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A year after President Donald Trump took the oath of office as the US President, ripples of his ‘America First’ policies are already felt across the world. He has stood fast on his promise of retaliating o trade agreements that he says are unfair to the Americans. President Trump recently imposed hefty tariffs on the importation of washing machines and solar panels (Heydarian, 2018; Vaswani, 2018; Meyers, 2018). China, one of the major exporters of these commodities will be hardest hit by this policy leading to a culmination of trade wars with the US reports Meyers (2018). However, according to Heydarian (2018), the policy does not merely affect China alone; South Korea and Europe countries are also affected by these policies. The President also hinted that he might be imposing additional duties on imports of steel and aluminum as reported by Vaswani (2018). These remarks have been met with retaliatory threats from other market leaders. China and Europe have already given statements implying that if their commerce is affected by these policies, they will also impose duties on American imports that will hurt them likewise.
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This paper will utilize the rational choice approach to analyze the impact these Trade Policies have on the world. The rational choice is characterized by three elements, that is self-interest, collective action, and goal maximization. Several problems are associated with these policies; one there is lack of coordination between the different market of the world. There is also the ‘free rider problem’ experienced since only a few countries have raised concern over the policies taking into consideration that this a global problem.
Just like the term ‘America First’ suggest, these policies enacted by President Trump are in themselves structured out of self-interest. It is clear that the president did not care to consider the repercussions the policies will have on other nations so long it saw the US have a competitive advantage. The US is not among the top league producers of solar panels and washing machines, therefore, the commodities are quite expensive in the country compared to when imported. The President, therefore, out of self-interest imposed hefty tariffs on the importation of the products mentioned above to leverage the home market. The affected markets also in their self-interest to ensure their market is not compromised responded to this with threats of their own that will see America suffer. For example, “Associated Press” (2018) wrote that has Europe threatened to stop the importation of bourbon from America while Vaswani (2018) reports that Beijing has imposed stricter measures on the importation of soybeans – one of their top imports – which are primarily produced in America.
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In light of President Trump actions, which experts term as protectionism and isolationism (Economist.com 2017; Kottasová, 2017), China and Europe have come up with a collective action to enact a free trade policy. Other countries like Japan, South Korea, Mexico, and Turkey are also in talks for the same. The US is a single large market and such policies are meant to affect the entire world and therefore to deal with these changes other countries are forced to come together and supplement the void being created by the US. The effects of the policies are widespread given that earlier President Trump scrapped the Trans-Pacific Partnership trade agreement as noted by the Economist.com (2017) and therefore, countries are left to fill the void in any ways possible such as a regional partnership. For example, Beijing partnering with Vietnam.
President Donald Trump during his campaigns promised a different America. One that would bring jobs to the American people and one that will be feared again (Heydarian, 2018; Economist.com, 2017). His slogan ‘make America great again’ is probably the catalyst for these policies. America is itself a single large market, and the President’s policies on trade seem to move to make the Americans enjoy their market. As such, he is looking to maximize this goal by ensuring he creates restrictions for other countries to trade in the American market or somewhat to control them. However, this is not the 20th century when the US would threaten to stop trade and countries would fall in line. As such, the threatened nations have promised to retaliate with strict measures that will also impact America in a similar way leading to a tit-for-tat trade war (Heydarian, 2018). While doing so, they are taking other alternatives like the free trade agreement to ensure they maximize their goals.
People have different opinions concerning these issues, but the majority fall within this approach. First question, do you support Trump’s move to add extra duties on solar panels? Most answered this query with the element of self-interest saying that it is vital to promote home industry first. They agreed with the President that the move would see increased job opportunities as Americans will be forced to buy solar panels and washing machines from American manufacturers. The other question, do you think the America First trade policies are creating unnecessary trade wars? Yes, was the answer by many. They explained that it was expected that no country would sit down and allow the US to compromise their trade without making a retaliatory move. They confirmed that it is in the public domain that threats have already been issued by European Union and China; therefore, their answers for this question didn’t fall in this approach. The last question, instead of imposing hefty customs and duties, what should the President do? Their opinion was that the President should provide an environment which supports the cheaper production of these commodities such that there will be no difference with importing them. As such, the American people will most likely buy from their own rather than sourcing from outside countries. Again, this answer did not fall within the approach of rational choice.
A trade war between America and the world (China and Europe) will hurt all the sides, and the citizens will be the ones to suffer (Kottasová, 2017). These tariffs imposed albeit their pure intentions will cause ripples in other products that are unnecessary. President Trump should, therefore, find other ways to enact his America First policies that will not result in global retaliation.
- Associated Press. (2018). EU official warn US on trade: EU will hit back if needed. Washington Post.
- Economist.com. (2017). America, China and the risk of a trade war.
- Heydarian, R. (2018). What a US-China trade war would look like.
- Kottasová, I. (2017). Germany: Trump may start a trade war with Europe. CNNMoney.
- Meyers, J. (2018). China will act if Trump hits out on trade, American business group warns.
- Vaswani, K. (2018). What could China do in a US trade war?. BBC News.