America First: Power and Geopolitics in US Trade Policy under President Trump

Author(s): Holger Janusch and Witold Mucha

Source: Sicherheit und Frieden (S+F) / Security and Peace, 2017, Vol. 35, No. 3,
Themenschwerpunkt/Thematic Focus: WIRSCHAFT, POLITIK, MACHT UND FRIEDEN
ECONOMY, POLITICS, POWER AND PEACE (2017), pp. 110-114
Published by: Nomos Verlagsgesellschaft mbH
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THEMENSCHWERPUNKT
| janusch/Mucha, America First

America First: Power and Geopolitics in US Trade Policy

under President Trump
Holger Janusch and Witold Mucha*

Abstract: President Trump's vision for a new US trade policy is based on the notion that trade is a zero-sum game and that trade
deficits cause losses of jobs and production. Therefore, the main objective of this America First trade policy is the reduction of
trade deficits. To reach this goal, the Trump administration announced an aggressive bargaining approach to use all US trade
laws, strictly enforce all existing trade agreements, and favor bilateral over multilateral trade negotiations. Regardless of the
potential negative economic impact, the proposed trade approach has three negative implications. First, it risks trade wars with
major US trading partners. Second, it is based exclusively on hard power and neglects possible damages for US soft power. Third,
it neglects geopolitical and security considerations of US trade policy.

Keywords: US trade policy, geopolitics, power politics, soft power, economic nationalism
Stichwörter: US-Handelspolitik, Geopolitik, Machtpolitik, weiche Macht, Wirtschaftsnationalismus

1. Introduction primary focus of US trade policy after the signing of NAFTA in

1994. Yet, trade policy under the Clinton administration was
the Second World War, the United States became characterized by a deadlock due to disagreement, especially
the advocate for free markets and trade liberalization in about labor standards in trade agreements, with the Republican
After world politics. As the new hegemon, the United States led Congress. The Bush Administration was finally able to
established a liberal world order based on the General Agreement break this deadlock by convincing Republicans to accept labor
on Tariffsand Trade (GATT) institutions, the later World Trade
provisions in FTAs and, therefore, gaining enough support
Organization (WTO), and the Bretton Woods institutions. While from Democrats in Congress for a trade mandate, the so-called
there was an occasional tendency in the United States toward trade promotion authority (Janusch 2015, 1055-1059). The
protectionist measures, especially during economic crises, trade
strategy of the Bush administration was to incite "competitive
liberalization has determined US trade policy for decades. The
liberalization" by negotiating bilateral and regional FTAs with
basic principle of the liberal world order created by the United
trading partners that were ready to open and reform their
States was the common understanding that free trade creates
markets, whereas states that were unwilling to liberalize trade
wealth for all nations. In contrast, President Trump questions
were left behind. Thus, the Bush administration hoped to
this basic principle by arguing that the United States lost jobs,
put pressure on trading partners that were unwilling to open
production and wealth because of the past trade agreements. He markets and to gain leverage in future trade negotiations,
also knows whom to blame for the, in his view, disastrous trade
including the Doha round (Evenett and Meier 2008, 36).
policy: former US trade negotiators who have been ripped off by Instead of potential economic gains, the Bush administration
foreign countries. In order to bring back economic growth and jobs
chose FTA partners primarily based on security considerations.
for American workers, President Trump renounces the liberal trade
In the Middle East and North Africa in particular, the Bush
policy of the past. Instead, the Trump administration calls for an
administration pursued the idea of negotiating bilateral FTAs
America First policy and economic nationalism with clear objectives
that were to serve as building blocks for a Middle East Free
in trade policy: changing the US trade deficit into a surplus by
Trade Area (MEFTA) (Janusch 2016). After the FTA negotiations
renegotiating existing trade agreements such as the North American
with the United Arab Emirates had failed, the idea to build a
Free Trade Agreement (NAFTA), withdrawing from the Trans-Pacific
free trade area from the trade agenda. Due
Partnership (TPP), enforcing existing trade agreements and trade
regional disappeared
to critique by corporate interests such as the US Chamber of
laws, and imposing tariffs on China and other countries that
Commerce, the Bush administration shifted the focus on FTA
supposedly use unfair trade practices or currency manipulations
(Navarro and Ross 2016, 15; United States Trade Representative
negotiations to larger economies in the second presidential
term. Yet, security affairs still played a major role in selecting
2017,6). The new US administration's rationale seems to be based
FTA partners, as the beginnings of FTA negotiations with the
on national economic interests first, while neglecting the security
two major allies Colombia and South Korea prove. Furthermore,
and geopolitical implications of that formula.
the Bush administration began informal talks over the TPP.

