Regional Perspectives on Trump Trade Wars

Views from the Region

6/15/2019

U.S. President Donald Trump has threatened once again to use trade tariffs as a means of coercive diplomacy. Mr. Trump’s threats against Mexico come amidst a widening and deepening trade war against China that has introduced uncertainty into the global market. Regional observers in the Middle East have expressed concerns about the rise in anti-trade rhetoric, fearing that the trade war between China and the U.S. and a worsening of the overall global business climate will negatively affect the region’s economy.

That, at least, appears to be the concern at the Gulf Times, according to which “the trade war is taking on a global dimension amid simmering tensions between the U.S. and the European Union, while U.S. President Donald Trump is threatening to impose more tariffs on Mexican goods in response to illegal immigration. . . . It’s now looking more certain that the rising costs brought about by the trade war will be felt across the global economy. Prices will rise for American consumers in some cases, hurt Chinese and American corporate profits in others, and drag down growth of nations caught in the crossfire should the global expansion decelerate.”

It is precisely the deceleration of the global expansion’ that has Al Arabiya’s Omar Al-Ubaydli asking the question of whether the Gulf countries should be worried. The answer according to Al-Ubaydli is “Yes, both because of the direct fallout from the tariffs, and because of the indirect effect resulting from the gradual dissolution of the international order. . . . Global trade is of acute importance to living standards in the Gulf countries, because almost all of the oil, gas, and petrochemicals produced are consumed outside the Gulf, and because almost all of the goods and services — including critical ones such as food and military hardware — are imported. The United States’ unilateralism undermines the integrity of the WTO. If as a result it becomes politically acceptable for countries to unilaterally raise tariffs, including those that Gulf countries export to, then this would expose them to greater trade risks than they already face.”

Commenting on the subject, a recent Jordan Times editorial uses rather strong language by characterizing Mr. Trump’s preference for trade tariffs as a means of coercion, or a weapon: “The mere thought of using trade as a weapon or a whip against countries sends shudders across the globe and threatens the global economy. Yet, this is exactly what U.S. President Donald Trump has been doing right and left, and the latest episode was when he arbitrarily used this dubious card against Mexico…. The U.S. president has already used the trade weapon against China, the EU, Iran and Venezuela to name just a few states. By acting so, Trump is wreaking havoc on international trade and commerce, as one action against any major country would have a ripple effect on the economies of the entire world and cause a global recession.”

The National’s editorial is equally concerned about the impact that a trade war could have for the region. However, it chooses to address the domestic and international costs that the United States will pay as a result of the ongoing trade war: “Not only does a decrease in free trade threaten the livelihoods of people in both countries, protectionism also bears considerable political risks for the US. In recent weeks, Mr. Trump has turned on neighboring countries…. Instead of creating new partnerships, the US is only succeeding in bringing its rivals closer together and alienating those nearby. True to his promises, Mr. Trump’s “America first” approach has, indeed, built walls – just not the kind he initially planned on. Instead, he has isolated his country from potential allies and damaged the global economy. Tariffs and tough economic measures may be popular with Mr. Trump’s voter base, but in the long run, a trade war will be detrimental to us all.”

That line of thinking is picked up by Khaleej Times’ editorial staff, which suggests that what it calls ‘techno-nationalism’ will ultimately cost the United States in competitiveness and leadership in the innovative technology: “In the long run, protectionism stifles domestic competition and by extension impedes innovation. [T]echno-nationalism goes against the tenets of open innovation that is driving this digital revolution. Open Innovation is all about a free exchange of ideas across organizational and international boundaries. There is something innately positive about sharing knowledge. An idea can emerge anywhere and can snowball into something transformational for humanity, if many organizations across countries contribute to it. As a result, the U.S. will cease to be the focal point of innovation.”

Suspecting that the current trade wars are reflective of deeper and more historic global shifts, Daily Sabah’s Tarik Oğuzlu argues that both governments and markets should prepare for a world where concerns about state sovereignty may trump calls for cooperation and multilateralism: “As nationalism and geopolitics have seen a strong revival, we are no longer on the verge of transcending into a borderless world in which universalism overshadows particularism…. The liberal hope that solutions to global challenges would be best found through collective organizations and multilateral practices is fast eroding given the rising appeal of bilateralism and hollowing out of such international organizations as the World Trade Organization…. In an emerging ‘VUCA’ world – volatile, uncertain, complex and ambiguous – many states have already put territorial defense, state resilience and preservation of national sovereignty at the center of their policies.”