Since the election last week, trade negotiations of a sort have already started. First, the leaders of Canada and Mexico have both said that they are open to the renegotiation of NAFTA. For those "experts" who told us how Trump would paralyze North American trade as Canada and Mexico fought with Trump, this should come as welcome news. It is also just a clear manifestation of reality. Neither Canada not Mexico could afford a battle with the USA.
Second, the TPP is now dead. It too will no doubt be subject to renegotiation. The Obama approach of playing dead will no longer be the one that the USA uses in these negotiations.
Third, the trade front with China is also heating up. The Chinese newspapers have published editorials and articles describing the counter-offensive that China will launch should Trump impose tariffs on Chinese made goods. As usual, the financial portion of the mainstream media is in full panic this morning after the article appeared in the Chinese press. The key here, however, is not that a semi-official Chinese paper is making threats. We are a long way from Trump imposing tariffs or China retaliating. The true key is that Trump has certainly gotten the attention of the Chinese. Instead of staying silent while waiting for Trump to take office, the Chinese are sufficiently worried about what he might do that they are trying to deflect his course already. The Chinese know that a trade war with the USA would be a disaster for them and it would not be good for the USA either. The difference now is that for the first time in a while the Chinese also know that the USA will not accept bad deals with them. Trade will need to be moved to a win-win situation before America will accept the result. Trump will be fine with the Chinese profiting from trade with America, but that will only be true so long as America also profits from the arrangement. The days of China wins and America loses which have prevailed under Obama are now officially over.
Fourth, in Europe, both the UK and France have avoided an EU meeting that was looking like it might turn into an anti-Trump forum. The UK needs to enter into a strong trade pact with America now that Brexit will be starting. Prime Minister May will not want to alienate our new president.
All of this is encouraging.
Second, the TPP is now dead. It too will no doubt be subject to renegotiation. The Obama approach of playing dead will no longer be the one that the USA uses in these negotiations.
Third, the trade front with China is also heating up. The Chinese newspapers have published editorials and articles describing the counter-offensive that China will launch should Trump impose tariffs on Chinese made goods. As usual, the financial portion of the mainstream media is in full panic this morning after the article appeared in the Chinese press. The key here, however, is not that a semi-official Chinese paper is making threats. We are a long way from Trump imposing tariffs or China retaliating. The true key is that Trump has certainly gotten the attention of the Chinese. Instead of staying silent while waiting for Trump to take office, the Chinese are sufficiently worried about what he might do that they are trying to deflect his course already. The Chinese know that a trade war with the USA would be a disaster for them and it would not be good for the USA either. The difference now is that for the first time in a while the Chinese also know that the USA will not accept bad deals with them. Trade will need to be moved to a win-win situation before America will accept the result. Trump will be fine with the Chinese profiting from trade with America, but that will only be true so long as America also profits from the arrangement. The days of China wins and America loses which have prevailed under Obama are now officially over.
Fourth, in Europe, both the UK and France have avoided an EU meeting that was looking like it might turn into an anti-Trump forum. The UK needs to enter into a strong trade pact with America now that Brexit will be starting. Prime Minister May will not want to alienate our new president.
All of this is encouraging.
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