Panic is Not a Good Strategy When Considering Future Trade Policies
By Ben Conner, USW Deputy Director of Policy
On Nov. 8, 2016, American voters shocked the world and themselves by electing Donald J. Trump to be the 45th President of the United States. To those who trade goods and services across the U.S. border, including wheat buyers, this may be cause for some alarm because of statements made by the President-elect over the past year.
This is, however, no time to panic. The U.S. wheat store will remain open. The President-elect has yet to enact a single policy, and campaign rhetoric always seems to have a way of adjusting to reality, particularly after a year where rhetorical flourishes played such an outsized role on the campaign trail.
And here is the reality. Much of the U.S. economy depends on a rules-based trading system, including free trade agreements (FTAs) and the World Trade Organization (WTO) agreements. All those agreements have provisions to prevent a country from giving special privileges to their producers.
The reason for that is simple enough: special privileges backfire because other countries impose their own special privileges in response. Sets of rules that create a level playing field, such as a trade agreements, allow people in each country to buy and sell without interference based on their own skills and preferences.
The network of trade agreements to which the United States is party — including NAFTA, CAFTA, the six Trans-Pacific Partnership (TPP) member countries that have existing FTAs with the United States, and the WTO — is integral to the function of the U.S. economy, because so many jobs are in whole or part dependent on international trade.
Wheat is the most export dependent grain grown in the United States and our overseas customers rely on its quality, consistency and reliability of supply. New and existing trade agreements are major contributors to the profitability of U.S. wheat farmers and their customers.
It is difficult to appreciate the scale of that dependence and the ramifications of threats to pull out of agreements or impose WTO-inconsistent punitive tariffs should any of those actually occur. However, it is interesting to see the path one formerly protectionist president took toward more open trade. President William McKinley, once one of this country’s most ardent protectionists, told a crowd shortly before his death: “Commercial wars are unprofitable. A policy of goodwill and friendly trade relations will prevent reprisals. Reciprocity treaties are in harmony with the spirit of the times; measures of retaliation are not.”
It will never be too late for President-elect Trump to come to this same conclusion. Despite his disappointing promise to pull out of the TPP, he is already advocating new bilateral trade agreements (it is worth noting that TPP is essentially a collection of bilateral agreements with some shared language).
Fundamentally altering the interests of the U.S. economic and political systems is much easier said than done. So if you are worried about the continued commitment of the United States to the global trading system, cheer up: the campaign is behind us. The work of governing comes next.
