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A trade strategy to rock US ties with allies
Published in The Egyptian Gazette on 21 - 06 - 2018


By the Gazette Editorial Board
SINCE adopting the motto of "America First," US President Donald Trump has raised world concern over his policies towards other countries, including the US's closest allies.
This policy surfaced in his withdrawal from the Paris Climate Treaty and the Iranian nuclear deal and before the latter in his unilateral decision to recognise Jerusalem as the capital of Israel.
During his election campaign, Trump promised to restore US's greatness and strength in the world. Unlike his predecessors, he decided not to rely on US's military power to achieve this goal. The businessman turned politician chose the trade approach to impose US's will on the world. He resorted to protectionist policies to lessen the import of certain products, mainly aluminium and steel, for the benefit of US industries.
To start with, his target seemed to be China whose trade balance tilted dramatically in its favour at a cost to the US. The Quebec G7 summit held in Canada earlier this month, however, showed that his target was much broader. Trump is ready to impose his America First policy even against his closest allies in North America as well as Europe.
At the G7, he asked his partners in Europe and Canada to lift their trade barriers against US commodities while he insisted on imposing tariffs on steel and aluminium imported from those countries. He even threatened to impose a tariff on European-made vehicles.
Trump, as a president who promised his people to promote the industrial sector and create more jobs for Americans, could have the right to impose some protective measures on some foreign imports to protect the local industries. But as head of the biggest capitalist country that continues to force the world to follow a free market economy, it is unacceptable to take such exceptional measures as to cause serious harm to its trade partners.
Even before the creation of the World Trade Organisation in January 1995, the US was among the leading countries to work within the former GATT treaty to force a liberalisation of trade on countries worldwide. Apparently, the aim was to open the markets wide to commodities exported from the developed world. So, these organisations worked for the lifting of all customs duties and tariffs on the exports of the developed industrial countries to the rest of the world.
Apparently, such policies have negatively affected the industries of many developing countries including Egypt. Most of these countries, however, were eager to join the WTO when it was created in the 90's so that their exports of raw materials and agricultural crops would have access to the markets of the developed countries.
Now that the tide has turned against the US market and more countries have managed to produce high quality goods more cheaply than the US equivalent, Trump has chosen to resort to the exceptional procedure of imposing tariffs on some foreign commodities, such as steel and aluminium to protect US industry.
These policies can only have a negative effect on trade and political ties across the Atlantic as the US import of steel from Canada, Mexico and the European Union is valued at some $23 billion. Cutting it would cause serious economic harm to those countries and might lead to a trade war between Washington and its allies who have threatened to take similar measures against US exports to their markets.
So, will Trump continue with his measures that risk the entire free market economic system, or will he drive the world into cornering the US and isolating it from the entire international community?


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