Expect trade turmoil with Trump comeback

A promised protectionist turn, expected weakening of the rules-based multilateral trade order, and the likelihood of the US pulling out of strategic alliances, all have worrisome implications for the global economy

- Biswajit Dhar

Two promises that United States (US) President-elect Donald Trump made during his election campaign could form the core of his economic policy: First, his promise to raise tariffs on everything that the world's largest economy imports by 10-20%, and second, his pledge to take manufacturing jobs from foreign countries by offering incentives to encourage companies to relocate to the US. In other words, the emergence of a staunchly protectionist US could be in the offing.

Almost a century back, another Republican, Herbert Hoover, won the presidential election by promising an increase in tariffs. This culminated in the adoption of the Smoot-Hawley Tariff Act of 1930, which raised tariffs by 40-60%. A trade war followed as the US's trade partners retaliated, and this, in turn, triggered the Great Depression, the worst economic crisis that humankind has seen. Trump's insistence on using trade protectionism to "Make America Great Again", therefore, does not bode well for a global economy that is already facing considerable headwinds.