Presumptive Republican candidate Donald Trump has vowed to pull the US out of multilateral trade pacts that ship American jobs abroad and slap China with a string of tough trade measures to bring it to heel.
In a major policy speech on Tuesday, Trump promised to roll out a set of protectionist measures that rattled the country’s trade establishment, the US chamber of commerce.
Though he didn’t mention India, which has an annual bilateral trade with the US of more than $100 billion, New Delhi would have followed his speech with a mix of misgivings and cheer.
Nothing in the speech came as a surprise. Trump has been railing against multilateral pacts such as the North American Free Trade Agreement and the Trans-Pacific Partnership.
And he has been scathing in his criticism of China, accusing it once of “raping” the US economy through manipulative trade practices such as currency devaluation to attract importers.
On Tuesday, Trump doubled down on all of that, arguing “globalisation” has “left millions of our workers with nothing but poverty”, ruined cities and “wiped out our middle class”.
Referring to the vote in Britain to exit the European Union, which he supported, the real estate tycoon said, “Now it's time for the American people to take back their future.”
He spelt out a seven step policy, topped by exiting the TPP, President Barack Obama’s ambitious trade project that is in the process of being ratified by its 14 member nations.
Trump would also renegotiate NAFTA, the US-Canada-Mexico trade deal, to get a better deal — “And I don't mean just a little bit better, I mean a lot better.” Else he will pull out.
And then China - his administration will declare the country a currency manipulator, retaliate with punitive tariffs and taxes, and bring trade cases against it in the US and WTO.
Trump’s openly anti-globalisation rhetoric so worried the American trade establishment that the powerful US chamber of commerce pushed back in real time on Twitter.
His proposals, the chamber argued, would cost 3.5 million US jobs. It added, “Under Trump's trade plans, we would see higher prices, fewer jobs, and a weaker economy.”
From India’s perspective, Trump’s emphasis on correcting trade imbalances could be worrying. India, which is among the top 10 US trade partners now, enjoys a two-to-one surplus in goods trade.
With this imbalance, said Rick Rossow of the Center for Strategic and International Studies, India “runs a risk of becoming targeted, at least during campaign season, much like China is today and Japan has been in (the) past”.
But, he added, India will be cheered by Trump’s opposition to the TPP, because, as studies show, “India may suffer from increased ‘trade diversion’ as other competing economies were more closely stitched together”.
Milan Vaishnav of Carnegie said New Delhi will be concerned about Trump’s preference for bilateral pacts, which goes against India’s “longstanding position” to push for a global trade accord through the WTO.