US economic partners are racing to maintain trade volumes in the era of Donald Trump by closing new bilateral deals and redirecting supply chains to deal with increasing US protectionism.
Policy makers and commerce Experts say the countries are turning to a tactic deployed during the US president's first term in office, when they signed more trade deals with each other as the world's largest consumption economy.
Since Trump's election in November, the European Union has concluded a long-awaited trade agreement with the Mercosur bloc of South American nations, updated its free trade agreement with Mexico, and reopened negotiations with Malaysia that had been complicated for more than a decade.
Trump Meanwhile, in his first days in office, he threatened tariffs of up to 100 percent on China, with 25 percent on… Canada and MexicoHe said he was considering a comprehensive tax on all American imports. He also ordered US government agencies to investigate trade issues including currency manipulation and counterfeit goods.
Tengku Zafrul Aziz, Malaysia's trade minister, told the Financial Times that Trump's return “could actually push countries to diversify their trade portfolios.”
Aziz pointed to the example of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, which advanced with 11 members in 2018 after Trump pulled the US out of the talks. He said the deal “demonstrated the flexibility of countries willing to cooperate even in the absence of traditional economic leaders like the United States.”
EU Trade Commissioner Maros šefčovič told the World Economic Forum in Davos that his diary was full of meetings with ministers from Gulf states and elsewhere. “There is great interest” in making deals with the European Union, he said.
The entire team of commissioners will visit India to advance trade negotiations and technology partnerships in the next few months.
“The countries that are actively handling deals are doing so independently of the US position,” one European official said, adding that there was a “huge gap” between the rhetoric of what Washington would like to do and what is actually happening on the ground.
In Trump's first term, the European Union signed deals with Japan — a staunch American ally that feared economic damage from his policies — Singapore and Vietnam and began talks with New Zealand and Chile, ultimately sealing the agreements. One EU official joked the president was “the best EU trade commissioner ever.”
“There were a lot of deals,” said Cecilia Malststrom, an EU trade commissioner when Trump was last in power who was instrumental in previous negotiations on Mercosur. We thought, it's a rough world. We don't believe in trade wars. We have an unpredictable president who is throwing tariffs everywhere. Let's see what we can do together. “
Malmström, now with the law firm Covington & Burling, expects a deal with Mexico and talks with Australia, Indonesia and possibly the Philippines and Thailand to be concluded during Trump's four-year term.
Bernd Lange, who chairs the European Parliament's trade committee, said the EU's response to Trump would link retaliatory tariffs with deeper trade ties elsewhere. “Apart from defending ourselves, we must further strengthen our partnership with third countries such as the United Kingdom, Mexico, Japan or Canada, which may also be in Crossfire.
“This means ratifying trade agreements such as the EU and the EU, and concluding negotiations with partners such as Australia and Indonesia.”
In 2020, ASEAN countries plus China, Japan, Korea, Australia and New Zealand formed the Regional Comprehensive Economic Partnership. RCEP mainly reduced non-carrier barriers to trade such as veterinary controls and customs procedures. RCEP covers 2.3 billion people and 30 percent of global GDP, compared with 25 percent of the United States.
The African Continental Free Trade Area, which will eliminate 90 percent of tariffs over time, begins in 2021.
Trade in goods and services It has continued to grow in recent years despite the Covid-19 pandemic and increasing protectionism.
“No matter what Donald Trump does over the next few years, everyone seems unwilling to embrace costly economic isolation and will instead just move on without us,” said Scott Lincecum at the Cato Institute, a Washington-based think tank. There are about 370 trade deals in place. As of mid-2014 with no sign of a reversal coming.”
Meanwhile, China recently launched deals with Serbia, Cambodia, Nicaragua and Ecuador. Beijing, which Trump sees as the United States' greatest rival, accounts for about 30 percent of global manufacturing.
One senior trade official, who declined to be named, said they were “more skeptical this time round on a range of deals because the agreements left to complete were tougher to negotiate.”
“Trump's return may foster new dualities, perhaps in Africa. But Asia is very much sewn up. I am there.”
Additional reporting by AIME WILLIAMS in Washington
Data visualization by Janina Conboye in London
