In the Trump administration’s first month alone, dozens of executive orders were signed and much was said about reversing Obama-era policies. What remains to be seen is where this administration will actually head in terms of its economic philosophy and priorities.
I try to put myself in the shoes of a country manager heading up a large American business halfway around the world, as I used to do. There was always a certain confidence in where any U.S. administration stood in matters of economics, business, and trade policies. Sitting across the table from senior bureaucrats or political leaders in emerging markets, I always felt confident telling them about the value of open borders, low trade barriers, free movement of goods, low tariffs, and reasonable taxes, knowing all the while that these were what any American government believed was best for economic growth.
Now, I’m not so sure where my government really stands. If the new administration’s statements are to be taken at face value, many of these principles are no longer going to be adhered to. In fact, there is a belief that free trade is a zero-sum game, with winners and losers. How, then, can one persuade emerging market leadership to open up their economies?
How would I, as country manager of an American business, argue to bureaucrats in Pakistan or Ukraine that high import tariffs on my company’s shampoos and soaps are only keeping local competitors from operating efficiently, or are keeping consumer prices artificially high, thereby limiting the development of markets? By keeping markets from growing, the government is in fact restricting its own revenue through forgone taxes.
There has been talk of the Trump administration wanting to upend the global economic order. Many have benefited from this order over many decades, based as it was on rules established by the U.S. and its Western allies. As with any carefully established order, it doesn’t take much to undermine participants’ confidence and bring it all crashing down. Replacing it could prove much harder.
The same goes for painstakingly negotiated multi-country trade agreements. One can argue that a certain agreement is unfair to one or more participants, but to claim all trade agreements are inherently bad is hard to understand. With the new administration having announced its disregard for the agreed, but not yet ratified, Trans Pacific Partnership (TPP), it’s only a matter of time until China steps in and starts to write the rules of trade in that important and growing part of the world.
Only in the last few months, as I sit here in Washington, D.C., has it dawned on me how important the free market, and the open trade philosophy of any U.S. government, has been to my ability to build American businesses in emerging markets. The success of these businesses overseas has directly benefited my American company here in the U.S., even as it contributed to economic development in the host emerging markets.
One month is not a long enough period for any administration to bring full clarity to where it wants to head in its trade and economic policies. So we should wait and see where all this ends up. But initial indications that point to rising protectionism are a worrisome red flag for both the U.S. economy and the world economic order.
S. Qaisar Shareef concluded a career of nearly 30 years with Procter & Gamble Company in 2011. He is the author of When Tribesmen Came Calling: Building an Enduring American Business in Pakistan, to be published in 2017 by Blue Ear Books. He lives outside Washington, DC.