Trump’s Economic Diplomacy – A Pundit’s view
As President elect Donald Trump and incumbent President Obama work out details of a smooth transition, Americans and the world at large will keenly follow how the incoming administration takes shape and influences their lives.
Many challenges await the new administration. Hot button issues on the domestic front will undoubtedly dominate Trump’s attention. As he assembles a top talent team, Trump has promised economic revival as his top priority with immediate focus on Tax reforms, Infrastructure, Healthcare and Immigration. If he can pull this off, it will be unprecedented and generate millions of jobs for middle America.
As part of this quest, the new administration will certainly reassess US participation in economic and trade agreements. It will seek to renegotiate or redraw these agreements to promote American jobs. Most likely, the Transpacific Trade Partnership (TPP) will be replaced by a new trade agreement.
The Trump administration’s heavy economic agenda will likely be reflected in its foreign policy initiatives also. Economic Diplomacy will dominate while erstwhile interventionist doctrine may take a back seat, if not abandoned altogether. This could mean that the US may scale down its involvement in conflict zones and other problematic areas of the world. This new diplomatic doctrine will put the spotlight on four areas – Europe, Russia, China and India.
Relationship with Europe will require a lot of sustained and energetic work. It is no secret that many European leaders have been skeptical of Trump. Their reactions to Trump’s election have ranged from nervous to outright undiplomatic. For example, the French ambassador to US raised eyebrows with his ‘undiplomatic tweets’ that he is reported to have subsequently deleted. German Chancellor Merkel’s response to Trump’s election was terse and calibrated. These reactions have publicly exposed the underlying discomfort among European allies.
Traditionally, the US has almost had a mystical influence on Europe. Despite differences, mostly bilateral, Europe identified itself with the US as an extension of itself. At least till Trump came on the scene. Trump had been critical of Germany’s intake of Syrian refugees during his campaign. He had also wanted the allies to contribute their fair share for the maintenance of NATO. Trump’s bluntness and his trademark lack of political correctness has soured relations.
It must be mentioned here that much of this disquiet among leaders about Trump has spawned from the fact that they tend to see and read Trump literally – word for word. They see his political incorrectness, but miss the larger message, often relying on an image portrayed by the media to understand him. But the media too, as seen in the election cycle, is guilty of misreading and missing Trump’s larger message. The sooner Europe gets past this mindset, the sooner will Trump reach out to them.
But the fact is that an economically weakened Europe needs the US for recovery. In return the US too needs Europe’s support in establishing Western might across the globe. This mutual dependence and a long history of partnership will endure and continue to sustain the relationship, albeit with creases that can be ironed out. But that should not dismiss the angst in Europe as the incoming administration works with individual European allies and the EU. However, with his native shrewdness and ability to strike deals, it may not be long before Trump and the allies are back to business as usual.
The North Atlantic Treaty Alliance (NATO) has been predicated on a communist threat from Soviet Union. But after the collapse of the Soviet Union, many strategic analyst have rightly questioned the need for NATO. Trump may be right in questioning the huge cost of maintaining the alliance, given that there are more pressing economic issues at home. But any rethinking on NATO only opens a host of other issues that may not be resolved easily or quickly. That may tie down Trump’s hands on any decision on NATO.
Trump will take a fresh look at relations with Russia. During his campaign, he had mentioned that he was open to improving relations with Putin. There is confluence of interest, at least in eliminating ISIS from Syria. But if Trump reaches out to Russian and succeeds in building new bridges with Putin, there may be early resolution to the conflict in Syria. This may also impact east Europe and reduce tensions there. This will be important from EU’s perspective. Any reduction in tension with Russia will also spur trade and that is something an economically bruised Europe is looking forward to. But the cold war era warriors and policy wonks in Washington may not easily come around to reaching an understanding with Russia and hence the problem is likely to fester.
US relations with China may not see any significant change. Even though Trump has talked about China stealing American jobs, no precipitate action may be forthcoming. In fact, Trump’s deal making skills will be helpful in negotiating better trade deals with China. How far he can bring backs jobs from China to USA will be a moot question. The US is a high cost center and manufacturing will be expensive, even if tax concessions are offered. On the other hand, China will maintain its currency advantage and enjoy lower costs of production. This will be a real challenge for the Trump administration.
India offers a lot of opportunities for the new administration. Indian Prime Minister has already reached out to Trump and congratulated him. President elect Trump has openly expressed his admiration for Modi. But beyond diplomatic niceties, India has a lot of work to do to step up the relationship with the US. India’s initiative to boost manufacturing under the ‘make in India’ initiative and Trump’s focus to bring back jobs to the US may appear to be at loggerheads. But the reality is that there is significant room to maneuver a mutually beneficial win-win trade deal. For instance, while India can buy US arms, frigates, aircrafts etc., it can also be a huge market for green technologies – solar energy, digital smart city technologies, desalination technologies, waste disposal industries just to name a few.
Also huge opportunities lie in deepening a regional strategic cooperation that is already in its infancy. For example, Trump and Modi could inject new vigor to the ‘Pivot to Asia’ strategy that could have long term impact for US as well as regional stability in Asia.
All things considered by this ordinary citizen of the world; Calls a spade a spade.