Global Trade: The Aftermath of Trump's Election
On Monday, November 25, The Association of Foreign Press Correspondents (AFPC-USA) hosted a timely educational program in partnership with the Hinrich Foundation, an Asia-based philanthropy dedicated to promoting sustainable trade, for foreign journalists to learn more about the transformative effects of Donald Trump’s recent re-election on global trade. With Trump’s renewed focus on trade policy and his clear intentions to reshape international economic relations, correspondents are faced with a new landscape that demands close attention and nuanced understanding.
Keith M. Rockwell, Senior Research Fellow at the Hinrich Foundation and former Director of Media Relations at the World Trade Organization (WTO), offered key insights on this topic, including how Trump's trade policies could disrupt traditional free trade frameworks, actions which Dr. Deborah Elms, Head of Trade Policy at the Hinrich Foundation, has referred to as “disruptive radicalism.” Also examined was the worsening trajectory of U.S.-China relations, a trend likely to persist regardless of U.S. leadership shifts, as highlighted in recent Hinrich Foundation research, and the implications of significant changes within the European Union, including the new European Commission in Brussels and the recent collapse of Germany’s government, as they intersect with a shifting U.S. trade stance.
This educational program was moderated by Patrícia Vasconcellos, the White House correspondent for the Brazilian television network SBT. AFPC-USA is solely responsible for the structure and the development of this program. Below, foreign correspondents will find a summary of some of the most important takeaways from the presentation.
ON HOW THE U.S. PRESIDENTIAL ELECTION RESULT SHAPES FOREIGN PERCEPTIONS ON THE COUNTRY AND TRADE
Rockwell emphasized that the U.S. presidential election results would have a significant but not unprecedented impact on foreign perceptions and trade, as many trade policies implemented during Trump’s first term were continued under the Biden administration. Biden maintained Trump-era tariffs on China and imposed tariff rate quotas on the EU, despite some reductions on steel imports. The administration also upheld the U.S. stance in the WTO without pursuing major reforms and withdrew from critical trade negotiations, such as the e-commerce element and the trade pillar of the Indo-Pacific Economic Framework.
While the Biden administration passed legislation with trade implications—such as the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Act—these measures were designed to prioritize U.S. industries and exclude Chinese supply chain influence.
In a potential second Trump administration, tariffs would likely play a central role, although their specifics remain unclear. Trump may impose across-the-board tariffs (e.g., 10% or 20%) or target China with additional 60% tariffs. Tariffs could also be tied to other policy areas, such as immigration, with Mexico potentially facing tariffs if it fails to address undocumented immigration or drug trafficking, and defense, with trade linked to NATO commitments.
The objectives of such tariffs could vary, ranging from generating revenue—potentially replacing tax cuts—to reducing the trade deficit, although the latter is influenced more by macroeconomic factors than trade policies alone. More likely, Trump would use tariffs as leverage to negotiate new trade agreements, a tactic he has employed in the past.
However, imposing tariffs carries risks, including retaliation from trade partners like the EU, which has prepared a list of politically sensitive U.S. products, such as Levi’s, Harley-Davidson motorcycles, and agricultural goods, for retaliatory tariffs. Broad tariffs could also exacerbate inflation, a concern among voters in the recent election, making their implementation politically challenging.
Trump’s trade agenda would likely prioritize manufacturing-related sectors like steel and energy rather than services, despite the U.S. being a global leader in service exports. He may also encourage foreign companies to relocate production to the U.S., a trend already incentivized by Biden-era subsidies and lower energy costs compared to Europe and Japan. These incentives, benefiting states across political lines, are unlikely to be repealed. A significant question remains regarding how the Trump administration might handle inward investment from China.
ON PREDICTIONS FROM TRADE WATCHERS ABOUT WHAT TO EXPECT FROM A REPUBLICAN WHITE HOUSE AFTER INAUGURATION DAY
Rockwell highlighted that the U.S. trade paradigm has shifted significantly since Trump’s first election, with a majority of Americans—56% of registered voters—now supporting tariffs. This shift has made it politically unviable for politicians to advocate strongly for free trade, which has become a minority position supported primarily by some economists and business leaders.
