Trump’s Precarious Moment
The United States’ long-festering trade imbalance with China is not the only policy problem Trump is facing as he begins to implement economic curbs on Chinese imports. In addition to defending American national security, Trump is also under pressure to increase exports to Asia, the world’s second-largest manufacturing market after the United States, which represents a significant percentage of total U.S. exports.
One of the most difficult challenges in reaching his goal of reaching 25 percent of U.S. gross domestic product in exports by the middle of his second term is negotiating trade agreements with Asia and China. The United States’ lack of trade-related policy in the Asia-Pacific region is due to factors such as U.S. leadership in the region having failed to provide a major strategic benefit to U.S. allies such as Australia, Japan, and New Zealand; and its failure to address the legacy trade imbalances on Asian countries’ balance sheets that are not subject to U.S. currency control.
The United States’ bilateral and regional trade imbalances in Asia are caused by the fact that U.S. tariffs on imports and currency manipulation have not led to a sufficient change in China’s trade policies, while the United States has not taken into account its own internal trade-policy imbalances. The result of the China and U.S. bilateral trade imbalances has been a high level of friction between the two nations, and a significant loss of economic dynamism on the part of Asian economies.
The United States also has to reconcile its trade policy with its trade commitments in the multilateral trading system. This has made the United States more vulnerable to market protectionist and unilateral economic policies in certain countries that would reduce the benefits of the multilateral trading system for the United States.
To overcome these challenges, the United States must implement a program of trade reorientation that prioritizes manufacturing over services, and seeks to improve the competitiveness of its exports by promoting exports of products
