Donald Trump has promised – or threatened – to cancel the Trans Pacific Partnership Agreement, to pull out of Nafta, to take action against Mexico and to name China as a currency manipulator. Markets and governments are now waiting to see how many of these he does in his first hundred days.
He will be told that he has to work within US and international law, and abide by the rules of the World Trade Organisation. He can pull out of the Pacific trade agreement. . He can give notice to quit Nafta, but will need subsequent legislative change from Congress and the Senate. He can open new proceedings against Mexico if he has evidence of trade violations. He does not appear to have the evidence to claim that China has been a currency manipulator under international trade law. There are no signs that China has been consistently intervening to get its currency down in recent months.
If he adopts the Republican proposal for reform of company taxation, that in itself will provide a substantial tax based boost for US exports and a hit to imports into America. The idea behind the party scheme is to exempt exports from their revised business tax, but to ensure imports carry its full force. Some say it is not compatible with WTO rules. The Republicans disagree, and the USA has more clout in international bodies like the WTO than any other country.
Globalists and free trade enthusiasts are concerned lest Mr trump’s America first agenda prompts retaliatory actions and makes protectionism fashionable. People on both sides of the Atlantic who have seen their jobs go or their wages cut thanks to low cost competition from Asia or Latin America will be egging him on.