By Tim Shea
For those of you (perhaps wisely) avoiding the news, last week saw the coming and going of the annual G20 summit. This year’s event, taking place in Hamburg, Germany, brought with it the usual slew of sensationalist headlines: riots, and handshakes, and the perennial misunderstanding of the word “tank” as it applies to military hardware. Beyond all of that drama, however, the summit raised important questions about how President Trump’s attendance would shift global perceptions of America as the lead actor on the world stage. The initial hot takes answering those questions haven’t been great.
To be clear, this is not intended as a partisan hit piece against the Trump administration. All recent administrations have foreign policy achievements that should be praised and shortcomings that should be criticized. The Trump administration is no different. With that said, there has been an undeniable shift in how the U.S. is asserting itself internationally.
Changing foreign policy paradigms, in and of themselves, are not a bad thing. What is concerning is how the current administration is shaking things up. Whether it’s an aggressive Russia, an overtly hostile North Korea, or simply the ongoing entanglements with ISIS and the Taliban, there are no shortage of international developments about which to be concerned. Now, we are of course an economics blog, and thus cannot claim expertise on military or geopolitical matters. However, modern political trends are even more alarming in an area in which we can claim expertise: trade.
The danger of President Trump’s antagonism towards free trade isn’t merely the possibility of isolating ourselves economically; it’s that the rest of the world isn’t playing along. As Vice News’ Michael Moynihan recently pointed out, withdrawing America from international agreements doesn’t mean such agreements will cease to be important. Some other country or countries will step into—and reap the benefits of—the void left by the United States.
Yes, there have been other nationalist/populist victories elsewhere in the world, Brexit being the most notable, but such philosophies have more often than not been repudiated. Thus, as the world continues barreling towards a more interconnected and interdependent economy, it is entirely possible that populist-leaning nations will draw blowback; that the U.S. and others will be viewed as unreliable partners. Or, worse yet, that they will be viewed as undesirable partners.
We have already seen numerous examples of such dynamics playing out in real time. For one, there’s the difficulties Prime Minister Theresa May has faced in negotiating a clean Brexit deal with the EU. Then there’s the previously-mentioned threat that the U.S. will face economic repercussions for its withdrawal from the Paris Climate Accords. Finally, there’s the recently announced trade deal preliminarily agreed upon by Japan and Europe. Whether this deal actually represents a giant middle finger to Trump’s America is open for debate. But the fact that this possibility is even part of the discussion speaks volumes to how dimming international perceptions of America can result in very real economic consequences for the average American.