US: Why Trump’s protectionist trade agenda fails? – Rabobank

In view of analysts at Rabobank, Trump administration has so far failed to implement much of his protectionist trade agenda and going forward they do not expect a full-fletched package of measures.

Key Quotes

“Although we do expect targeted protectionist measures going forward, we do not expect a full-fletched package because of five reasons: 

- The US has to respect WTO rules, or face retaliation

- The value chain is sliced up globally, which limits possibilities for protectionist policies without hurting domestic firms

- Retaliation by trading partners would seriously harm US economic growth 

- US companies benefit much more from offshore production than gross trade data show

- Automation is more to blame for US job losses than trade. In order to revitalise American manufacturing, Trump should focus on fostering domestic innovation and human capital”

“If Trump decides to impose protectionist measures anyway, this would have negative consequences for the US and world economy. We have used an macro econometric model NiGEM to calculate the impact of an additional US tariff of 20% on foreign import. This would result in a GDP loss of -0.7 percentage points in 2017 and -1.4 percentage points in 2018.”

“If countries decide to retaliate, the damage would be even more serious. US GDP would face a loss of -1.3 percentage points in 2017 and -3.1 percentage points in 2018. Moreover, global trade would decline by 2% in 2017 and 5% in 2018.”