He said: “Finding a free trade coalition in the US right now is a very difficult thing to do. You have some economists, you have some business people, but people are not going around and shouting about how important trade is because it's a losing political proposition at the moment.”
Rockwell emphasized that while trade policy rhetoric may vary, actual policy outcomes have remained consistent across administrations. For example, the Biden administration, despite its more diplomatic tone, adopted trade measures as restrictive as those implemented under Trump, such as imposing additional tariffs on Chinese goods and unprecedented restrictions on U.S. outward investments in Chinese tech sectors.
Biden also monitored inward and outward investment flows, expanded the role of the Committee on Foreign Investment in the U.S. (CFIUS), and opposed foreign takeovers like Toon Steel's attempted acquisition of U.S. Steel, Rockwell noted. These actions reflect a continuation of a trade-averse stance, which Rockwell predicts will persist under a Republican White House. While the presentation under Trump may be more overtly aggressive, he argues that the substantive results will likely mirror the Biden administration’s approach, signaling a broader bipartisan alignment on restrictive trade policies.
Keith M. Rockwell
ON WHETHER U.S.-CHINA TIES WILL WORSEN AND HOW THE U.S. MIGHT RESPOND OVER THE NEXT YEAR
Rockwell noted that U.S.-China relations are unlikely to improve under Trump’s leadership, with existing tariffs on Chinese goods—totaling $360 billion—remaining in place and potentially being increased. Trump has hinted at imposing an additional 60% tariff, and Rockwell suggested there would be little domestic political resistance to such measures.
He contrasted this with Europe, where efforts to impose countervailing duties on subsidized Chinese electric vehicle exports have faced resistance from countries like Germany, Hungary, Austria, and Spain due to concerns over Chinese retaliation against their products. In contrast, Trump appears less concerned about such repercussions and is likely to continue pushing for economic "decoupling" from China.
Rockwell also raised a critical question regarding how Trump would handle inward investments from Chinese companies. For example, if a major Chinese electric vehicle manufacturer like BYD proposed building a facility in a U.S. swing state, Trump might allow it—a stance that would differ from Biden’s administration, which has been cautious about such investments.
He pointed out that China’s dominance in the electric vehicle supply chain, from raw materials to finished products, makes this sector a key area of interest, particularly to figures like Elon Musk. Rockwell said that tensions between the U.S. and China are likely to escalate, driven by trade policies and competition in strategically significant industries.
He also said that Trump will likely adopt aggressive trade measures toward China regardless of the legal complexities involved. He emphasized that while Trump has suggested imposing a 60% tariff on Chinese goods, such a move would likely face minimal political resistance domestically. However, broader measures, such as a 20% tariff across the board, could spark pushback in Congress. He referenced a legal analysis by Alan Wolf, a trade law expert at the Peterson Institute, who argues that under the U.S. Constitution, control of trade policy rests with Congress (Article 1, Section 8). This constitutional provision could complicate efforts to implement blanket tariffs without legislative approval.
Rockwell noted that while the president's ability to impose tariffs on individual countries or products is more straightforward—often justified under claims of national security—broad, across-the-board tariffs present greater legal challenges. Historically, courts have been reluctant to limit presidential authority on national security matters, which could allow Trump to pursue such measures despite potential legal and constitutional hurdles. Ultimately, Rockwell suggested that the approach Trump takes will reflect a broader disregard for traditional rules governing trade policy, leaving significant uncertainty about how such measures might be implemented.
ON HOW THE SECOND TRUMP ADMINISTRATION WOULD REGARD TRADITIONAL FREE TRADE FRAMEWORKS
Rockwell painted a “grim” picture for the future of traditional free trade agreements under a Trump administration, predicting a significant departure from comprehensive, multi-faceted trade frameworks. He suggested that Trump would likely avoid traditional broad agreements and instead favor targeted deals, focusing on specific sectors such as agriculture or steel. For instance, Trump might push for trade agreements tied to reducing tariffs, pressuring countries to purchase more U.S. products or invest domestically as a condition for avoiding punitive measures.
