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Economic statecraft and the Donald

How will the Trump administration utilize economic statecraft and how will his approach be distinct from previous presidents? To answer these questions, we look to what we know about Trump’s stances and early actions on trade policy, sanctions, and foreign aid.

For much of the early history of the republic, economic statecraft was the primary bargaining tool employed. In fact, it was one of the few issues that Alexander Hamilton and Thomas Jefferson agreed upon while they served together in President George Washington’s cabinet. Even in some of the most important military engagements of our country’s history, economic statecraft has played an important role, like the North’s blockade of southern ports during the civil war, the Lend-Lease Act to assist our Allies and the embargo against Japan in World War II. We have not, however, constrained ourselves to only the use of sticks. The Marshall Plan was a defining element of the US’s early Cold War. Following the 9/11 attacks, the US also ramped up aid to countries willing to stand beside us in the fight against terror.

On the campaign trail, Trump had tough talk about many of our existing trade agreements and for many of our closest trading partners. As a successful businessman, he has touted his ability to get better deals for the US. Under the slogan “America First,” Trump has begun to move the United States in a more protectionist direction and has already pulled the United States out of the Trans-Pacific Partnership. In addition, during his first week, Trump notified both Canada and Mexico that he intends to renegotiate the North American Free Trade Agreement (NAFTA).

These moves mark a sharp shift in US policy. Since the end of the World War II, American presidents, regardless of political affiliation, have advanced policies that encourage free trade and a globalized business environment. The United States was a founding member of the GATT and its successor organization the World Trade Organization. The United States created many of the institutions that dominate the global economy, much to its benefit as liberalization has spread. The likely consequence of many of these actions is that US influence in the global market, which has made it an influential sanctioner and important distributor of aid, will be diminished.

The US has been influential in setting the agenda on global health and development.

On the issue of sanctions, the Trump Administration’s position has been less clear. On one hand, he has issued new sanctions against Iran in the wake of its recent missile testing, despite claims that this action was outside of the purview of the Iranian nuclear deal. On the other hand, Trump has expressed interest in lifting sanctions against Russia and has already moved to ease those measures. On the campaign trail, Trump suggested he would both support the easing of sanctions on Cuba and that he opposed the easing of sanctions against Cuba. To date, he has taken no action on the issue. How the public will respond to this range of policies is unclear.

During the presidential race, Trump offered tough talk on foreign aid, causing many humanitarian groups to be concerned about how he will budget for this type of assistance. While Trump has offered some vague support for development assistance, he has more than once suggested that these funds could be used at home again as part of his America First agenda. In a speech in 2015, he asserted that the United States should “stop sending foreign aid to countries that hate us” and instead invest in our own infrastructure. Trump has already reinstated the ban on aid to groups abroad that provide abortion services. While typically, over estimating the amount of money the US spends on foreign aid, a large portion of American people see foreign assistance as a beneficial and moral thing for the country to do. Because of the scope of American aid (roughly 20% of the world’s total), the US has been influential in setting the agenda on global health and development. Walking back our aid commitments would also diminish our influence.

Throughout the latter half of the Twentieth Century, advancing American commercial goals was a part of the country’s foreign policy vision. With businessmen sitting in both the president’s chair and that of the secretary of state, it remains to be seen whether their “America First” approach will pay dividends for American businesses and America’s allies in the long-term. Abandoning long-held principles and practices in favor of the attention to America’s bottom line may have unintended consequences for our global leadership.

Featured image credit: Donald Trump by Gage Skidmore. CC-BY-SA-2.0 via Flickr.

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