November 11, 2016

What to Expect in a Trump Trade and Foreign Policy?

Gardner Peckham

Trade

The truth is, no one really knows what to expect in the way of trade policy in the Trump Administration. But, here’s my best guess. International trade is essential and unavoidable. Trump will leave the TPP by the side of the road where it currently lies lifeless. The truth is, no one liked TPP. It was not enthusiastically supported by the business community, was opposed by environmentalists, labor unions, and activists of all colors, and was only favored by those who generically believe that trade agreements beget freer trade; a means to a better end, but not an end in itself. The Trump Administration will advance a trade agenda that punishes those who cheat and favors those who share our values. The UK will be a prime candidate for an FTA and those negotiations will begin in 2017. TTIP will take a back seat to the US-UK trade negotiations because the UK is eager to do a deal and our differences over trade policy are less than with anyone outside NAFTA. Speaking of which, there will be an effort to rewrite certain portions of NAFTA but this will be window dressing and in Trump’s perfect world, a few changes will be trumpeted as a total rewrite, and he will move on to the next thing. A US-UK FTA will be the basis for restarting TTIP negotiations with an increasingly fragmented EU, under siege from migrants and under the gun from Russia. While it does not recognize it today, the EU of 2021 will be very different and far weaker than the EU of today.

China will be targeted for sanctions over currency manipulation and Chinese investment into the US will be viewed more skeptically than today. The scope of Committee on Foreign Investment in the US (CFIUS) will be more elastic and extend beyond “strategic sectors” of the economy. On trade policy, Trump will seek to drive harder bargains with the PRC than has been the case historically.

Foreign Policy

Trump is a deal maker. And, just as quickly as the foreign policy establishment ran away from him, they will return to the fold with their tails between their legs, for they are technocrats, not wedded to political parties but enthralled by policy and the role they play in making it. Senator Corker is likely to be the next Secretary of State and his is a steady and experienced hand. He will surround himself with competent people and policy and war making will be returned to the State and Defense Departments and wrested from the grip of the bloated NSC Staff which will be substantially reduced in size. When I served on the NSC staff in 1991, we were under 40 in number. Today, the NSC staff is nearly 400. Inevitably, this leads to a change in the traditional role – from advising the President and coordinating the interagency policy process – to dominating policy and gutting the State Department and Pentagon’s statutory roles. This will change under Corker who will not put up with being an ambassador-at-large as did Kerry and Clinton.

NATO and Japan will be asked to take a more aggressive role in their own defense in both spending and strengthening their own militaries. This is long overdue and Trump highlighted this during his campaign. Trump will not be a handmaiden to Russia. He will give Putin the opportunity to make a deal but he is not naïve as to Putin’s motives. Putin may flex his muscles and test Trump but will think twice before being more aggressive in the “near abroad” – Ukraine, and in the Baltics.

Trump will not waste time and energy trying to restart the Middle East peace process but will focus on defeating ISIS and keeping pressure on Iran. He will not attempt to reverse Obama Administration policy on Iran (specifically the Joint Comprehensive Plan of Action – JCPA) but will apply greater pressure than Obama on the Mullahs’ foreign meddling and missile program.

The Wall and Beyond

Trump will not build a “wall” on our border with Mexico but he will strengthen border enforcement either through extension of the existing fence(s), or more likely, with the aid of technology – a virtual fence, with greater resources for USBP. The bottom line is that illegal immigration will be curtailed. Diplomacy with Latin America and Africa will be largely unchanged but hopes for continuing the Obama reversal of nearly 60 years of Cuba policy will be dashed. Congress has twice put into statute strong economic sanctions and will not support removal of those sanctions, even if a Trump Administration supported the idea. His Asia policy will be challenged by an ever more aggressive China. During his term in office, the hermit kingdom of North Korea may finally require decisive US reaction as it marries nuclear weapons with long range missiles capable of striking the continental US.

Trump will take full advantage of Obama’s (and Bush’s) vast enlargement of unilateral executive authority but will need to work with Congress to increase national defense spending to rebuild our atrophying military might.


Gardner Peckham

Gardner manages Prime Policy Group’s international practice. He has 30 years of experience in the design and implementation of federal policy on foreign relations, national security and international trade. Gardner co-leads our practice which services clients on issues related to the Transatlantic Trade and Investment Partnership (TTIP) negotiations.