Trade policy is the rule and accord that control the import and export of foreign countries. Trade agreements also include NAFTA, CAFTA, the middle eastern trade initiative, and regulations, subsidies, and tariffs.

Ancient trade agreement position.

Earlier, the rule of trade was constitutionally invested in United States Congress. Congress, in ancient times, was the power holder of everything. With changing time, congress started delegating its power to the executive branch. But had somewhere it kept tight hold of few authorities like the execution of the trade and programs.

The great depression of 1929 in history changed the whole scenario in which the stock market collapsed. After which the country appeared among the most notable global trade policy-maker. It is now a partner with many trade agreements, GATT {General Agreement on Tariffs and Trade} and the WTO {World Trade Organizations}. The U.S. has trade connections with many countries, among which EUROPE and ASIA are the main strong elements.

To attain the industry sector’s request, the U.S. imported things like mineral oil and iron ore on a wide-ranging basis. Machinery, cotton yarn, sugar, coffee, and many such items were traded to the countries. They also continued exporting goods from other countries. The U.S. exported food grains like wheat, corn, and soybean. Airplane, cars, and other such machinery items provided to different industries.


A war of trade started by Trump

In recent times, the 45th president of the UNITED STATES took over the power and authority in 2017. During his election campaign trump proponent, the policy of protectionism and ‘making America great again.’ His economic policies followed American economic nationalism based on the speculation of high tariffs, which will automatically lessen the imports, generate more employment opportunities for Americans, decreasing the inflow of emigrants, and considerably raising the export.

Trump’s mindset always stated that smart trade should be made, not stupid trade to outgrow and create opportunities. Trump’s trade policies encourage mercantilism or commercialism. The foremost bedrock of trump policies is to protectionism, which he uses to safeguard the U.S. industries from external foreign rivalry. He planned to reduce the U.S. trade deficit, especially with China and European countries. Through which U.S. companies will be able to give rise to more taxes, which he will fund for the growth of military troops.

On September 2, 2017, trump declared to evacuate the US trade policy with South Korea. Trump wanted South Korea to import a large amount of U.S. goods. Further, Trump evacuated the negotiation on The trans-pacific partnership by signing an order on January 23, 2017, in which he assured to restore it with the bilateral agreements.

Countering to this step of Trump, Japan, and the European Union declared their vend. On July 6, 2017, they decided to escalate the Japanese auto export to Eu and European food supplies export to Japan. Trump’s management inflicted a hefty tariff and quota on imported solar panels, and washing machines on January 22, 2018, and china was the major exporter of these things to the U.S.

Than Trump on March 1, 2017, declared a 25% tariff on steel products import and a 10% tariff on aluminum products and the point to be highlighted that European countries and again China is the major exporter of these products to the U.S. The steel buyers like automakers or steel maker industries saw it as a substantial cost. And this cost will be added to the consumer list. With the immense loss in the stock market, analysts discern that Trump’s decision might cause a trade war.

On August 16, 2017, the U.S. began surmounting the North America free trade agreement {NAFTA} with Canada and Mexico. NAFTA is the world’s broad trade agreement. Trump had menace to withdraw from NAFTA and smack Mexico with a 35% tariff. Moving forward with his planning, he announced that he would remove the United States from the Iran nuclear deal on May 8, 2018.


U.S. Vs. China trade war

The U.S. began the battle of tariff while China reciprocated against it. This China – United States war was all about the tariffs on goods traded. On January 23, 2018, Trump increased the tariff rate to 30% on solar panels, which were supposed to decline to 15% in nearly four years. In complimentary, he raised the tariffs to 20% on the washing machines for the first 1.2 million costs of washers to the United States.

On April 3, 2018, Trump declared 25% tariffs on Chinese products comprising electronics, aerospace, and machinery. Trump administration wanted to stop dispensing U.S. companies with the sole technology to Chinese firms. They must do it if they’re going to gain access to China’s market.

China retaliated in no time and announced 25% tariffs on $50 billion U.S. exports to China. On April 6, 2018, President Donald Trump announced tariffs on $100 billion more on Chinese products. Fascinatingly, it covers only 1/3rd of U.S. imports from China. Funnier part, if China retaliates, it could impose tariffs on all U.S. exports to China. The trade negotiations to resolve the issues that were going on.

On April 10, 2018, the China said that trade negotiations had broken down. The United States demanded that china stop funding the ten industries prioritized in its “made in china 2025” plan. Following this, the president of China, Xi Jinping, on the same day, said that he would reduce tariffs on imported vehicles. But I made little impact on trade. Nevertheless, because of the taxes, the automakers found it cheaper to build their products in China.

On May 15, 2018, China agreed to pull out the tariffs on U.S. pork imports. But in return, the United States has to detach taxes on Chinese telecom company ZTE. This move was seen as a weakness of Trump. This move led many European countries to ask the U.S. to avoid punishments on companies that do work with Iran. They may scare off tariffs on U.S. imports as a haggle tool.

