The US underpinned the liberal economic order. So what now in a world of America First?by George Magnus / February 10, 2017 / Leave a comment
Published in March 2017 issue of Prospect Magazine
Often accused of being rambling or incoherent, in his inaugural address President Donald Trump did—for better or worse—have something substantial to say. He summed it up in the two-word slogan, “America First.” To the uninitiated, this might have sounded like typical new-president waffle that might be forgotten as quickly as the “thousand points of light” of George HW Bush’s 1989 inaugural. Those who know their American history, however, were not so easily soothed. For “America First” was also the slogan of the isolationists during the 1930s, the last time the world descended into a serious trade war. The question that can no longer be ducked is whether it could happen again.
On their path to the top, many presidential candidates—Barack Obama and Bill Clinton included—have aired anxieties about trade, but they have tended to cool their rhetoric pretty quickly on assuming office. They were bound to do so if the United States were to maintain the role it has had for the last 70 years, as the linchpin of the liberal trading order. No winning candidate, however, has adopted anything like the language of Trump, who has talked of the “rape” of America’s jobs.
And as he stood in front of the Capitol on 20th January, he doubled down on that line. “Protection,” he said, “will bring great prosperity and strength.” He indicated that all his decisions on trade, taxes, immigration and foreign affairs would be made in the interests of American families and workers. In Trump’s America trade is a zero-sum game in which only one party gains, and in which the interests of Americans as suppliers of products or labour are all-important, entirely dominating the interest they have as consumers.
Trump is an ugly new feature on the world’s trading landscape, but he did not come from nowhere. In important respects he is a creature of his time. If the great contemporary political battle is between globalisers and the malcontents, then trade is the front line. Even before the remarkable events of 2016, world trade had been in trouble, mainly for economic reasons. Now, though, there is a new political cloud hanging over world trade, bringing in its wake greater protectionism and the real possibility of a full-on trade war.