The US President Donald Trump,
signed an executive order removing the US from the Transpacific Partnership
(TPP), which was signed on his first day. This was advantageous from the
economic point of view, but from the strategic point it would be
disadvantageous. TPP gave USA influence in the Asia Pacific region. This can
allow the major Asian countries to fill the vacant seat in the Asia-Pacific
Region. The many policies taken by US President Donald Trump under his “America
First” agenda will be a threat to the international free trade.
When USA increases tariff rates for
its imports, prices level will increase because many of the consumable products
are produced outside the country. Of course, many are also produced in the
country but at higher cost. Due to higher prices, competition in US of
international companies will decrease. Hence exports will decrease, which
results in the lower production, employment and finally income.
In Europe also after the Brexit
memorandum has caused the wave of protectionism to rise in countries like
Britain, Germany, France and many others. This will cause negative impact on
the world’s free trade. If European Union, worlds one of the major free trade
supporter became less liberalized and more protectionist, will cause negative impact
on trade between the countries. As the major South-east Asian countries have trade
relationships with EU, primarily Britain. After Brexit, if there is a negative impact
on trade and commerce, the businesses globally will be less inclined to spend in
the Britain causing a chain reaction, which can negatively affect the South-East
Malaysian open economy is 35th
largest in the world. But due to US’s protectionist policies in the recent
years, such as import tariffs and renegotiation of Free trade agreements, will
cause it to be undermined. This is because US is Malaysia’s one of the major
trading partners. The US coming out from the pro-free trade to becoming
protectionist country will cause the volatility to increase on the world level.
This will cause the Malaysian companies to suffer. As Malaysia is one of the
largest supplier of electronic items to US, the increased tariffs will cause
the trade to suffer.
This protectionist stance of US will
cause the Asia-Pacific countries to focus on RCEP (Regional Comprehensive
Economic Partnership) which is more Asia Specific trade Treaty. This Treaty
will cause the consumption in the Asia-Pacific region to increase which will
help the consumption driven sectors such as Transport, Logistics, Healthcare,
India’s one of the major IT company
Infosys Ltd. Announced that it will hire about 10,000 Americans in the period
of two years. This statement came after US government criticized the Indian
Information technology companies over its hiring. US president has signed an
executive order to review the H-1B visa programme. Indian IT companies earn
their major bulk of their income from the US market and are major beneficiaries
of the visa programme. Not only US but many developed nations like Australia
and New Zealand are also introducing the protectionist policies. This has
caused the professionals from India and other low cost countries to have labour
Asia has made significant progress
in the last half of the 20th century because of the free trade
policies of the USA and Europe in general which were created after the Great
Depression and World War II. Take Singapore, where their government has led a
key role in globalization that took place in the late twentieth century.
Singapore has promised to sectors that will suffer from the protectionist
policies of Western Countries, like construction sector to extend the
assistance like targeted reliefs that may balance the initial losses. They have
also lowered their trade barriers so that foreign companies and start-ups will
create new partnerships and create jobs for the people of Singapore.
The impact of Protectionism to China
will be majorly on the industry level. Special tariffs can be imposed on the
Steel and Aluminum imports from China, which can cause negative impact on
US-China bilateral relationship. US president also signed an order to determine
if any investigation is needed on the trade policy of China regarding any
Intellectual property, technology and Innovation. As US is China’s largest trading
partner, any problem in that will cause China’s growth rate to slow down. This
can also led to Trade war.
Trade war between China and USA will
cause Hong Kong, the world’s freest economy, to become vulnerable in sectors
beyond Trade. Because of the deteriorating relationship of US with China, will
cause the financial sector to become volatile, causing detrimental effects on
Hong Kong’s financial and property Sector. This will also cause the direct
effect on the export and imports of Hong Kong.
Philippines because of Trump’s
“America First” Policy will cause the loss of two of the major sources of
Dollars, first the BPO (Business Process Outsourcing) industry and the
remittances the Filipinos send to their country.