From May 15 to May 19, Liu he the economic advisor of China’s president, visited the USA for trade talks. On May 20, it was announced that the Chinese administrator had agreed to substantially decrease America’s trade deficit with China by committing to grow its buy of American goods. 

On July 6, 2018, the united states foisted 25% of the tariffs on U.S. products. On July 10, 2018, the U.S. trade representative’s office issued a list of $200 billion in Chinese products to be subject to a newly suggested 10% tariffs on the U.S. President’s order Trump. China basted the proposed tariffs as unreasonable and inadmissible. The Trump organization said that the levies were mandatory to ensure the national security and protected innovation of U.S. organizations and help them reduce the U.S. import/export imbalance with China.

In August 2017, Trump had already unbolted a formal inquiry into the theft of America’s intellectual property and its allies, the stealing of which was costing America alone a sum-up amount of $225 billion to $600 billion in a year. 

Alone, not China but also the U.S. Vs. European Union trade war

Trump trade policy also created a trade war with European countries. Thought the Trump administration declared earlier that it would delay the implementation of tariffs on E.U. countries, Canada, Mexico, by another 30 days to work out the trade terms, but there was no guarantee that more time will relent on any development. Trump had already thrust a 25% tariff on steel and a 10% tariff on aluminum. This would apply to all America’s trade partners and close allies such as E.U. countries and Canada. 

Rather than putting all its concentration on the Chinese producers alone, the white house declared blanket import conscript. The secretaries and other trade adepts in trump administrations like Robert Lighthizer, the U.S. trade representative, and Wilbur Ross, the commerce secretary, contended that this blanket procedure was necessary to prevent China from shipping steel and aluminum to the USA through the help of other countries. 

But to Europeans, mainly, the white house step looks like the starting of a campaign to eliminate the U.S. trade deficit by selecting a wide range of U.S. imports and assisting U.S. esports. This was the focus that Donald Trump had set out in his speeches since the presidential campaign started.

After a congregation with Angela Merkle, the German chancellor, at the white house, Trump decided to set up the U.S. steel industry, saying its victory was crucial to national security. He also had a conversation about the U.S. trade deficit in goods with the E.U., which was $151.4 the previous year. Trump said that he was perpetrated to “remedy these trade balances.”

Trump has carved out the auto industry, headless to the fact that the general motors and ford had maintained substantial manufacturing operations in Europe for many decades, and, since the nineteen- nineties, BMW and Mercedes-Benzes had plants in the UNITED STATES. 

Angela Merkel, the German Chancellor, French President Emmanuel Macron, and British Prime Minister Theresa to protect their interest and to discuss the Trump Trade Policies, may speak over the telephone. Later, Merkel furnished an assertion saying that Europe was “resolved to defend its interests.” This was a gesticulation that they wouldn’t be intimidated by Trump.

The E.U. had taken out a list of reprisal tariffs—earmarking iconic U.S. goods, such as bourbon and Harley-Davidson motorcycles—that would take place if White House implements its steel and aluminum tariff trudge plans.

The Trump Administration ostensibly wants the Europeans to admit to a numerical cap on their steel exports, as South Korea has done, as well as other compute designed to intensify the competition in the European market for American firms.

Europeans are withstanding the proposals from the United States. The European Commission had to write out the affirmation that says, “as a longstanding partner and friend of the U.S., we will not negotiate under such a warning. Any future across work program has to be balanced and should be beneficial for both.”

The United States Vs. India Trade Policy

India’s Trade with the U.S. has been on the rebel. Nevertheless, with the United States’ foisting of tariffs, India had to think again on some drawbacks to safeguard its interests. Recognizing to an inquiry on Indo-US several exchanges, Deputy US Trade Representative Jeffrey Gerrish said that the progress made in the two-sided connection has been notable over the previous years.

The two-way trade in 2017 outstretch to $126 billion, and that was a marker.

After staggering tariffs on Chinese imports, Washington filed a complaint at the World Trade Organization (WTO) —the first WTO action of this administration—over several export subsidy programs imposed in India. These comprise the Merchandise Exports from India Scheme, the Export Oriented Units Scheme, the Electronics Hardware Technology Parks Scheme, Special Economic Zones, and the Export Promotion Capital Goods Scheme. These measures may create tension in India.

India and the U.S. have a trade disparity of US$30 billion, and given the current situation, it is yet to be decided how to lessen it.

Trump made it transparent that he wanted India to decrease the import tariff on its Harley-Davidson Motorcycles from 100% to 100%. He has to browbeat imposed a tariff otherwise on the Motorcycles exported from India to the United States.

India-U.S. Trade has been on the increase, and in recent times Trump also wants to thrive it further. The process is to be decided.

Trump put forward to make Immigration rules even more robust for Indians also. Nonetheless, many adjustments are under discussion. 

