In the article today, I will write about the use of tariffs to bring about major changes in America's relations with the world. The focus of this move are America's major trading partners – China, Canada and Mexico. I will write about the changing situation in the Middle East in the article next week. While Pakistan is part of the geographic space identified as the 'Middle East', developments in that part of the world would have consequences for the country.

There were different stated reasons by President-elect Donald Trump for moving against the country's important trading partners. Most informed commentary on the declared objectives of Trump's trade policy saw the move by the incoming president as an opening salvo in the high-stake negotiations that would rattle businesses and governments on two continues – North America and East Asia. The incoming president is threatening to blow up more than $2.1 trillion in annual two-way trade with Mexico, Canada and China. The potential upheaval would put at risk major supply chains, including those managed by automakers and appliance manufacturers. Catherine Rampell wrote in a column for The Washington Post headlined, "Trump's tariffs are bad news for grocery prices". Her contribution examined some of the consequences of Trumps' announced trade policies. She focused on the impact of the Trump's stated moves on fruits and vegetables Americans don't or can't grow at home. Each year, Mexico sends America $19 billion worth of agricultural products. "For some common grocery items – such as ones Americans eat year-round – we're especially reliant on our southern neighbor. About two-thirds of fresh tomatoes that Americans eat are from Mexico; same goes for 90 percent of avocados," she wrote.

Housing sector would be seriously hurt since a quarter of lumber used in the US comes from Canada even after the very high tariffs that are already in place on construction wood products. Canada and Mexico also provide many other home building materials, including cement, metals and machinery. The cost of housing was one of the major points of contention in the campaign that led up to presidential poll of November 5. Kamala Harris, the Democratic contender, promised to build hundreds of thousands of new homes to lower house prices. Implementation of such a policy would mean importing billions of dollars worth of house-building materials from Canada and Mexico.

Trump is also threatening to disturb petroleum supply and distribution system that has been developed over the years. The US is a critical partner of Canada and Mexico in moving the supply chain of petroleum products. This would be disturbed by the incoming president's threat to impose tariffs on petroleum products. According to Patrick De Haan, head of petroleum analysis wing at the firm GasBuddy, American motorists would pay between $6 billion to $10 billion more per year. This estimate is based on the price of petroleum at the service stations.

The automobile sector would be seriously affected by the way Trump is likely to work with the country's neighbours. "Our auto industry is incredibly well integrated across North America, with parts and components crossing borders many times in the process of making a car/truck," notes University of California, Los Angeles, Professor Kimberly Clausing. Trump tariffs would roil these auto supply chains, and likely raise automobile prices.

The other shock to the American economy is Trump's intention of rounding up millions of foreign workers who had entered the country illegally and had not acquired permission to work in the country. Undocumented foreign workers make up roughly half of the American agricultural workforce. He is also likely to dismantle the existing visa programme that allows seasonal agricultural workers from foreign lands to enter the US legally and return to their homelands after the work season is over. This touch-and-go system of providing workers to the sector of agriculture means that the farm owners can't plan on a long-term basis. Immigration has also been important in developing some of the modern sectors of the American economy. Migrants from India are playing important roles in developing America's technology sectors.

At this point it seems that during the four-year period of Trump's second presidency, America's relations with the world would change dramatically. Thisa, however, would not be for the better.