Even though trade policy had a low priority on President Obama's

2. Competitive liberalization and the pivot to Asia: agenda at the beginning of his first term, the administration
Trade policy under Presidents Bush and Obama continued the liberal trade policy. After renegotiations, the Obama
administration pushed forward the ratification of the pending
While the United States favored multilateral trade agreements FTAs, including the ones with Colombia and South Korea (Janusch
for decades, bilateral free trade agreements (FTAs) became the 2016,185-200). Furthermore, the Obama administration began
official TPP negotiations. TPP complemented the "pivot" or
*
This article has been double blind peer reviewed. "rebalance" of US foreign policy from the Middle East toward East

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 Janusch/Mucha, America First TH EM EN SC H WERP U N KT

Asia (Falke 2015,366). In addition to the geopolitical importance, in explaining the current US trade deficit (Pearson 2017a,
the Obama administration emphasized that TPP serves as a 2017b). Second, the trade policy of the Trump administration
tool to set international standards, including labor rights and focuses on the producer surplus and neglects the consumer

environmental protection, which otherwise would be set by surplus. Cheaper imports and greater product variety due

China. While US foreign policy focused more and more on East to free trade increase living standards. Furthermore, a large
Asia, the Obama administration also started the Transatlantic share of US imports are part of the value chain and serve as
Trade and Investment Partnership (TTIP) negotiations with intermediate goods that are added to US exports. Thus, imports
the EU. In addition to economic interests, TTIP together with make US companies more competitive on the global market
TPP would have strengthened the geopolitical position of the (Meitzer, Foda, and Dervis 2013). Third, while some studies (e.g.
United States by fostering trade and investment in the Pacific and Acemoglu et al. 2014) show that US imports from China led to
Atlantic regions with the United States as the center. The Obama net job losses of 2 to 2,4 million, especially in manufacturing,
administration also took a tougher stance vis-a-vis China by other studies (e.g. Collard-Wexler and Loecker 2015) emphasize
initiating antidumping and countervailing cases against Chinese for example that a major factor for job losses in the steel sector
exporters, filing more and more complaints against China in is not foreign trade but increasing productivity.
the WTO, and denying Chinese acquisition of US companies.
Furthermore, the Obama administration refused to grant China
status as a market which was to be done no later than
economy,
4. America First trade policy and power politics
15 years after China's WTO accession in 2001 (Ikenson 2017b, 2).

The notion of economic nationalism is not only characterized

by goals to reduce the trade deficit, create jobs and strengthen
3. Economic nationalism: Paradigm shift in US the manufacturing base, but also the willingness to use all
trade policy under President Trump means possible to achieve these goals (United States Trade
Representative 2017, 5). First, the Trump administration
While President Trump claims to be a "free trader", he emphasizes wants to strictly enforce US trade laws and existing trade
that free trade has to be fair in the sense that foreign countries agreements. In its new trade agenda, the Office of the United
do not use unfair trade practices such as export subsidies or States Trade Representative emphasizes that the United States
currency manipulations. However, the argument that free trade is willing to use antidumping and countervailing duties on
has to be fair is not new in US politics. Since the negotiations imports that are dumped or subsidized. Furthermore, it is
about NAFTA, administrations have argued that the United willing to use safeguard measures if increasing imports threaten
States has to push forward trade agreements that enforce domestic industries and to take appropriate actions when
foreign countries violate existing trade agreements. It will
international labor and environmental standards in order to

protect American jobs against unfair competition. So what also enforce the labor provisions in existing FTAs. Second, the
is it exactly that differentiates Trump from his predecessors?
Trump administration made clear that it will defend national
Rather than assuming trade to be a positive sum game as liberal sovereignty over trade policy. By highlighting that a WTO ruling
trade theories do, the Trump administration takes a mercantilist does not automatically change US trade laws and practices, the

approach and regards trade as a zero sum game. The welfare loss Trump administration questions the WTO dispute settlement
mechanism. Third, the Trump administration thinks that
by one country is the gain by another. Based on the balance of
trade, the Trump administration dichotomizes between winners
its goals can be best accomplished in bilateral rather than
and losers. Countries with a trade surplus are winners, whereas multilateral negotiations and is willing to renegotiate existing
trade deficits cause the loss of production and jobs. In this sense, agreements (United States Trade Representative 2017, 6). Fourth,
the United States, having huge trade deficits with China, Mexico, if trade agreements do not meet the standards, the Trump

