Will President Trump Clash with India’s Prime Minister on Trade?

June 26, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

Today, President Donald Trump will meet with India Prime Minister Narendra Modi. Leading up to the meeting, U.S. lawmakers on either side of the aisle have urged the President to press Modi on the removal of barriers to U.S. trade and investment in India (The New York Times). According to these lawmakers, despite the high-level engagement with India, the country has not eliminated major barriers to trade and investment and has not been prevented from imposing new barriers. These barriers include high tariffs, poor protection of intellectual property rights, and inconsistent and non-transparent licensing and regulatory practices.

In a letter to the President, lawmakers claimed that a wide range of sectors from India’s economy remain “highly and unjustifiably” protected, making India a very difficult place for U.S. companies to do business (Reuters). their opinion, the bilateral economic relationship does not perform efficiently due to India’s hesitance in enacting vital market-based reforms.

Major sectors affected are solar and information technology products, telecommunications equipment and biotech products. Further, there are limitations on foreign participation professional services, in addition to numerous restrictive foreign equity caps. The lawmakers’ list of grievances is long and growing.

Currently, Prime Minister Modi is running a “Make in India” campaign as an attempt to boost domestic manufacturing and create jobs (Bloomberg). This may make it difficult for he and the President to reach an agreement, as President Trump’s “America First” agenda creates a clash of economic nationalisms. However, President Trump has called Modi a “true friend” on Twitter, and Modi has expressed excitement in anticipation of the meeting.

For updates on the meeting and information on other relevant trade issues, follow Mercatura Global on Twitter.

Robert Lighthizer to be Sworn in as U.S. Trade Representative Today

May 15, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

Robert Lighthizer will be sworn in at U.S. Trade Representative at 3pm today. The occasion comes after a months-long confirmation process, in which he was finally confirmed by an 82-14 Senate vote last Thursday.

Despite the overwhelming consensus, two notable Republicans, John McCain of Arizona and Ben Sasse of Nebraska, voted against his confirmation due to Lighthizer’s stance on the North American Free Trade Agreement (NAFTA). According to the GOP Senators, they do not believe Lighthizer understands “the North American Free Trade Agreement’s positive economic benefits to our respective states and the nation as a whole” (U.S. News & World Report). They claimed to fear Lighthizer did not appreciate the jobs created by NAFTA and worried he would not be a champion of U.S. agriculture.

The delay on Lighthizer’s confirmation has hindered President Trump’s trade agenda, especially in regard to his goal of renegotiating NAFTA. Before this formal process begins, the Trump administration must send a declaration letter to Congress detailing its intention to initiate negotiations in 90 days (Reuters). Renegotiations would likely focus on Mexico, as the U.S. trade deficit with Mexico has ballooned since the establishment of NAFTA in 1994 and has been largely criticized by the President.

In addition to renegotiating NAFTA, Lighthizer is expected to tackle other trade issues detailed by the Trump administration. This includes establishing bilateral trade deals with allies like the United Kingdom and Japan, and take a tougher stance on China (Politico). Future trade policy will have an “America First” focus, with the goal of bringing back manufacturing and other industrial jobs back to the U.S.

After Lighthizer is sworn in today, the Trump administration will be able to begin acting on measures outlined in President’s campaign. This could mean a lot of changes for trade. To stay up to date with all things related to trade, follow Mercatura Global on Twitter.

President Trump and Chinese President Xi Form 100-Day Action Plan on Trade

April 7, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

This Thursday and Friday, President Trump welcomed Chinese President Xi JinPing to Mar-A-Lago for their first face-to-face meeting. On Thursday, Trump administration officials claimed they will be hardening their position on trade with China (The New York Times). China is America’s largest trading partner, and President Trump is expected to sign an executive order directed at countries that dump steel into American markets. This measure would be intended to address China’s huge trade surplus with the U.S., an issue highly publicized during President Trump’s campaign.

