Dominance
Donald Trump is into dominance. In a series of orders since he started his second term last January, he has proclaimed his intention to restore America’s maritime dominance and its energy dominance, to make the United States dominant in cryptocurrency and artificial intelligence, and to maintain the dollar as the world’s dominant currency. And that’s not all. “America’s destiny is to dominate every industry,” he told an audience in Pennsylvania on July 15.
In recent days, Trump reasserted his belief in U.S. dominance by announcing steep tariffs on many countries. His quest for dominance goes beyond eliminating bilateral trade deficits. He has placed tariffs on imports from Canada, supposedly because it allows fentanyl to cross the border into the United States; and on Brazil (with which the United States has a trade surplus) to punish it for prosecuting a former president for plotting the violent overthrow of the government; and on India, supposedly because it purchases oil and military equipment from Russia. Tariffs, he clearly believes, are a useful cudgel to force other governments to conform to his desires.
In the short term, large bilateral trade deficits have made it difficult for trading partners to retaliate when Trump nullifies longstanding trade agreements and announces new import barriers. In the longer term, though, such policies threaten the United States’ central place in the world economy. U.S. disinterest in expanding international trade and negotiating multilateral agreements is not shared by most other countries, which are busily signing trade packs that do not include the United States. Talk about creating a substitute for the World Trade Organization without U.S. involvement is widespread.
Already, traders are responding to America’s anti-trade agenda by finding other partners. “Since this March, China-ASEAN export volumes are now double that of China-US, traditionally the most important route in container shipping,” Bloomberg reports. On August 5, the Bureau of Economic Analysis confirmed that while U.S. imports are declining, its exports are in decline as well. As America withdraws, other countries are moving forward, and U.S. dominance is slowly falling away.
Tags: tariffs