South Korea and Germany, is being ripped off by these countries. administration has stressed that it will withdraw from existing
trade agreements and impose tariffs on trading partners that
By blaming former trade negotiators for the US trade deficits, the
administration's view on trade seems to be use unfair trade practices or currency manipulations.
Trump agreements
based on the notion that the balance of trade can be negotiated.
These bargaining tactics comply with one of Trump's fundamental
It just needs and smart get the best deals to
principles to maximize leverage. According to The Art of the Deal
tough negotiators
and, thereby, trade surpluses. The main objective of US economic
(Trump and Schwartz 1987), you are only going to make the deal
nationalism is to shrink the trade deficit and, thereby, stimulate
you want from a position of strength. "The worst thing you can
economic growth, strengthen the manufacturing sector and
possibly do in a deal is seem desperate to make it. [...]My leverage
eventually create jobs (Navarro and Ross 2016, 5; United States came from confirming an impression they were already predisposed to
Trade Representative 2017, 5-6).
believe" (Trump and Schwartz 1987,37). By demonstrating resolve
The basis of the notion of economic nationalism is problematic to enforce US trade laws and trade agreements, questioning
for several reasons. First, while unfair trade practices of trading the rules of the WTO, and threatening to impose tariffs, the
partners might affect imports in specific sectors, they have Trump administration wants to increase its leverage. Because
only minor effects on the overall US trade deficit. The trade the Trump administration is convinced that the United States
deficit is mainly caused by the shortfall in domestic savings is losing from trade relations with specific countries such as
and investments. Currency manipulation can have important Mexico or China, the administration is also convinced to have
effects on balances of trade. Yet, they are only a minor factor more leverage vis-à-vis these trading partners. Following the

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TH EM EN SC H WER P U N KT janusch/Mucha, America First

argument of asymmetric interdependence, a state that benefits by using coercion. Even rewards as another form of hard power
less from cooperation is also less dependent than its counterpart. are often neglected as means to accomplish the goals of the
For this reason it can threaten more credibly to break up an trade agenda (Navarro and Ross 2016, 17-21; United States
existing cooperation and receive concessions (Hirschman 1980). Trade Representative 2017, 2-6; Trump and Schwartz 1987,

It isreasonable to assume that the United States has a greater 37-38). In contrast, soft power is the ability to persuade others
to aspire to the outcomes you want by attraction due to one's
leverage in trade negotiations with trading partners such as Mexico
and China. First, the ratio of foreign trade to the gross domestic ideas, values or culture (Nye 2004). No signs indicate that
the Trump administration is aware of soft power and how its
product (GDP) of the United States is quite low compared to its
aggressive trade approach might damage US soft power. Soft
larger trading partners. Thus, the US economy is less dependent
on foreign trade in general. For example, four percent of China's power works through the ability to convince others that your
GDP comes from exports to the United States, whereas US exports ideas, values and policies are beneficial for all. Thus, others
to China account for less than one percent of US GDP (The change their preferences and policies voluntarily. The America
first trade policy and aggressive approach harms US soft power
Guardian 2017). Second, the United States is still the biggest
and makes it unattractive for other countries to admire US
single market in the world. Therefore, the Trump administration
can rely on US market power in trade negotiations (Navarro and values, adopt US ideas and emulate US foreign policies. In this
Ross 2016, 20-21). Third, it is more difficult to find substitutes regard, TPP would have preserved and strengthened US soft
for imports than exports, because every state is willing to sell power. For instance, countries such as South Korea, Indonesia

but not to buy. From a power perspective, it is less important or Thailand demonstrated a willingness to implement domestic

which state buys more from another, but rather which state is reforms just to enhance their chances of eventually becoming

less dependent on the market of the trading partner (Hirschman a TPP member (Ikenson 2017a).

1980, 32-33). Thus, trade deficits increase the leverage of the

United States vis-à-vis its trading partners.