U.S. Trade Representative Jeffrey Gerrish said, “We are two of the greatest economies on the planet. U.S. .biggest economy, India is the sixth-largest economy in the world. Given how bigger economies are, we want to develop our exchange fundamentally, and we believe it ought to be a lot bigger than it is.”

Rationales by the U.S. for Tariffs — Pros

During his Presidential campaign, President Trump spoke to follow the Policy of America First and cancel international trade deals, creating a deficit for the USA.

U.S. Trade deficit is $500 billion a year and with intellectual property (I.P.) theft of another $300 billion. Trump wants to eliminate it.

In January 2018, Trump said he needed the United States to have a decent connection with China, yet demanded that it treat the United States reasonably. 

In his view, America has likewise at long last turned the page on many years of out of line economic agreements that relinquished it is thriving and sends away its organizations, its employments, and the Nation’s riches. The time of monetary acquiescence is finished. Starting now and into the foreseeable future, America anticipates that exchanging connections should be reasonable and equal. 

John Ferriola, the CEO and President of Nucor, America’s biggest steelmaker, and its biggest metal recycler, guaranteed that levies were not uncalled for, however, they were “basically making everything fair.” He clarified that the “European Union yet most nations on the planet have 25 percent or more noteworthy VAT, esteem included duty, on items going into their countries. So on the off chance that we force a 25 percent duty, all we are doing is rewarding them precisely as they treat us. 

Richard Trumka, leader of the AFL-CIO, which speaks to more than 12 million dynamic and resigned laborers, said that China has taken U.S. protected innovation and “tormented its way into procuring the basic U.S. progresses in innovation.” According to him, “Levies aren’t an ultimate objective, yet a significant instrument to end exchange rehearses that American slaughter occupations and drive down American compensation.”

Several experts have focused on China’s theft of Intellectual Property, and that it forces U.S. firms that need to work together there into moving its private innovation and proprietary advantages before approaching their market.

Trump Trade Policy: May Turn Ineffective — Cons

July 2018 study indicated Trump’s policies had little impact on the U.S. economy in terms of GDP or employment. For example, more jobs were created in President Obama’s last 19 months (3.89 million) than in President Trump’s first 19 months (3.69 million), until Julill July 2018.

The debt additions projected by CBO for the 2018-2027 period have increased from the $9.4 trillion that Trump inherited from Obama (January 2017 CBO baseline) to $13.7 trillion (CBO current policy baseline), a $4.3 trillion or 46% increase.

Trump’s exchange strategy is a rerun of an awful 1980s arrangement where ‘American customers were the most significant failures.’ 

President Donald Trump’s exchange arrangements are like protectionist exchange approaches of the 1980s.

The U.S.’s trade policies in the 1980s did little to reduce the trade deficit and cost American consumers more than helping the protected industries.

During the 1980s, President Ronald Reagan and U.S. officials were worried about the growing U.S. import/export imbalance with Japan, just as the Nation’s solid section into territories where the U.S. commonly commanded. 

Much like Trump’s emphasis on cars, steel, and developing advances, Reagan concentrated on automobiles, iron, and new semiconductor innovation. The 1980s policy also employed a series of tariffs, quotas, and other import restrictions to give a leg up to U.S. companies in the fields.

The final product of the 1980s-time strategy was a failure to slow the development in the U.S. import/export imbalance. According to the BAML economists, the deficit widened from $36 billion or 1.3% of GDP, in 1980 to $170 billion or 3.7% of GDP, in 1989.

Erecting trade barriers does not necessarily decrease the trade deficit. One of the biggest problems focusing on trade deficits is that they have as much to do with domestic policies as trade policy. For example, enormous government spending programs, such as Reagan’s and Trump’s tax breaks and shortfall spending, can help fuel an exchange lopsidedness. 

The enterprises that should be ensured may get little assistance. It occurred in the eighties as well. The limitations on vehicles shrank the all-out piece of the pie of Japanese automobiles in the U.S., yet under three rate focuses. Simultaneously, the total dollar value of Japanese autos coming into the U.S. rose due to a significant price increase. Similar experiences occurred in the steel and semiconductor industries, with some small wins at a substantial cost to the U.S. consumer and the American economy.

The moves can, therefore, do little to achieve their goal of reducing the U.S. trade deficit.

China has announced retaliatory tariffs on U.S. goods. Even the U.S.’s supposed allies — Mexico, Canada, and the E.U. — have imposed the taxes on their own.

This danger of considerable acceleration makes the dangers of Trump’s potential exchange war significantly more prominent than the experience three decades back. 


In my opinion, Trump started this trade war to protect U.S. intellectual property, employment opportunity and mostly to give security to there own people from the external competition so that he can save the generated amount by the U.S. own people can use it for funding for the growth of military troops or can fund development.

Starting a trade war brings destruction for other countries, but to save ones own country, there is no harm to do so, but threatening and making them agree according to your terms is not the right procedure to carry on.

By this, I conclude that yes, Trump started a trade war just to save billions of money and use it for U.S. development.


Rashi Jain

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