By Isaac Cohen*
Two major accomplishments in international trade can be credited to President Donald Trump, at the start of this year. The Phase I agreement with China has been celebrated by both parties as a victory, because it basically deals with what is known as “low hanging fruit.” The second accomplishment was the ratification of the new NAFTA, now known as the USMCA, preserving more than $1 trillion a year of trade between the United States, Canada and Mexico.
The question is what restrained the protectionist temptations that have so far emanated from the White House. The most plausible explanation is that President Trump was running out of time. The uncertainty caused by both pending negotiations was hurting some of the constituencies that will be decisive in the next elections. Resigned, President Trump declared that the most difficult negotiation of Phase II with China will happen after the 2020 election.
Farmers in the mid-West sacrificed hard won market shares in Asia, with US agricultural exports to China dropping from $20 billion in 2017 to $9 billion in 2018. The Secretary of Agriculture Sonny Perdue admitted “you can’t pay the bills with patriotism.” (The Washington Post 11/14/19).
Because of the protectionist tariffs, the manufacturing sector supposedly was expected to attract new foreign direct investment, but if fell into recession during the first half of 2019 and producers of heavy machinery, such as Caterpillar, blamed the trade uncertainty.
By the end of the year, exasperated, an editorial in The Wall Street Journal (12/16/19) declared, “Donald Trump is the most protectionist American President since Herbert Hoover,” who presided over the Great Depression.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
