Trump’s Support to the UK: Not Entirely ‘Reason’able

Why Trump is bonding with the UK, is less of a mystery, and more of a redundancy.

Both the UK and the U.S share the largest bilateral foreign direct investment partnership in the global market. UK is the largest market for U.S exports and largest supplier of U.S imports, and the UK is the prime source of US foreign tourists, including its participation in the Visa Waiver Program. Trump apparently loves the UK, and will offer a quick and fair trade agreement for both the U.S and UK, and there is a need for the US to have ‘good, business-like relationship’ with the UK. However, his statements can be kept on hold, since there still seems no clear Brexit strategy for several workers and businessmen in Britain.

When a policy perspective is adopted, it is difficult to envision the American economy with border restrictions and protectionism. Despite Trump’s wing of the Republican Party, more open competition and trade including the WTO and GATT increased income for citizens in America and the developed countries. Investment and open markets are the key factors in alleviating the world poverty from 40% to 13% between 1980 and 2013. The U.S has negotiated about 14 regional and bilateral free trade agreements (FTAs) with at least 20 nations. Analysis by the Congressional Budget Office showed that such agreements realized small, yet discernible positive effect on trade, economic growth, and the U.S productivity at large. The minimal economic impact is because most FTAs were small economies, a scenario that would have changed by completing the Trans Pacific Partnership (TPP) agreement which would increase wages by $130 billion and exports by $357 billion by 2030. These estimates would have increased further as Thailand, South Korea, Colombia, and Indonesia join the TPP. The formation of regional trade agreements has more of political implications rather than job creation and economics. Simply put, multilateral trade agreements would increase U.S trade. Nevertheless, it is relative to expanding a two-lane into six-lane highway of trade, with four incoming lanes for imports and two out-going lanes for imports.

This scenario would have been more beneficial to U.S trading partners than to U.S exporters. Trade agreements can further worsen the U.S trade imbalances and retard current improvements in the U.S current account balance. Despite having filled gaps in the past, bilateral agreements have less economic payoff to U.S. Trump strategies harken to an ugly capitalism witnessed in McKinley-Hoover administration. To achieve TTP beneficial equivalents, Trump administration should slog bilateral negotiations with additional countries – a ‘hugely’ inefficient option for the ‘dealmaker’ Donald. Further, Trump’s decision to reward firms with uncompetitive processes and plants within U.S risks devolving the system into a laden with random authoritarianism, idiosyncratic, and lawlessness. Will U.S economy challenge the presidential interventionism’s economic folly?

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