Stop Trump from beating the drums of trade war
American citizens must be persuaded of the danger of their president’s economic agenda – for the sake of the world economy and that of their own
Donald Trump has been called many names. But when it comes to the US president’s economic policy of guaranteeing “America First”, there is a method to the madness. His programme, if put into practice, will be the most sustained assault on free trade and globalisation since the collapse of the Soviet Union. The world’s major economies such as China, Japan and Germany – all of which have been rounded on by Trump or his top economic advisers in recent weeks – must be ready to counter their ideological assault, defend free trade and put in place measures to protect their economic interests in the event that they are threatened with a trade war.
As Foreign Minister Wang Yi (王毅) said this week, the world needs free trade, and a trade war among the top economies would have no winner, only losses on all sides.
A free and open economy such as Hong Kong is especially exposed to the geopolitical and economic uncertainties that China and the world economy now face. Trump’s unpredictable and often irresponsible utterances don’t help either.
Financial Secretary Paul Chan Mo-po and Secretary for Financial Services and the Treasury Professor Chan Ka-keung have both sounded the alarm over Trump’s increasingly vocal protectionism and its likely impact on the region. We must stay vigilant and be ready to deploy our considerable resources such as our massive fiscal reserves to shield the city’s economy from the gathering storm.
Last week, Trump accused China and Japan of currency manipulation. Our stock market immediately went into a wild ride, and the price of gold shot up. Meanwhile, Peter Navarro, Trump’s most senior economic adviser, has accused Germany of the same through “a grossly undervalued” euro. It’s all a bit rich coming from those who have run the world’s longest and largest money-printing exercise in history, known as quantitative easing.
Yet, Trump is not an exception. US presidents from Richard Nixon and Ronald Reagan to Bill Clinton never hesitated to devalue the greenback or attack other countries’ currency policies when it suited them.
However, Trump’s brand of protectionism dates back to a much earlier era, a time when such policies helped precipitate the Great Depression of the 1930s. His threats to impose prohibitive taxes on imports and tear up trade treaties to rebuild a manufacturing base and create domestic jobs will likely hurt consumers who account for 70 per cent of the US GDP.
American citizens must be persuaded of the danger of their president’s economic agenda – for the sake of the world economy and that of their own.