📝 A Second Trump Term Likely to Step Up U.S. Protectionism: Rabobank

Arguments over whether, or the extent to

which, China has breached intellectual property rights, offered unfair government subsidies to

domestic producers, or acted as a conduit for Western technology to flow into Russia will no

doubt be debated for years to come. For both the former Trump and current Biden governments,

however, protectionism has already been seen as a valid response to these issues. Biden’s Chips

and Inflation Reduction Acts offer generous subsidies for manufacturers to operate on home

territory. This week alone, his Administration has quadrupled tariffs on electric cars to 100%,

tripled tariffs on aluminium and steel and doubled those on solar cells. For companies wishing to

sell to the huge US market, investing in ‘Made in America’ may be the only realistic choice.

Some countries are positioning themselves to benefit from the change in the mood music that is

now accompanying globalisation. Mexico is now a bigger trading partner to the US then China

(Figure 5). India is looking to continue extending its standing on the global stage. The clearer

alignment between the US and its allies is offering Japan the possibility of delivering more tech to

the US while South Korea is also mulling joining part of the AUKUS pact with the US, UK and

Australia. Given its strength in science, tech and defence, S. Korea could have a valuable role to

play as a potential Pillar 2 AUKUS partner along with Japan, Canada and New Zealand. These

incentives, however, are currently unlikely to outweigh the current draw of capital flows into the

US that Biden’s policies have triggered. If Trump wins a second Presidency, it seems likely that

protectionism will be stepped up further - Rabobank