According to China’s Foreign Ministry website, Xi believes both sides should promote the “healthy development of bilateral trade an advancement” (Reuters). Xi also asserted there is no reason to spoil the China-U.S. relationship.

According to Commerce Secretary Wilbur Ross, during the Summit the two leaders agreed to put into action a 100-day plan to tweak the trade relationship between China and U.S. (US. News & World Report). While there were no major breakthroughs at the meeting, the 100-day plan is intended to address economic differences, included a reduction in the U.S. trade deficit.

To stay up to date on the progress of the 100-day plan and other international trade news, follow Mercatura Global on Twitter.

How U.S. Protectionism Impacts Regional Economies

February 13, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

New York City, Los Angeles, Houston, Chicago, Dallas, and Seattle are the top trade cities in the U.S. In total, each city exports over $50 billion in goods and services a year, and together they account for 25% of national exports (Global Trade Magazine).

Contrary to popular belief, although these cities engage in the most international trade, they are not the parts of America that would be most affected by trade protectionism. Rather, it is the smaller energy- and manufacturing-oriented metros that are reliant on exports as a driver of economic growth and jobs. This includes metropolitan areas such as Wichita and Seattle, Detroit and Youngstown, Portland and Ogden, and Baton Rouge, New Orleans and Houston. Exports account for at least 15% of GDP in these metropolitan areas, especially in major industries such as aerospace, automotive, electronics, and energy production.

In areas that rely on exports to drive economic activity, trade supports millions of workers in numerous locations around the country. If protectionism becomes a reality in the U.S., a trade war would ensure, prices would rise, and purchasing power would diminish for the American consumer. This would cause demand for goods to decrease and companies needing fewer workers, which would cost American jobs (Forbes Magazine). Therefore, the “America first” ideology may have the opposite effect than which it was intended.

Overall, national policies will have a legitimate effect on regional economies, and the future of U.S. trade could impact numerous companies and individuals. Keep in touch with all international trade news and remain up-to-date by following Mercatura Global on LinkedIn and Twitter.

Slow Growth in Transatlantic Trade Could Be Boosted by TTIP

February 6, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

The plateauing of U.S. consumer demand is apparent in the decline of annual westbound transatlantic volume growth. 2014 and 2015 recorded growth of westbound shipments by 8.4% and 6.4 % respectively, while 2016 reported only 2.5% growth (Global Trade Magazine). As the dollar has strengthened relatively in comparison to both the euro and the British pound, shipment carriers likely expected more from this trade.

Eastbound shipments also remain weak, in part due to both a strong dollar and subdued demand in Europe. Interestingly enough, although American and Canadian exports lacked in 2016, Mexico experienced almost nine percent growth in exports to Europe.

Despite the uncertain future of U.S. trade under the Trump Administration, one possible opportunity for growth is in the Russian market. As the U.S.’s relationship with Russia seems to be looking up, perhaps there is a chance Russian sanctions will be relaxed and new trade opportunities will arise with Russia. However, this alone would not offset losses if the President continues pursuing his protectionist ideologies and ends tentative talks with the EU regarding the Transatlantic Trade and Investment Partnership (TTIP).

European Commission Vice President Jyriki Katainen believes there is still hope in TTIP. In a recent interview, he claimed that the EU officials are committed to strong transatlantic ties, and he expressed how this relationship would greatly benefit U.S. and European small- and medium- sized businesses (Reuters). He also indicated that while Trump vehemently spoke out against the TPP during his campaign, he took no specific aim at the TTIP.

At Mercatura Global, we are dedicated to assisting small- and medium-sized businesses to growth their company by engaging in international trade. Stay up to date with the latest happenings in international trade by checking following us on LinkedIn and Facebook. If you are an SME interested in capitalizing on your export potential, contact us today.