While Rockwell speculated that a deal with the United Kingdom could be a possibility, he highlighted the challenges inherent in such negotiations. Trump would likely demand full market access for U.S. agricultural products, a requirement that the UK might find difficult to accommodate. This contrasts sharply with the Biden administration, which showed little to no interest in pursuing trade agreements, signaling an overall shift away from traditional free trade priorities.
Rockwell suggested that Trump's approach would be deal-driven rather than systemic, leveraging tariffs or the threat thereof as a bargaining chip rather than adhering to established frameworks for economic collaboration. This strategy reflects Trump’s preference for direct negotiations and sector-specific outcomes over comprehensive trade agreements that cover a broad array of economic activities.
ON TARIFFS
Rockwell emphasized that the use of tariffs based on political considerations rather than purely economic factors represents a significant shift in U.S. trade policy, emerging prominently during the first Trump administration in 2016 and continuing through subsequent administrations. This approach diverges from historical norms and reflects a broader trend in which trade policy is increasingly shaped by political alignment and strategic objectives.
He speculated that Trump might use tariffs as a tool to address broader fiscal challenges, such as compensating for revenue shortfalls that could arise from extending and expanding the business tax cuts initiated in 2017. While tariffs could be employed to raise federal revenue, Rockwell questioned their efficiency and doubted they would lead to a significant reduction in the U.S. trade deficit, as trade imbalances are driven more by macroeconomic factors than tariff policy.
Rockwell also predicted that Trump would likely leverage tariffs as a bargaining tool to strike deals with key trading partners, including the European Union, Japan, and potentially China. He expressed confidence that this deal-making strategy, focused on leveraging trade pressure for broader political or economic objectives, would be a central feature of Trump's trade agenda if pursued. Ultimately, Rockwell suggested that these decisions will hinge on both strategic goals and the administration's evolving fiscal and geopolitical priorities.
ON HEIGHTENED CONCERNS IN EUROPE
Rockwell pointed out that these concerns are focused more on defense and geopolitical stability than trade. He noted that European leaders, particularly in Brussels, are deeply concerned about U.S. commitment to NATO and the defense of Ukraine. For Europeans, Ukraine is not just a foreign policy issue but an existential crisis, given their proximity to Russia and Ukraine, with Poland and other EU states sharing borders with these nations. In contrast, the U.S. public views Ukraine as a distant issue, often framed as a fiscal burden.
On trade, Rockwell stated that Europe would likely be open to negotiations with Trump, potentially involving agreements to increase European imports of U.S. products like liquefied natural gas and soybeans. European companies might also ramp up investments in the U.S. to take advantage of subsidies from industrial policy programs and lower energy costs. However, the EU’s capacity to respond proactively is constrained by its market economy structure, where the European Commission cannot dictate specific purchasing decisions. Instead, these efforts would rely on voluntary adjustments by private enterprises.
Germany's precarious position adds to Europe's challenges. Politically, Germany is in turmoil following its government collapse. Economically, the country is teetering on the brink of recession, grappling with high energy costs after losing access to Russian gas, and struggling to transition its auto industry from combustion engines to electric vehicles—a shift where it lags behind competitors. Broader European vulnerabilities include a lack of technological competitiveness and a struggling startup ecosystem, exemplified by Northvolt, a Swedish electric battery company, filing for bankruptcy.
Rockwell emphasized that Europe is approaching the incoming Trump administration from a position of economic and political fragility, making it difficult to confront U.S. demands effectively. While European leaders anticipate potential linkages between defense commitments and trade negotiations, they remain tense and uncertain about the future.
He said: “There is a lot of evidence to suggest that the European economy and indeed the political makeup of many of the most important countries is very much in a turbulent place right now. They're not really standing on the most solid ground as they look to face up to incoming President Trump.”
