Impact of U.S. Economic Policies on Global Trade

International Business
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U.S .Economic Policies 1
Introduction
Undoubtedly, global trade flourishes on free entry markets. However, protectionist measures
such as the imposition of tariffs derails international trade .Recently, the United States Economic
policy implementation under the Trump administration threatens globalised trade following the
introduction of tariffs and the trade wars between it and the Chinese economy is likely to have
negative consequences on global trade. Whereas tariffs will protect American industries, the
effect on other world economies, OPEC, NATO, ASEAN and other economies will be negative
in terms of higher trading costs, higher consumer costs and dissolution of trade arrangements.
For multinationals to thrive, they must establish their businesses in countries with regional
economic arrangements and avoid trading in countries involved in trade wars. Overall,
protectionist measures such as tariffs harbour international trade.
Economic Policies in the U.S.A
Undoubtedly, the Trump era has stirred major economic changes, globally and locally.
Recently, the trump administration introduced increased tariffs on the steel and aluminum
industry in a bid to protect the local industry from cheap steel and aluminum imports.
Specifically, the Trump administration has imposed a 10% tariff on steel and 25% tariff on the
aluminum industry (Bouchet & Parilla 2018).It is believed that the United States has declared a
tariff war with China, which is an equally large economy hence the effects could be disastrous
from the global economy as a whole. Additionally, the U.S. government has taken to
protectionist policies such as impositions of tariffs and monetary policy likely to disrupt
globalized trade (Toh 2017).According to Toh, protectionist measures are likely to protect local

U.S .Economic Policies 2
industries in the United States at the expense of globalization thus injuring open and upcoming
economies such as Malaysia.
Effect of economic policies on the U.S economy and the world economy
According to some economists, the imposition of tariffs on the steel and aluminum industry
will protect the domestic industry in the United States of America. Due to the higher tariffs, there
will be less importation of steel and aluminum products. Also, there will be less likelihood of
cheaper and low quality steel and aluminum following the tariff imposition(Swanson
2018).Owing to high tariffs, there will be no stiff competition for the steel and aluminum
industry hence the industry will grow. However, protectionist policies such as tariffs imposition
might lead to retaliatory measures by the countries affected by the tariffs (Peterson et.al
2017).For instance, following the tariff trade war between the United States and China, might
prompt China and other trading partners to impose their own protectionist measures as a
response to the tariff imposition. In the event that there is a retaliation, there will be a break
down in global trade.
Whereas local industries in the United States might thrive due to import tariff, retaliatory
measures by its trading partners might curtail global trade. Specifically, the U.S exports were
affected by retaliatory tariffs from China against $75billion worth of exported merchandise
(Murphy 2018).The recent tariff wars between the U.S and China has affected The United States
Agriculture, auto and steel and aluminum industries among others.Specifically,the United
states ,agriculture and manufacture sectors are highly targeted for retaliatory tariffs(Murpgy
2018).In the event of such retaliatory tariffs, the American farmer might have to incur additional
costs in the exportation of agricultural produce to the global market thus reduced