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?

Thanks to constantly declining prices of crude oil internationally, for the
last more than 2 years, net oil importing countries have benefitted im
mensely. It is notable that India imports nearly 70 percent of its oil
requirements. Due to declining crude prices, oil import bill of India has come down from $164 billion in 2012-13 to merely $83 billion in 2015-16. As a result India’s trade deficit has nosedived to only $118 billion in 2015-16 from $190 billion in 2012-13. It is clear that this would not have been possible, had crude prices not fallen. In the event of high crude prices, our rupee would have depreciated significantly; balance of payment worsened and inflation could have gone out of control.

Low fiscal deficit
Declining oil prices also benefitted the exchequer. As crude prices had been falling, government did, but only partially transferred the benefit of the same to the consumers and instead raised tax on petroleum products. This led to increase in Government’s revenue and government could reduce fiscal deficit and therefore enforce fiscal discipline. By 2015-16, our fiscal deficit could be brought down to only 3.9 percent of GDP. Therefore we can say that declining crude prices helped us in not only reducing our trade deficit but also our fiscal deficit. Prices could also be brought under control and overall performance of the economy also improved in terms of GDP growth.

Is oil party over?
Crude oil prices have now once again started increasing in international markets, recently. Crude price, which had come down to as low as $30 per barrel; now moving around $ 55 per barrel. This has happened after OPEC (Organisation of Petroleum Exporting Countries) countries decided to reduce their daily output by 1.7 million barrels. It is notable that OPEC countries provide nearly 42 percent of world oil supplies. In November 2016, non-OPEC oil producing countries also joined hands with OPEC countries and agreed to reduce production of oil. Therefore, obviously for the time being oil prices have started taking an upwards trend and oil prices are keeping around $55 per barrel. Now there is a dilemma that whether low price regime is over and in future oil prices may start increasing fast.

Though on the outset, it seems that oil prices may start looking upward because OPEC decided about reducing oil production and non-OPEC producing countries also have joined the chorus. However, there in another contrary view coming from Energy International Administration (EIA) of USA. According to EIA, crude prices may remain well under $50 per barrel even next year. Though EIA agrees that OPEC countries will honour their commitment to cut their production, their oil production may actually fall; however, it would be more or less compensated by increase in production by USA. According to EIA, US companies are likely to increase production next year and some non-OPEC countries may also increase production. There has been an unprecedented increase in the production activities of US companies and they have registered significant profits as well. Therefore, it is very likely that they will continue to increase production. News agency ‘Reuters’ also shares the opinion of EIA and its research reveals that this effort of OPEC to prop up oil prices is not likely to be a success, as non-OPEC production is likely to increase fast. However, there is a slight difference between EIA and ‘Reuters’ assessment of future oil prices. According to ‘Reuters’ oil prices are likely to be between $55 and $57 per barrel, but not more than $60 per barrel; however, according to EIA, it will be around $50 per barrel.

On the other hand experts also differ about possibility of reduction in output by OPEC. Though, OPEC has decided to reduce their production by 1.7 million barrels, it is conditional to non-OPEC countries reducing their production by 0.6 million barrels. So far only Russia has committed to the reduction in production by 0.3 million barrels. Some OPEC countries even say that, they will reduce their production, irrespective of non-OPEC countries, falling in line.

Situation has changed now, as OPEC accounts for only 42 percent of oil supply globally, which used to be 52 percent earlier. Today non-OPEC countries are playing an important role in global oil supplies. Tension between OPEC major Saudi Arab and non-OPEC major supplier Russia is a known fact. On the other hand, USA has been increasing its crude oil production constantly. USA’s total crude production which was nearly 5 million barrels in the past has increased to nearly 9 million barrels now.

This has played a major role in dampening oil prices internationally. Although, OPEC countries have decided to prop up prices by contracting productions and non OPEC countries are also joining hands with them, there is always a doubt about whether individual countries in OPEC and non-OPEC will actually honour their commitments honestly. Constantly increasing production by USA indicates to the point that it is interested to keep oil prices low. There are two reasons behind this thinking of USA. One, USA does not want that Saudi Arab is left with big surplus from export of crude oil, as it has been financing terror world over (including USA). Secondly, increase in oil prices may shake efforts to take USA economy out of recession.

We must also keep in mind that OPEC countries do not command monopoly power, which they did previously. In 1973 they used to supply 52 percent of would supply, and now they supply merely 42 percent. Although oil exporting countries are passing though huge financial crisis, however, due to erosion in their monopoly power, they may not be able to push up prices in any near future.