ON RUSSIAN SANCTIONS
Rockwell discussed the potential for a shift in sanctions against Russia, emphasizing that the Kremlin would likely prioritize the easing of these measures as part of any negotiated settlement. He suggested that sanctions relief could target areas such as investment, trade, asset seizures, or restrictions on the movement of people, though the specifics would depend on the broader terms of negotiation.
The feasibility of such a settlement, according to Rockwell, hinges on what Ukraine and its allies might accept in exchange. While Kyiv and President Zelenskyy have hinted at the possibility of negotiations in the coming year, the outcomes remain uncertain. Russia, despite its territorial gains, has suffered substantial losses, including an estimated 700,000 casualties and incursions into its own territory. These costs, coupled with a military stalemate, may make both sides more inclined toward diplomacy than before.
Rockwell acknowledged that the potential role of a new Trump administration in advancing negotiations remains unclear but noted that the international dynamic appears closer to a negotiated resolution now than six months ago. The outcome of such discussions will likely reflect the balance between economic, political, and territorial concessions on both sides.
ON HOW CHINA MIGHT INTERACT WITH THE SECOND TRUMP ADMINISTRATION
Rockwell addressed the likely trajectory of U.S.-China relations under a new Trump administration, predicting heightened tensions accompanied by a more aggressive rhetorical approach compared to the Biden administration. This shift in tone reflects Trump’s characteristic style but leaves open questions about the feasibility of negotiating a new trade agreement. He highlighted the fallout from the previous U.S.-China trade deal, where China failed to meet its commitments, leading to significant and lasting consequences for U.S. agriculture.
In response to China's actions, the U.S. government under Trump provided subsidies to offset the losses faced by American agricultural producers. However, these disputes created an opportunity for Brazil, a major agricultural competitor, to fill the gap in Chinese markets by supplying soybeans and other products. Brazilian producers have since solidified their foothold in those markets, making it exceedingly difficult for U.S. exporters to reclaim their previous share.
Rockwell cautioned that trade disputes of this nature come with “serious downsides,” affecting not only global economic relations but also causing domestic harm within the U.S., particularly to sectors like agriculture that rely heavily on international markets.
ON THE GLOBAL SOUTH
Rockwell discussed the emerging influence of the Global South in global trade, particularly the roles of Brazil, India, and other major economies. He noted that Brazil, as an agricultural powerhouse, and India, with its dominance in services and tech, are key players on the global stage. He also acknowledged the rivalry between these countries, particularly the tense relationship between India and China, and how these tensions influence their trade policies.
For example, Brazil and other countries have imposed significant tariffs on Chinese products, such as steel and electric vehicles, and are increasingly requiring foreign companies to build local factories in exchange for market access. This "local content" strategy contradicts WTO rules but is widely adopted by countries seeking to foster domestic industries and add value to their economies.
Regarding the future of trade and currency, Rockwell emphasized that despite the desire from some nations to use currencies other than the U.S. dollar, the dollar’s dominance remains secure. Currently, the dollar makes up about two-thirds of global reserves, and over half of international trade is conducted in dollars. While countries may experiment with other currencies, the dollar remains the preferred global currency due to trust in its stability and the depth of U.S. capital markets.
Rockwell expressed skepticism that any movement away from the dollar’s dominance would happen soon, as trust in other currencies is still lacking. Additionally, he suggested that Trump, despite previously expressing interest in a weaker dollar, would likely recognize the value of maintaining the dollar’s position as the world’s reserve currency, which he referred to as an "exorbitant privilege."
WTO rules prohibit trade-related investment measures, such as local content requirements or export obligations. For example, it’s not allowed for a country, like Brazil, to mandate that a company must produce locally in order to sell in the domestic market or require a certain percentage of production to be exported. These rules are in place to maintain fair trade practices and prevent countries from using trade as leverage to enforce domestic production or export quotas.
