Trade and Trump

We should coordinate with friends to make the Trump administration irrelevant to the world's progress

- NAUSHAD FORBES

The past two weeks have seen the President of the United States unleash an attack on trade with all countries. Even penguins have not been spared. A country like Singapore, which has carefully balanced its trade with the US and runs a deficit with it (unlike almost everyone else), was covered under the blanket 10 per cent tariff. It did not matter if one had a free-trade agreement (FTA) with the US, signed by Mr Trump himself — Canada, Mexico, and South Korea all were covered. The higher rates have subsequently been rolled back to 10 per cent for all (except China) for the next 90 days. (A relief, but should we welcome a temporary and partial pause in something thoroughly bad?) How should the world respond to Mr Trump? How should India?

The best option is to not respond at all. The President wants the world to come calling in search of individual deals. Ignore him. Instead, call one's friends around the world. Agree on a set of principles consistent with the most-favoured nation (MFN) guidelines of the World Trade Organization (WTO). And start a round of trade liberalisation with the rest of the world. Keep the door open for the US to join in at a subsequent date, if, and only if, it subscribes upfront to the same guidelines. Is it practical to conclude a deal without the US? Certainly. The US may be a large trading nation (it is second only to China), but the rest of the world together accounts for 10 times more of world trade. Over 90 per cent of world trade is unaffected by the US — if we choose to keep it unaffected. We should put our immediate negotiating effort into trade deals with the rest of the world, not the US. We can get to the US on our terms and in our time. Let them go ahead with tariffs — on whosoever they choose. So long as countries do not compete to steal a march on one another in dealing with the US, this option is perfectly viable. What can Mr Trump do if no one responds?