2. Trump “sees trade as a zero-sum game, and sees anyone ‘beating’ the United States as a threat.”
3. Introduction
Post Obama regime newly elected Trump administration has shown a
paradigm shift in US’s International Business policies.
Trump administration has officially stepped out of many treaties and alliances
stating US interest.
US has also created hard business scenario for foreign cooporations by
imposing tariffs and duties.
The economic reasons for the US to leave and renegotiate transnational
agreements seem fairly compelling but From a strategic standpoint, however,
the US may be giving up much of its dominance in different regions.
4. Agreements and treaties
TPP( Trans-pacific Partnership Free Trade Agreement )
• trade agreement between Australia, Brunei, Canada, Chile, Japan,
Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam signed on 4
February 2016.
• After the United States withdrew its signature, remaining nations
negotiated a new trade agreement called Comprehensive and
Progressive Agreement for Trans-Pacific Partnership.
5. North American Free Trade Agreement (NAFTA)
• The United States commenced bilateral trade negotiations with Canada
more than 30 years ago, resulting in the U.S.-Canada Free Trade
Agreement.
• Tariffs were eliminated progressively and all duties and quantitative
restrictions.
6.
7. Reasons
since free trade supported by these treaties allowed relaxation in duties
and tariffs, foreign corporations were able to easily penetrate into lucrative
US market.
South-east Asia provides workforce at very less wages compared to US,
which made US companies to invest and employee people from these
cheap labour regions.
These cheap labour markets resulted in less job creation In US economy.
Because of low or negligible tariffs, tax losses, revenue deficit was a
threating outcome for US economy.
President Trump is reported as having said there are more BMW and
Mercedes on Fifth Avenue than there are Chevrolets in Germany.
8. facts
Monthly wages in Vietnam, can be as low as $120 USD per month, in Mexico
average wage was 4.25$, while US factory workers earn around $2,000 a
month.
after China entered the WTO, there was a loss of 2.8 million manufacturing
and high-tech jobs in US.( source : International Business Times)
since 2011 the US dollar is up 26%, essentially making US products 26% more
expensive on foreign markets and making foreign imports cheaper at home
and abroad.
BMW, Daimler and Volkswagen, all have production facilities in Mexico to
build cars and parts for the American market. President Trump’s proposed 35%
tariff would most likely make this business model non-Profitable, and directly
or indirectly 1,00,000 people are employed with these facilities.
9. Implications
US exit from trade agreements, has created an opportunity for China to
renegotiate trade deals with Agreement allies to gain trade volumes and
establish global dominance in trading.
Initially US will observe a gradual decline in its trade volumes.
US’s status of global leader in free trade will be challenged by rival nations
like China, Russia.
In long term these policies might have both positive and negative
impacts, and US might be forced to renegotiate trade deals.