While US leverage in trade negotiations might be larger vis 5. Ambivalent geopolitical implications under
à-vis its trading partner, it is still constrained and risky. First, President Trump
trade agreements are based on reciprocity. Trade agreements
The negotiations for the mega-regional trade agreements TPP
usually have mutual reductions of trade barriers for which
with eleven Asian and Pacific Rim countries and TTIP with the
reason unbalanced trade agreements are not indefinitely
European Union (EU) were based on the Obama administration's
possible. Second, the Trump administration wants to gain
rationale of "foreign policy being economic policy" (Hamilton
leverage by questioning the principles and rules of the WTO
and existing trade agreements, threatening to withdraw from 2014, 81). As the only party to both negotiations, the Obama
administration sought to leverage issues in one to advance its
these agreements or imposing tariffs if their demands are not
interests in the other (Hamilton 2014, 81). From a geopolitical
met. This aggressive approach increases the risk of trade wars
that would severely hurt all involved countries, including the perspective, TPP and TTIP were to serve the US principal
United States. Third, trading partners might be less willing to strategic goal of preserving its global primacy in the face of
make concessions as a reaction to the Trump administration's rising challengers, particularly China. While Beijing is far
threats because this could hurt their reputation of resolve in from being a genuine peer competitor to the US, its rapid
rise challenges Washington's hegemony, as Beijing's military
future negotiations. Giving in on threats signals the counterpart
that it can for more concessions. the
efforts in the South China Sea illustrate (Morton 2016, 909;
push Fourth, Trump
administration wants to gain leverage by favoring bilateral Tellis 2014, 99). What makes the rivalry unique is the mutual
over multilateral negotiations. It hopes that power asymmetries dependency between the US and China. On the one hand,
become more effective in bilateral negotiations. However, this Beijing is a political antagonist committed to ending American
assumption is questionable. Because the average US tariff is unipolarity, while on the other hand remaining integrated in a
already quite low, its leverage is limited. Yet, TPP countries tight trading partnership with Washington and its allies (Tellis
made more concessions vis-à-vis the United States, for example,
2014, 98). It is against this backdrop that conceptually simple
regarding intellectual property rights and investment, because strategies as proposed by the Trump administration will not
the United States helped them to get better access to more yield lasting results. For instance, in light of the North Korean
closed markets in Japan, Vietnam and other countries that nuclear program President Trump recently opened the door
would not have been possible to get on a bilateral basis. In for China for concessions on his trade agenda in exchange
for greater support in pressuring Pyongyang (McBride 2017).
addition, TPP would have increased the leverage in future
accession negotiations because it could have been offered on
Certainly, Beijing has seemed to play along by turning away
a take-it-or-leave-it basis (Schott 2017, 3). coal shipments back to North Korea in accordance with new
Additionally, the aggressive approach reduces the soft power
sanctions imposed by the United Nations in November 2016.
of the United States. The Trump administration seems to be Also China made more forceful statements in an attempt
focused on using the full potential of the US hard power only. to cool the ratcheting of tensions in the region (Diamond
Hard power is the ability to get others to do something they 2017). However, the impact of these measures on Pyongyang
do not want to do by using sticks and carrots (Nye 2004). The is limited compared to the huge geopolitical implications

Trump administration's understanding of trade negotiations of bartering economic or foreign policy issues with China
seems to be based on the notion that goals can only be achieved in exchange for support on North Korea's nuclear program.

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 Janusch/Mucha, America First | T H EM EN S C H WE R P U N KT

First, Washington might get dragged into making other damages for US soft power. Third, it neglects geopolitical and

concessions to win China's full support on Pyongyang (e.g. security considerations of US trade policy.

