The international ‘big boy’ caravan had its annual reunion this week set against a backdrop of skyscrapers towering over the sandy beaches and rolling sea waves of Buenos Aires. Although some elitists and political bureaucrats like to describe the G20 summit as a ‘safe haven for political discourse and diplomacy’, they are, in a generic sense, just a bunch of secretive gossip, quarrels and fake friendships hidden underneath the pearly white teeth and fancy suits of powerful world leaders. The recent meetup was hailed by plenty of media outlets as an extremely productive one that saw nations reach a consensus on multiple different topics from the murder of Saudi journalist Jamal Khashoggi to the bittering US-China trade war.
Mr. President seemed to be top dog at the summit as he marched through it with the bright and blazing motto that has captivated America since the start of his campaign: make America great again. One of the primary highlights of the week, President Trump finally managed to strong-arm Prime Minister Trudeau of Canada and Prime Minister Nieto of Mexico to chuck NAFTA into the shredder and ratify the USMCA (United States, Mexico, Canada Agreement). Although Prime Minister Pretty Boy(Trudeau) didn’t seem to be content with the deal, there was little that Mexico or Canada could do to resist the US’s common tendency to bully every other nation in the world. Folks, yet again we see another example of Uncle Sam showing off his smoking guns to his neighbors so he can get what he wants. Among the specifics of the deal, it mandates that 75% of all auto-parts for automobiles manufactured in North America be made in North America to qualify for tariff-free treatment, longer patent protection for pharmaceutical companies and less stringent data storage requirements for e-commerce companies.
Unfortunately, the US seems to have forgotten the difference between real economics and fake dreamonomics: some parts of the deal are fairytale stories which belong in children’s books. Now, although promoting more heavy manufacturing industries throughout North America is a good thing, President Trump has just laid yet another seed of strict US trade protectionism in the world. In a market governed by a global supply chain, where a large proportion of auto parts used to build automobiles in North America are received from countries such as China, Germany, South Korea, Japan and France, Mr. President is starting yet another international trade dispute. The US has further proclaimed itself as a state that inhibits international trade in a rapidly globalizing world. Secondly, it is shocking how e-commerce companies are being given the unbridled, rampant freedom to do whatever they wish. The recent agreement allows them to store their data almost wherever they want– that means they can more easily manipulate data, sell data and misuse public information. 2018 has been no outsider to massive data breached: Cambridge Analytica, Facebook’s 50 million user scandal, Marriott’s massive 500 million user data breach. Data breaches and cybercrime are gaining traction at an exponential pace, and it should be the government to make sure these companies can do their business without causing harm to their consumers. Unfortunately, the USMCA has just neglected all these data breaches and given permission to e-commerce sites to do whatever they want, eliminating the threat of increased regulation on these businesses. Watch out for the spam emails and the multiple breaches on your social media accounts folks– strap your digital selves in tight!
Another ‘great victory’ that further ‘greatens’ the ‘greatness of America’ was the recent US-China trade talks in Buenos Aires. Both sides have come out of the talks rather content, describing it as successful in inhibiting a full out tariff war. Among all of the agreements, The US and China have agreed to suspend any escalation in trade tariffs for the next 90 days. Although Mr.President seems to jubilant as he has gotten China to promise to buy for US agricultural products, he is underestimating the Chinese. One thing should be known: the Chinese have never and will never agree to a deal that doesn’t offer them benefits. Mr.President has to understand that the Chinese are in no hurry to chop that trade deficit in half because US imports of Chinese products are rising regardless of all the tariff barriers. The US is in a weak position in these talks; that 90-day suspension has just given China’s economy another 3 months to relax in the sunshine. Mr. President should not go as far as to believe that China will suddenly stop any of its previous trade practices, regardless of how unjust they may be. Chinese corporations will be looking to buy US corporations and their technology; China’s government will look for ways to increase their exports to the US, and China will want to restrict its local markets as much as possible. So, if China finally decides to increase US agricultural imports by USD 20 Bn, they will look for an opportunity to increase their exports to the US by more than USD 20 Bn. Mr. President and his are celebrating ‘a fake victory’ over China; meanwhile, the Chinese contingent is snickering as to how they outsmarted the confident Americans.
In the end, the US should approach economic policy and the rise of protectionism throughout the world with a very cautious mindset. Intense jubilation followed by intense criticism of another nation’s trade policy is the equivalent of a bipolar disorder in global trade and it yields the following: a goddamn financial crisis. Free trade and foreign investment should be what the US should be focusing, along with protecting its intellectual resources. Then folks, let’s toast to an unlikely future of free-trade: may it be the true victor in this bitter uprising of protectionism.