How Donald Trump Could Remake Global Trade With a Pen

3 minute read

It’s too early to tell whether Trump will make good on his campaign vows to renegotiate or withdraw from trade deals and slap hefty tariffs on U.S. partners. But the law gives him broad latitude to fulfill his pledges. Here are three ways the new President could disrupt the global trade order during his first weeks in office–with little more than a flick of his pen.

1 Impose large tariffs on goods made abroad During his first 100 days in office, Trump has promised to introduce the End the Offshoring Act, which would tax certain goods made in foreign countries. It’s not clear how high those tariffs would be or which countries would be targeted. But even if Trump can’t persuade a Republican Congress to pass his bill, he could invoke a handful of federal statutes to help him accomplish his goal. So long as the President-elect claims that a foreign nation is acting “unreasonably or unjustifiably,” says Michael Gadbaw, a former U.S. Trade Representative’s attorney and Georgetown University law professor, Trump has the authority to impose tariffs, import restrictions or other retaliatory measures without congressional approval. On the campaign trail, Trump suggested a 45% tax on Chinese imports and a 35% tax on Mexican goods. If enacted, those rates would raise costs and likely trigger a trade war, possibly hastening a new global recession.

2 Declare China a currency manipulator Trump often said during his campaign that on Day One of his presidency, he would call out China for keeping its exchange rate artificially low to gain an unfair export advantage against global competitors. He repeated the promise in an action plan for his first 100 days, which he released in October. Labeling China a currency manipulator comes with international legal ramifications. But if Trump follows through on that threat, he could impose new sanctions, justify tariffs on imports and preclude China from some U.S. financing deals. Trade experts say such a move could spark a diplomatic row with Beijing and hobble U.S. strategic interests in Asia.

3 Renegotiate NAFTA One of Trump’s biggest applause lines on the trail was a promise to either rework or withdraw from the North American Free Trade Agreement, which he called the “worst trade deal in history.” Ending the U.S.’s commitment to the 22-year-old pact requires nothing more than a letter and a six-month waiting period. What happens next is fuzzier. Legal experts say it’s unclear whether the decision would be subject to court review or legislative approval, as well as whether Congress would have to vote to undo certain provisions. Either way, the U.S. business community–including corporate giants like General Motors and Coca-Cola–would fight the move tooth and nail.

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