Beijing's territorial claims to Taiwan). Second, Trump's offer

The latter implication seems to be
partly true as particularly
only
risks nullifying crucial leverage in urging Chinese cooperation: the way China has been approached by the Trump administration
that stopping North Korea's nuclear program is also in China's
illustrates. On the one hand, critics might call the administration's
interest (e.g. regional instability would make North Korean
moves ambivalent, inconsistent, or unpredictable. On the
refugees flood into China). Third, other countries might get other hand, though, other observers describe that approach
incentivized to bargain for a better economic relationship and
as a pragmatic way of dealing with politics. Regardless of the
thus get the US to give up on longstanding positions. Fourth,
interpretation, making trade concessions to Beijing in exchange
US allies such as Japan or Taiwan might start to ponder whether
for Chinese pressure on Pyongyang is one striking example in
their traditional protectors in Washington might trade that
or the unexpected
this regard. The way NATO has been perceived
long-standing relationship in exchange for other interests. This
that
airstrike on an airbase in Syria also speak volumes about
would introduce a huge level of uncertainty on an international
pragmatic modus operandi. At this moment, it is too early to give
level (Diamond 2017). It seems that Washington hazards
a comprehensive assessment of the US administration's grand
losses, in South Asia, for the sake of
geopolitical particularly
strategy from a power, security, and geopolitical perspective.
the new economic nationalism.
For instance, in late April 2017 President Trump was about to
The status of TPP and TTIP corroborates the new US sign an executive order withdrawing from NAFTA. However,
quo
trade President has fulfilled a campaign after consultation, the pragmatic and liberal factions within
policy. Trump already
an executive order to withdraw from TPP the administration were apparently able to convince President
pledge by signing
(Holland and Rascoe 2017). Predecessors Bush and Obama had Trump to refrain from withdrawing from NAFTA (Parker et al.
TPP forward based on the whether East Asian 2017). Regardless of the (alternating) upper hand of one faction
pushed question

integration would be led by China or by the United States. over the other, the ambivalence of the US administration seems

has a separate FTA for the to be its most reliable character trait at the moment.
Indeed, Beijing supported region
which would sixteen countries - for the
bring together except This unreliability has not caused severe geopolitical ramifications
United States. Withdrawing from TPP gives away substantial
as observers in and elsewhere
many Washington predicted:
leverage vis-à-vis China and thus might have major geopolitical the US has not embarked on a new war; there has been no
ramifications. The TTIP negotiations convey a similar picture. with alliances with transatlantic
grand bargain forged Russia;
Yet, the transatlantic negotiations have been stalled because and are still functional. After almost
partners regional neighbors
of various reasons such as the Brexit and domestic protests, a year in office, it seems that the White House have
might
for example in Germany (McBride 2017). In a similar vein, the burdens of - of
accepted superpower leadership regardless
President stance on NAFTA has mirrored the economic this about
Trump's whether change was brought by cabinet shake-ups
nationalism Mexico was criticized for taking favor of former
approach. in militaries such as John Kelly, H.R. McMaster,
advantage of less strict labor and environmental regulations and James Mattis. President address to the nation on
Trump's
and thus creating incentives for US companies to install factories the in Afghanistan seems
strengthening military engagement
across the southern border (Puyana 2017, 145). Ottawa was in to feed into this At the end
superpower leadership approach.
the pillory for Canada's supply-management system for dairy of the day, it remains to be seen to what extent this decision

products and softwood lumber (Hadfield and Potter 2017, reflects a fundamental learning process at the White House.

214). In sum, until recently the handling of NAFTA, TTIP, The US administration's lack of a grand Russia policy, a grand
and TPP demonstrated the Trump administration's economic Middle East and a grand Asia cast doubts in that
policy, policy
nationalism trade policy: national economy first, geopolitics (Glasser 2017).
regard
second.

Dr. Holger Janusch is an assistant professor

at the Friedrich-Alexander-University
in Erlangen, Nuremberg in Germany.
6. Conclusions He currently works on the international
political economy, trade policy of the US
America First trade and economic nationalism are and transatlantic trade relationship.
policy
based on the credo that trade is a zero sum game and trade

deficits cause job losses and destruction of production. Thus,

the main goal is to reduce the trade deficit in order to induce

economic growth and create jobs for American workers. To

reach this goal, the America First trade policy is based on an Dr. Witold Mucha is a research fellow

The administration at the Heinrich-Heine-University in

aggressive bargaining approach. Trump
its willingness to use all US trade laws and
Diisseldorf, Germany. His research focus is
Düsseldorf,
signaled strictly on escalation and de-escalation in domestic
enforce all existing trade agreements. It also favors bilateral over violent conflicts, crisis prevention and
multilateral negotiations to increase its leverage vis-à-vis trading counterinsurgency.
partners. This economic nationalism holds three implications.
First, it risks trade wars with major US trading partners. Second,
it is based exclusively on hard power and neglects possible

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THEMENSCHWERPUNKT janusch/Mucha, America First

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N0m0s Unser Wissenschaftsprogramm istauch
^MIIIIIK
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