Trade policy in President Trump's next term

By comparing "tariffs to the most beautiful word in the dictionary", US President-elect Donald Trump has an overarching implication for the trade policy goals that his government has pursued during his previous term as well as the upcoming term.

For him, tariffs are used as a strategic tool to confront trade injustices and revive some domestic industries. This trade policy is an important part of the "America First" agenda that he pursues.

Donald Trump and ChinesePresident Xi Jinping during a meeting at the G20 Summit in Japan in 2019

PHOTO: REUTERS

Many economists and policy commentators have strongly criticized Trump’s trade policies as protectionist and not good for the economy in general (such as higher prices for consumers and job losses for workers in some industries due to retaliatory tariffs). According to orthodox economic theory, the benefits of free trade are undeniable. But in reality, trade is a policy determined by politics . And here we can see the rationality of Trump ’s trade policy, stemming from the following two important factors.

Two key factors

First, the rise of China (with its economic strength increasing to enhance its military capabilities) forced Washington to see Beijing as a rival that needed to be countered on all fronts. During its first term, the Trump administration carefully analyzed China’s “Made in China 2025” plan. The US Trade Representative (USTR) concluded that in pursuing its industrial policy, China had engaged in unfair practices (such as forcing US companies that wanted to do business with China to transfer technology), causing damage to the US economy. This conclusion paved the way for the US to impose punitive import tariffs on China. This began with a 25% tariff on $34 billion worth of Chinese imports in July 2018, opening the US-China trade war. During his recent election campaign, Mr. Trump threatened to impose a 60% tariff on imports from China. It is difficult to predict how far he will go, since threatening to get results is a key part of his strategy. But the move sends a clear message that a second Trump administration will be tougher on China. It is also a move toward shifting the US global supply chain, reducing its dependence on China. To avoid high import tariffs from China, many multinational companies will move production from China to other countries or to the US. With the US-China competition increasingly fierce, especially in the high-tech sector, Washington will not hesitate to use many trade defense measures. Second, President-elect Trump and his close trade advisers (such as former US Trade Representative Robert Lighthizer) believe that trade policy should be implemented to protect the US working class, especially the manufacturing sector in industries such as cars and steel. Accordingly, reviving the manufacturing sector is the most practical action to help people and communities that have been harmed by imports. Moreover, this helps maintain an industrial base necessary for national security. In fact, it is no coincidence that China is the world's largest steel producer, with excess production to dump on the US market.

The review is coming soon

Critics will be quick to point out that manufacturing currently accounts for less than 20% of US GDP and that tariffs on imports like steel will raise the cost of production for many other industries that use steel as inputs, which is not in the overall interest of the economy . In an interesting move, 23 Nobel laureates in economics signed an open letter supporting Kamala Harris and criticizing Trump's economic policies as "counterproductive". But most workers and communities hurt by imports disagree and may see Trump as a "savior". The US stock market also experienced a record day of gains in response to Trump's victory. In terms of using tax tools, the Trump administration prefers bilateral negotiations rather than multilateral ones like through the World Trade Organization (WTO). Partner countries can expect this over the next four years as the Trump administration reviews US trade agreements to pursue new goals. Since taking office in 2017, President Trump has made it clear that he is a pragmatist, inclined to negotiate and trade to achieve his goals. Trump’s second term trade policy will be dynamic and clearly demonstrate the fact that politics – not economic theory – determines trade.

Mr. Hegseth speaks at the Fox News awards ceremony in Tennessee on November 16, 2023.

PHOTO: AFP

Surprise with Trump's upcoming cabinet

Yesterday (Vietnam time), US President-elect Donald Trump continued to announce his cabinet nominees after he officially returns to the White House in January 2025. According to Reuters, the surprise was that Fox News host Pete Hegseth (44 years old) with anti-Pentagon views was nominated for the position of US Secretary of Defense. He was a captain in the National Guard, having served in Iraq and Afghanistan. After being discharged from the army, he began hosting television programs in 2014. Mr. Hegseth graduated with a bachelor's degree from Princeton University (New Jersey) and a master's degree in public policy from Harvard Kennedy School (Massachusetts). Although he had served in the army, Mr. Hegseth is said to have no experience in high-level military or national security. Meanwhile, Mr. John Ratcliffe, former Director of National Intelligence (DNI) in the last 8 months of Mr. Trump's first presidential term, was chosen as the new Director of the Central Intelligence Agency (CIA). As DNI, Ratcliffe has been accused by Democrats and former intelligence officials of being a “tool” for Trump and his Republican allies to attack political opponents, including Joe Biden. Ratcliffe’s office denied the accusations at the time. Trump also announced that he had tapped billionaire Elon Musk, founder of SpaceX and Tesla, and entrepreneur Vivek Ramaswamy to co-head the newly created Department of Government Efficiency. “Musk and Ramaswamy will pave the way for my administration to dismantle government bureaucracy, reduce excessive regulations, cut wasteful spending, and restructure federal agencies,” Trump said on Truth Social. The new department is expected to provide advice and guidance outside of existing government agencies and work with the White House and the Office of Management and Budget to push for broad structural reforms and create an entrepreneurial approach. On the same day, South Dakota Governor Kristi Noem was also nominated for the position of Secretary of Homeland Security in Mr. Trump's next term. In her new role, Ms. Noem is expected to work closely with Mr. Tom Homan, who was chosen as a senior official on US border issues, to implement Mr. Trump's campaign promise regarding immigration. Previously, Senator Marco Rubio was chosen by Mr. Trump as US Secretary of State and Congressman Mike Waltz was nominated for the position of National Security Advisor. Meanwhile, Congresswoman Elise Stefanik will be the US Ambassador to the United Nations and Ms. Susie Wiles will be the White House Chief of Staff. Thuy Mien

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