Trump's tough trade stance forces world to examine old rules

Trump's tough trade stance forces world to examine old rules
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President TrumpDonald John TrumpHouse Republican threatens to push for Rosenstein impeachment unless he testifies Judge suggests Trump’s tweet about Stormy Daniels was ‘hyperbole’ not defamation Rosenstein faces Trump showdown MORE has announced tariffs against steel and aluminum imports into the U.S to help domestic industries long suffering from import pressure. Pundits have bemoaned these steps as inappropriate and precursors to a trade war. But other considerations in play make these announcements useful.

Consider the difficulty with which shifts in policy and diplomatic direction are implemented in Washington. Bureaucrats typically outlast their current team of policymakers. So, it is often difficult for a well-intentioned appointee to implement change and witness its result.

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Trade is only one of the economic components of government, and only part of a myriad of decision parameters forming the policy-decision set. New policymakers go through all the same motions as those before them, the initial touching of base, the mutual assurances of collaboration and the plans to develop a joint vision.

 

But, little if anything happens. Things just chug along without new outcomes. Over more time, new issues arise and take priority. Relative to other concerns, the current trade structure may then become quite acceptable to many leaders and make change even more difficult.  

If President Trump wants to see change in a global issue crucial to his country, such change is slow in coming. To speed things up and to get results, there has to be a spotlight. Issues have to affect a number of important countries.

Different concerns and trade-offs between countries have to be possible; timing has to acquire immediacy. In order to have government leaders and their bureaucracies address, analyze, understand and present changes, there must be an anvil focus. 

The Trump tariffs open the world onto a new direction: They successfully command attention from all trading partners; they require a response instead of the typical speechwriter niceties. New thoughts on the purpose and capability of trade will lead to an active reanalysis of policy steps and agreements. 

Much of today’s trade understanding has been in place since the international institutions of Bretton Woods were formed in 1944. Surely, after 74 years, policymakers, firms and their long-range planners and academics can make some helpful changes.

All this is likely to precipitate shifts, adjustments and re-conditioning in global actions and perhaps even entirely new paths and expectations for both international and domestic business transactions.

Sourcing policies, supply-chain management and even the offering and timing of goods may follow new rules, which make society more productive and life more pleasant. 

If President Trump’s announcements and communications capture the attention of world leaders, they can astutely trigger new considerations and approaches. Knowing the crisis of what could happen clears the mind.

But after all is said and done, the benefit lies in the restructuring process and precipitated changes. The implementation of tariffs is only a means to an end.

Michael Czinkota teaches international business and trade at Georgetown University’s McDonough School of Business and the University of Kent. He is the co-author, with Ilkka Ronkainen, of “International Marketing” (10th ed., CENGAGE).