Donald Trump’s return to the White House is expected to bring new dynamics to U.S. international trade policy, with possible shifts that could impact global markets. Known for his “America First” stance, Trump has historically taken a protectionist approach, aiming to reshape trade agreements and reduce trade deficits by bolstering American manufacturing and workforce opportunities. With his return, industries worldwide are anticipating how these policies may unfold and affect key regions like China, Europe, and North America.
Revisiting China Trade Policies
During his first term, Trump redefined the U.S. stance toward China, labelling the country as a “strategic competitor” and imposing significant tariffs on Chinese imports, triggering a trade war that rippled through global markets. Despite efforts to mitigate these tensions, relations soured further amidst the COVID-19 pandemic, with Trump amplifying his critiques of China’s economic practices. The Biden administration kept many of these tariffs intact, yet Trump’s return could mean an even harder line with additional tariffs or restrictive measures aimed at reducing U.S. reliance on Chinese goods.
With Trump’s strong stance on trade fairness, he may also push U.S. companies to reshore more manufacturing jobs, potentially through tax incentives or penalties on businesses that outsource jobs. While popular among domestic industries looking to compete on more favourable terms, such moves could strain supply chains and impact consumer costs.
Strengthening Trade with North America
In Trump’s previous tenure, he negotiated the United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA. This updated trade deal emphasised labour protections, environmental standards, and stricter country-of-origin requirements for products like automobiles. Trump is expected to continue focusing on enhancing U.S. manufacturing through partnerships within North America, while likely pushing Mexico and Canada to uphold USMCA provisions more rigorously.
A second Trump term could see increased pressure on both neighbouring countries to support American industries. These changes could provide new opportunities for North American businesses but might also bring about disputes if the U.S. seeks to re-negotiate specific terms to achieve further trade advantages.
Europe: A Shift in Trade Dynamics?
Europe has traditionally been an essential trading partner for the U.S., but Trump’s criticism of the European Union’s trade policies and NATO spending often created tensions. Trump previously threatened tariffs on European cars and other goods, and his return may revive these discussions. He has been vocal about reducing America’s trade deficit with the EU and could propose tariffs or additional trade barriers to achieve this goal.
Trump’s administration may also scrutinise individual trade deals with key EU nations, potentially renegotiating terms that he perceives as unfavourable to the U.S. However, escalating tariffs could lead to retaliatory actions from the EU, affecting products like American agricultural goods and technology exports.
Middle East Relations and Trade Interests
In the Middle East, Trump’s close relationship with Saudi Arabia and other key nations could lead to continued cooperation in energy markets, especially oil. Trump has previously praised Gulf allies for their purchases of American defence equipment and goods, suggesting a continued emphasis on trade relations that benefit U.S. industries. Trade policies here are likely to focus on securing energy partnerships and encouraging more investment in American sectors from these countries.
The Israel-Arab peace accords, known as the Abraham Accords, were among the hallmark trade-related diplomatic achievements of Trump’s last term. These agreements opened up new trade opportunities with Israel, the UAE, and Bahrain. Trump may expand on this foundation, facilitating broader economic cooperation and investments in various industries, from technology to agriculture.
Latin America: Continued Efforts to Curb Trade Imbalances
Latin American trade policies under Trump were focused on stemming illegal immigration while creating more balanced trade agreements. His administration may continue addressing trade deficits with countries in the region while encouraging U.S. investment in Latin America. Trump’s focus will likely be on agricultural and manufacturing exports, as well as seeking ways to curb imports that could affect American producers.
Implications for Global Trade Stability
The global community will watch closely as the U.S. under Trump re-engages with its trade policies. If he pursues aggressive tariff policies, it could lead to increased costs for American consumers and businesses that rely on international goods. The impact on diplomatic relations also remains uncertain, as a strong “America First” approach may create friction with some of America’s longest-standing allies.
Overall, Trump’s approach to international trade is expected to be a balancing act between protecting U.S. interests and sustaining beneficial partnerships. With his track record and stated ambitions, the world is preparing for a potentially more assertive U.S. trade policy that may both challenge and redefine the global economic landscape.