European Commission Vice-President Jyrki Katainen holds a news conference on Commission’s proposal for a new methodology for anti-dumping investigations, at the EU Commission headquarters in Brussels, Belgium November 9, 2016. REUTERS/Yves Herman

Restrictions on Trade with China Would Lead to a Trade War the U.S. Will Lose

January 11, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

Since the early 2000s, U.S. foreign debt has grown faster than the growth of its economy as a whole, stemming from a significant trade imbalance with China. Between 2011 and 2015, the US trade deficit with China sat at an annual average of $300 billion (US News).

The trade deficit with China is concerning, yet steep tariffs and restrictions of Chinese imports will not solve the U.S.’s problems. Analysts have indicated that steep tariffs would harm both economies, with the U.S. being the bigger loser of the two (Fortune Magazine). The U.S. relies on China far more than vice versa, and steep tariffs would lead to a trade war that the U.S. would undoubtedly lose.

China accounts for around 20% of the world’s population, and the U.S. cannot ignore the size of its consumer base. Large American corporations such as Apple and Boeing sell more to Chinese consumers than American consumers, and they rely on raw materials and finished goods produced in China. This reliance on China for materials and finished goods spans from across almost every U.S. industry, and the precipitation of a trade war would lead to shortages within these industries (US News).

A trade war with China would only become a reality if U.S. President-elect Donald Trump follows through with his threats of imposing a 35% or 45% tariff. A tariff at this rate would go against the rules of the World Trade Organization (WTO), and would potentially lead to U.S. withdrawal from the organization. Many U.S. policy-makers condemn this prospect, so for now we must wait until after the inauguration to determine if Trump’s trade policies will actually transpire.

Beijing to Assert Trade Influence in Response to US Election Results

November 15, 2016  |  No Comments  |  by Nicole àBeckett  |  Blog

The president-elect, Donald Trump, has been clear about his protectionist viewpoint on trade and his strong opposition of the TPP. Given his recent triumph in the US president election, there seems to be little hope that the TPP will be voted upon before his inauguration.

One of the main purposes for the TPP was to help assert US influence in Asia-Pacific region. Now that it is safe to say that a US-led FTA is unlikely, Beijing has decided it is the perfect time to begin pushing for their own free trade deals. China has proposed the Free Trade Area of the Asia Pacific (FTAAP) and the Regional Comprehensive Economic Partnership (RCEP), both of which are clear competitors of the TPP (Reuters). This is likely to call into question the relationship between the US and China as well as their regional balance of power.

The TPP had excluded China, and its failure has prompted China to assert dominance by promoting its own FTAs. According to US Trade Representative Michael Froman, the US is “going to be left on the sidelines as others move forward if [TPP] doesn’t happen” (Financial Times). Malaysia has already declared it will begin focusing its efforts on solidifying a multi-nation trade pact with China as it prepares for the collapse of the TPP.

Although Trump has yet to make any distinct moves, he has repeatedly asserted his desire to dismantle the TPP, and his rhetoric has had implications for US international trade. However, the deal itself is not dead, and Froman believes it will be preserved and hopefully revived in the future.

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How Election Day Will Affect the TPP

November 8, 2016  |  No Comments  |  by Nicole àBeckett  |  Blog

Politico’s Megan Cassella analyzed the affect that tonight’s election results could have on the TPP. President Obama has stated that he will continue to push forward with the TPP during the lame-duck period, and that the results of tonight’s election will not alter his determination. Congress, on the other hand, may develop a different agenda depending upon both the presidential and congressional results.

According to the analysis, the best possible outcome for the livelihood of the TPP would be for the current situation to remain the same: a Democratic president and Republican control in both houses of Congress. While Clinton has opposed the TPP, she has announced that she would not interfere with Obama’s final efforts to push the TPP forward. On the other hand, if the Republican nominee is to be elected, the immediate future of the TPP is not as bright. Opposition of the TPP has been one of Trump’s clearest policy stances, and many Congressman will not be willing to hold a vote if they believe it will not be worth their effort.

Stayed tune for tonight’s results, and for more information about international trade and the export process, contact us today. 

 

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