Donald Trump took oath to the office of 45th President of United States of America on January 20, 2017. From the beginning of his campaign for presidential election, Donald Trump has been saying in unequivocal manner that since the advent of globalisation, Americans have been losing jobs and facing deprivation. Data shows that between 1999 and 2011, 2.4 million jobs were lost due to Chinese imports only and workers have been worst off.
Immediately after taking oath, President Trump said, “For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost. Washington flourished, but the people did not share in its wealth. Politicians prospered but the jobs left and the factories closed. The establishment protected itself, but not the citizens of our country. Their victories have not been your victories. Their triumphs have not been your triumphs. And while they celebrated in our nation’s capital, there was little to celebrate for struggling families all across our land.”
He further said, “Mothers and children trapped in poverty in our inner cities, rusted out factories scattered like tombstones across the landscape of our nation. Education systems flush with cash but which leaves our young and beautiful students deprived of all knowledge.”
US has been Advocating Globalisation
In the last more than 25 years, US and European countries, who had been ferociously advocating globalisation, and used to argue that globe in like a village and therefore there should be no restrictions on the movement of goods, services and capital between nations, they only seems to be most wary of globalisation. President Trump says, “For many decades we’ve enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military. We’ve defended other nations’ borders while refusing to defend our own. And we’ve spent trillions and trillions of dollars overseas while America’s infrastructure has fallen into disrepair and decay.”
He further said, “One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind. The wealth of our middle class has been ripped from their homes and then redistributed all across the world. But that is the past, and now we are looking only to the future. From this day forward, it’s going to be only America first, America first. Every decision on trade, on taxes, on immigration, on foreign affairs will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.”
In terms of solution, Trump favours protectionism and says “Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down. America will start winning again, winning like never before. We will bring back our jobs. We will bring back our borders. We will bring back our wealth, and we will bring back our dreams.” For Trump there are only two rules, “Buy American and Hire American”
During his election campaign, Trump had said that free trade with China has caused huge loss to America. Factories closed down and jobs vanished as a result. Interesting thing is that Trump, got maximum victory from those counties which were worst affected by China imports, in terms of loss of employment. Though his opponents maintained that trade with China has benefitted America more than the losses caused by the same. They have been counting the benefits reaped from trade with Japan and Mexico. However, Trump could feel the problems of the people and made election promises, accordingly. People of US believed Trump more than Hillary Clinton and despite heavy election campaign and media bias, Trump could win elections.
Significance of trade deficit with China is proved from the fact that USA not only consistently had trade deficit with China, the deficit increased in leaps and bounds and reached $367 billion in 2015 from mere $83 billion in 2001. Though, it declined to $319 billion in 2016, important point is that today, 63 percent of China’s trade surplus comes from USA’s trade deficit. Therefore, reducing trade deficit with China is the top agenda of Trump’s USA.
Globalisation in Reverse Gear
The very first decision, taken by President Trump, has been to dump Trans Pacific Partnership (TPP) agreement. It is notable that TPP agreement came into existence on the insistence of US Administration. The logic behind dumping TPP, given by Trump is that this would help US to impose heavy tariff on imports from other countries, including China, if they refuse to accept conditions imposed by USA. Indications are that USA might impose hefty tariff duties on Chinese imports, on the pretext of labour standards and trade distorting subsidies. Trump administration is expected to circumvent multilateral trade agreement and also Regional Trade Agreements. Protectionism will increase; and globalisation may go in reverse gear.
It is clear now that US Administration under President Trump will make all out efforts to restrict imports from China and strengthen production structure of USA. There may be a rethinking about technology too, in order to increase jobs. Strict action on illegal migrants is also on cards. Efforts are also expected to be made to correct inequalities caused by of globalisation. Trump may not bring riches to US companies; however, condition of poor, unemployed and deprived is definitely expected to improve.
India Should Take a Cue
India also has an opportunity, to reconsider its economic and trade policies, as Indian people and economy have also been a sufferer of globalisation; whether we look at high trade deficit, depreciating rupee, rising unemployment, worst condition of industry (both big and small) and labour. Can’t we take a cue lesson from protectionism preached by Trump to safeguard our economy?