Titling the Times: Trump and Trade in 2025: Legacy or Legacy-maker?
In the current scenario, U.S. trade dynamics have undergone massive transformations compared to the time Donald Trump first took office as president in 2017.
Let's dive into the changes:
Firstly, the North American Free Trade Agreement (NAFTA) has been replaced by the United States-Mexico-Canada Agreement (USMCA).
Now, delving into a bit of detail, the World Trade Organization (WTO) lost its appellate judges' quorum back in 2017. Neither Trump nor his successor, President Biden, have replaced these judges, rendering the WTO largely ineffective.
GOP and Labor
The Democrats, with Obama as their leader in 2017, held firm control over labor. However, current times find the Republican Party siding with labor unions, like the International Longshoremen, even proposing to hinder technological advancements and progress in efficiency. The ILA members will soon vote on this agreement.
Tariff Tussles
Trump adopted the title of "Tariff King" in his first term. Currently, the tariffs imposed under Biden's administration have pushed him to reclaim this title, considering tariffs imposed during Trump's second term or beyond haven't been fully implemented yet.
Irrespective of if Trump's threatened tariff percentages don't materialize, the potential for bragging rights is substantial. Despite all this, the U.S. trade growth persisted, surging from $3.64 trillion in 2016 to more than $4 trillion for three consecutive years, accounting for 2024 figures.
The Role of Data
Following official data releases, Mexico is poised to claim the top spot as America's primary trading partner for the second consecutive year. In 2016, China held this position twice in a row, until 2024 when it will slip down to the third position, falling below both Canada and Mexico.
China, formerly accounting for more than 21% of U.S. imports by value, will see its share decrease to approximately 13.50% in 2024, with Mexico leading as the country's most prominent import source, exceeding the 15% mark.
Deficits Shift
In 2017, the U.S. trade deficit with China stood at a staggering $551.37 billion, more than 5 times larger than the deficit with Mexico. However, by 2024, the U.S. deficit with China could decline to around $300 billion. Conversely, the trade deficit with Mexico will almost double, from $63.27 billion in 2017 to an estimated $170 billion in 2024.
Vietnam's U.S. trade deficit has also seen a significant rise, surging from $31.99 billion to near $120 billion, marking three consecutive years above $100 billion. Alongside this, other countries like Canada and Taiwan have also witnessed substantial trade deficit increases.
In conclusion, as Trump enters his second term, while some aspects have remained unchanged, various others have undergone significant transformations in the U.S. trade landscape.
The Republican Party's newly found support for labor unions has led to proposals that could hinder business efficiency, as seen in the International Longshoremen's agreement. The U.S. government's trade policy, in response to these changes, continues to evolve.
