On Trade, No One Is Waiting for Washington

Shipping containers at a port in Tokyo, Japan, in 2014. (Toru Hanai/Reuters)
Trump’s protectionism hasn't stopped increasing cooperation in the rest of the world.

President Donald Trump’s flips and flops on trade are now as ubiquitous as his 5:00 a.m. tweets. Many predicted that trade-expansion efforts would come to a standstill and world commerce would suffer amidst all the uncertainty. Instead, the precise opposite has happened. In the last few months, it’s become clear that, while we may have historically been this trade system’s champion, we are no longer its linchpin.

America’s president has zigzagged mightily. He warns of steel and aluminum tariffs on allies, then he exempts key countries. He threatens a trade war with China, then he backtracks. He calls the WTO a “disaster,” then his top officials sing its praises. He withdraws from the TPP immediately after taking office, and now it seems he wants back in.

As America lurches — however inconsistently — toward protectionism, the rest of the world is responding with a simple proposition: more trade. We are not witnessing a collapse of the liberal economic order. We’re watching its expansion.

In December, Japan and the EU finalized a free-trade agreement that will overtake NAFTA to become the world’s largest, covering nearly 30 percent of global GDP. Negotiations took on a new vigor last year, as Trump’s withdrawal from the TPP and his campaign’s attacks on the TTIP upped the ante for Tokyo and Brussels, respectively.

The Japan–EU deal is impressive in its scope, but what drew the most attention was the rhetoric that accompanied its announcement. The agreement, EU and Japanese leaders proclaimed, was meant to “send a clear signal to the world” that the two parties would lead the charge in “fighting the temptation of protectionism.”

Sure, the pithy statements were a veiled barb at the country that had just tanked the signatories’ other landmark deals. Everybody understood the reprimand of Washington. What people did not understand was the warning that the rest of the world would not be kept waiting.

And indeed it hasn’t. The TPP has since been resurrected without the U.S. — and, notably, without 22 proposals championed by Washington but deemed dispensable in its absence. Aiming to bring East and West together as the North steps back, the sweeping agreement was signed last month in Chile.

Chile, itself a free-trade leader, is also a member of Latin America’s Pacific Alliance, which has recently ramped up its overtures not just in the Asia-Pacific — attracting Australia and Singapore as associate members last year — but elsewhere in Latin America. There are now efforts to merge the Pacific Alliance with its Atlantic-facing neighbor, Mercosur, with the help of new trade-friendly administrations in Brazil and Argentina.

Mercosur, for its part, is finally wrapping up trade talks with the EU. Effectively dormant for years, the negotiations were given new life last year as a retreating U.S. spurred wholesale bet-hedging across the globe. A Mercosur–Canada FTA is now in the works, too.

Contrary to what many predicted, the world isn’t following Washington’s protectionist lead. This is both comforting and worrying.

And Europe, Asia, and Latin America are hardly alone. Last month also saw the creation of a massive free-trade area in Africa, where 44 countries have moved to scrap tariffs on 90 percent of goods. The unprecedented agreement is projected to double intra-African trade in a continent where consumer and business spending is set to approach $7 trillion by 2030.

Contrary to what many predicted, the world isn’t following Washington’s protectionist lead. This is both comforting and worrying.

On the upside, it means the doomsday predictions that ran rampant after Trump’s election won’t become reality; the trade regime that revolutionized the world is nowhere near done expanding. On the downside, U.S. moves to “go it alone” will do real damage that can’t easily be undone once we’re ready to rejoin the game.

The damage is, in part, reputational — that is already becoming clear. Just look at the subtle and not-so-subtle gibes from traditional allies in Ottawa, Brussels, Tokyo, and Mexico City. Canada’s pitch to foreign investors used to rely on selling the country as the “51st state.” Today, our neighbor has sadly adjusted its spiel as the U.S. is becoming a liability as much as an asset.

But the damage is also substantive. Whether Washington’s protectionist turn lasts eight years or four, there’s no doubt that the terms of engagement will have changed by the time we’re ready to come back. The U.S. will shift from rule maker to rule taker. Indeed, snickers abounded when the U.S. expressed a recent interest in rejoining the TPP. The message from signatory countries was clear: Come back whenever, but take it as it is. Worse yet, the more we turn away, the more eagerly other powers — China first and foremost — step in, whether in Latin America, Africa, Asia, or Europe.

The U.S. is a founding member of the current trade system, which has brought the world so much prosperity. And the fact that the system continues to function notwithstanding Trump’s cold shoulder is a testament to its strength. But as the world continues along without Washington, let’s not fool ourselves into thinking everything will be the same once we’re ready to come back. No one is waiting for the United States.

Peter Schechter is a political analyst, an author, and a co-host of the international-affairs podcast Altamar. He was previously the Atlantic Council’s senior vice president for strategic initiatives. He is on Twitter at @PDSchechter.


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