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Globalization in the Trump Era
The United Nations Investment Trends Monitor showed a 16% decline in foreign direct investment worldwide between 2016 and 2017. Cross border merger and acquisitions declined by 23%. The value of Greenfield Projects, which is when a parent company builds its operations in a foreign country from the ground up, declined 32%, its lowest point since 2003. “Globalization was already on the ropes, and it’s only going to get worse.”- Daniel Mcdowell.
President Donald Trump ran a campaign with the slogans “Make America Great Again”, and “America First”. He made it very clear he was going to be harsh on foreign countries. “Trump’s election means the world must prepare for a more aggressive U.S. foreign economic policy—one where America does not shy away from conflict.”
During his campaign Trump threatened to place high tariffs on imports from Mexico and China, two of Americas biggest trading partners who we have had long and successful relationships with. Trump also threatened to terminate the North American Free Trade Agreement (NAFTA). NAFTA was put in place to remove trade barriers between Mexico, Canada and the United States. In January of this year, regarding NAFTA Trump said “A lot of people are going to be unhappy if I terminate NAFTA. A lot of people don’t realize how good it would be to terminate NAFTA because the way you’re going to make the best deal is to terminate NAFTA. But people would like to see me not do that.” One major reason why NAFTA has been so successful, is the same reason Trump wants to terminate it. U.S. companies move their production into Mexico where they can get cheaper labor. Trump does not like that Americans are losing jobs to people in foreign countries.
Just 3 days after being sworn into office, Trump pulled the United States out of the Trans-Pacific Partnership. The Trans-Pacific Partnership was President Obama’s signature trade deal, which he spent 7 years negotiating. The partnership was between the U.S and 12 other counties bordering the Pacific Ocean. The partnership removed more than 18,000 taxes that U.S companies were paying in order to sell their products in those countries. Trump is not making it easy for American companies to do business in other countries.
During his campaign Trump also promised he would pull the United States out of the World Trade Organization. The World Trade Organization is an intergovernmental organization that regulates international trade. Trump believes this organization is very unfair to the United States, and is very beneficial to china. In a tweet on April 6th Trump said, “China, which is a great economic power, is considered a Developing Nation within the World Trade Organization. They, therefore, get tremendous perks and advantages, especially over the US. Does anybody think this is fair? We were badly represented. The WTO is unfair to US.”
Trump is all about putting America first. President trump is breaking away from the over 70 year old American tradition of globalization. He campaigned on anti-globalization, and is staying true to his word.