However, Rockwell pointed out that these rules are being increasingly disregarded by countries, and the WTO’s dispute settlement system is currently ineffective, a situation that was not addressed by the Biden administration and is unlikely to be addressed by the Trump administration either. He suggested that significant reform of the WTO would be needed in the future.
ON U.S.-CANADA RELATIONS
Rockwell mentioned that President-elect Trump has expressed a desire to renegotiate the United States–Mexico–Canada Agreement (USMCA), while Mexico and Canada likely prefer a more minor review with potential adjustments. He highlighted the contentious nature of the previous relationship between Trump and Canada, particularly over steel and aluminum tariffs, which were imposed under the claim that Canadian imports could pose a national security threat despite the long, undefended border between the two countries.
This stance was deeply offensive to Canada. He speculated that while Prime Minister Trudeau and Trump have clashed in the past, Canada might try to make “friendly overtures” to the new administration, though it remains unclear how those efforts will be received.
ON NATO’S FUTURE
Rockwell noted that while Congress passed legislation during the Biden administration that prevents the president from unilaterally withdrawing the U.S. from NATO, the president could still impact the alliance's strength. If Trump were to publicly declare that the U.S. would not defend certain NATO members, even without formal withdrawal, the mere perception among allies that they might not be defended could weaken the alliance. He emphasized that this would particularly affect Europe, which is already grappling with significant political and economic challenges, adding to their anxieties.
ON WHETHER IT’S POSSIBLE TO “REBUILD TRUST” WITHIN THE US
Rockwell discussed the polarized political landscape in the U.S. and its impact on revitalizing industries and rebuilding trust in the country. He pointed out that the U.S. remains divided on issues like green energy, with the Trump administration “historically being critical of renewable energy and supportive of the fossil fuel sector.” This ideological divide has caused political tensions and paralysis, making it difficult for the country to address crises or support its international allies effectively. He also noted that this polarization is not unique to the U.S., with similar trends appearing in countries across Latin America, Europe, and Africa, where political shifts are leading to less openness to opposing views.
IN RESPONSE TO A QUESTION ABOUT THE RECIPROCAL TARIFF ACT AND BILATERAL TRADE DEALS
Rockwell explained the challenges of implementing a Reciprocal Tariff Act, which would require a different tariff schedule for each country and product. This approach would create a complex and chaotic system, making it difficult to manage and prone to fraud. He also noted that the current system, established by the WTO, ensures a standard tariff schedule for products from each country, which avoids such complications.
Regarding bilateral trade deals with the European Union, Rockwell suggested that while full-fledged agreements like the US-Mexico-Canada Agreement (USMCA) might not be on the table, the U.S. and EU could negotiate more specific trade deals involving a narrower range of products. However, he highlighted that any such agreements would require concessions from both sides, and it remains unclear how willing the U.S. would be to make those concessions.
Rockwell also discussed the idea of incentivizing allies and other countries to participate in strategic industries within the U.S. through relief measures rather than applying tariffs. He noted that tariffs, especially under the Reciprocal Tariff Act, could raise prices without necessarily protecting domestic industries or creating job security, especially for products like ship building cranes, which the U.S. does not produce.
Rockwell pointed out the importance of addressing existing barriers, such as the Jones Act, which limits domestic shipping to U.S.-flagged vessels and therefore complicates the supply of ships. He emphasized that the focus should be on finding practical solutions, rather than simply imposing tariffs, and that any changes to the trade regime would require careful planning and a lot of execution.
ON WHAT JOURNALISTS CAN TAKE AWAY FROM THE DISCUSSION
Rockwell advises journalists to focus on the objectives behind tariff policies. He suggests determining early whether the goal of tariffs is to raise revenue or to serve as leverage in negotiating deals, with the latter being more aligned with Trump's approach. He also stresses that tariffs are not a cure-all solution and can create problems, particularly for consumers, domestic producers, and allies due to potential retaliation. Additionally, he emphasizes the importance of understanding the broader context in which trade policy operates, including its connections to defense, immigration, and other key areas.
