Will the US continue to lead?

People watch a television news report showing pictures of US President Donald Trump (L) and North Korean leader Kim Jong Un at a railway station in Seoul on March 9, 2018. (AFP Photo/Jung Yeon-je)

The mercantilist school of economic thought – which promoted tariffs and other protectionist elements – seems poised for a comeback under the administration of Donald Trump. The United States (US), once saw leaders like Ronald Reagan champion the values of free market economics as the world watched the Berlin Wall crumble to dust, marking the end of Soviet era communism. Now at the reins of the American economy stands Trump with his eclectic brand of Trumponomics – looking to reclaim his country from those that had seemingly taken advantage of that same free market and left America short-changed.

Trump and Reagan are both Republicans, representing a party synonymous with free trade, free markets and individualism. But now, the party is a different animal and since the election of Trump, much of it and America has changed. American exceptionalism has taken a new meaning altogether. Immigrants are viewed as bad, and not a healthy addition to America’s diversity. The land where anyone could realise the American dream – one of liberty and freedom in the pursuit of happiness – is being slowly chipped away as Trump’s economic decisions threaten to cripple that ethos.

Backlash to protectionism

As US President Donald Trump signed two proclamations levying tariffs on aluminium and steel imports, further south in Chile, 11 nations – representing 13.5 percent of the global economy and a market of 500 million people inked a new free trade pact, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The CPTPP, a slimmer version of the Trans-Pacific Partnership, was spearheaded by Trump’s predecessor, Barack Obama. However, upon Trump’s election to the Oval Office, he rescinded US commitments to the free trade agreement which left the deal dead. It wasn’t until Japan took up the leadership mantle that the remainder TPP-11 soldiered on to finally formulate the CPTPP in its current form.

The pact which comes into force 60 days after it is fully ratified by six of the 11 members aims to slash tariffs, reduce further trade barriers and foster trade to boost growth among the 11 economies. It keeps most of its original form except for provisions related to intellectual property (IP) rights which were keenly pursued by US negotiators.

"We are proud to have completed this process, sending a strong message to the international community that opening markets, economic integration and international cooperation are the best tools to create economic opportunity and prosperity," said Chilean President Michelle Bachelet as quoted by Agence France Presse (AFP).

If anything, the signing of the CTPP signals that whilst the US may turn its back on free trade, the rest of the world would not do the same. America which was once heralded as the bastion of global free trade, with every strike of Trump’s pen, is seemingly relinquishing its global leadership role.

Leadership in the Korean Peninsula

On the other hand, Trump’s eclecticism has also borne some rather strange results – especially with regard to tensions in the Korean Peninsula.

After trading barbs with North Korean tyrant leader, Kim Jong Un, calling him “Little Rocket Man” and the latter referring to Trump as a “dotard”, the prospects of tension seem to be lessened of late. In a stunning turn of events, it was announced that Trump and Kim will hold an unprecedented meeting by the end of May this year.

Trump, who previously chided his Secretary of State, Rex Tillerson and South Korean Prime Minister Moon Jae-in for engaging in dialogue with the North Koreans himself now sings a different tune. He seems more willing to come to the negotiating table now while still maintaining sanctions on the hermit kingdom.

“Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze. Also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!” Trump tweeted.

Herein, the US has the brilliant opportunity to demonstrate the extent of its global leadership and if Trump manages to bring this long-lasting conflict to an end, it would definitely be a defining feather in his cap. In many ways, it could also water-down the effects of his protectionist policies for the short term as markets the world over reacted positively to this update.

Trump’s subsequent steps will be closely watched and whether his boorish attitude in diplomacy so far will eventually bear fruit is anyone’s guess.

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