If the United States, the biggest power in the world, shifts to a self-centered “U.S. first” policy as economic globalization progresses, it will exert a serious impact on the international community. Eventually, this would not be advantageous for the United States.
Global attention is focused on what kind of economic policy U.S. President-elect Donald Trump will pursue.
In his victory speech, Trump emphasized his desire to revive the U.S. economy, saying, “We will double our growth and have the strongest economy anywhere in the world.”
The U.S. stock market, which stood ready for the “risks from a Trump victory,” saw share prices shoot up Wednesday, the day after Election Day. Stock prices in the Japanese market also rebounded Thursday, regaining what was lost the previous day.
This is possibly because Trump’s calls for a policy of reducing corporate tax and increasing public works projects were received favorably. The Republican Party maintained majority seats both in the Senate and the House of Representatives as a result of congressional elections, which will dissolve the “divided power balance” between the White House and Congress that has been in place during the Democratic administration of outgoing President Barack Obama. Expectation that the likelihood of policies being realized becomes higher could also be behind the stock prices rebound.
It will be advantageous to the world economy if the United States is able to spur growth through an expansion of domestic demand. However, concerns have been raised about a deterioration of state finances as fiscal resources to make up for tax cuts are nowhere to be found.
More worrisome than anything else are the repeated dismissals of free trade Trump made during the presidential campaign.
Seek better understandings
The Republican presidential candidate called for extreme protectionism to resolve frustrations held by low-income white Americans and other disgruntled U.S. voters. Trump said he would restore employment after making up his mind that Americans had been deprived of jobs and that their livelihoods had worsened due to an inflow of cheap foreign products.
Trump expressed readiness to label China as “a currency manipulator,” arguing that it is guiding its own currency lower. He also stated that high tariffs on par with those imposed by Japan on U.S. beef imports would be levied on Japanese car imports. He also referred to the possibility of reviewing the North American Free Trade Agreement.
If Washington chooses to be more protectionist and close its market to secure domestic employment, an immeasurable impact is feared on not only its main trade partner, China, but also other emerging economies whose business remains sluggish. The stagnation of the world economy would eventually impair the growth of the U.S. economy as well.
It will become extremely important for Japan and other principal nations to play roles in stemming a U.S. inclination to be inward-looking.
A proposal to ratify the Trans-Pacific Partnership free trade pact, a focal point of the current Diet session, was approved by the lower house on Thursday. It is natural to continue with domestic procedures on the agreement formally reached by the 12 participating countries.
However, Trump made a public statement to withdraw from the TPP, meaning the prospect of the pact taking effect certainly remains grim.
Prime Minister Shinzo Abe plans to visit the United States next week and hold a meeting with Trump. Abe needs to seek Trump’s understanding of the importance of a free trade system and desirable trade agreements — including the TPP.