During his campaign for president, Trump promised to put “America First,” with a number of steps laid out in defining this new path. Those included —on the trade front — withdrawing from “bad” trade deals like the proposed Trans-Pacific Partnership (TPP) and the 23-year-old North American Free Trade Agreement (NAFTA), as well as labeling China a “currency manipulator.” All three steps would undermine important U.S. agricultural export interests.
On security matters, future support of the North Atlantic Treaty Organization (NATO) was questioned, getting bogged down in Middle Eastern chaos was criticized and Russia was lauded as a promising ally in the war on terror.
While less direct threats to agricultural interests, such steps called into question the post-WWII framework America had built up.
This checklist caused widespread heartburn and not just among Democrats conditioned to object to any Trump initiative. Many Republican and independent voices worried aloud where this apparent elevation of “protectionism” and “isolationism” might lead.
Actions reinforce concerns
Actions by President Trump in his early days reinforced those concerns, as he followed Steve Bannon’s advice to withdraw from the TPP. President Trump also was reportedly on the verge of announcing plans to withdraw from NAFTA when calls from Mexican President Enrique Peña Nieto, Canadian Prime Minister Justin Trudeau and persuasive voices from family adviser Jared Kushner and the agricultural export community prompted a change of course: instead, renegotiations were promised down the road. A series of investigations on such things as steel and aluminum imports’ effects on national security, new duties on Canadian lumber imports and saber-rattling over Canada’s “supply management” protection of its dairy and poultry industries, however, keep concerns front and center.
More encouraging was the reorganization of the White House economic team to give a stronger hand to Gary Cohn and Treasury Secretary Steve Mnuchin on foreign economic policy matters. It also is true that Congress plays a steadying hand in trade policy. And in the absence of U.S. leadership on trade reforms, partners like Japan and the European Union seem willing to step forward.
The about-face on China was even more pronounced. Far from labeling the country a currency manipulator, President Trump has met personally with Premier Xi Jinping and apparently is working with the Chinese in a coordinated effort to isolate North Korea and curb its nuclear ambitions.
On the European front, Trump national security and foreign policy officials have reaffirmed America’s commitment to NATO. In the Middle East, a reckless use of chemical weapons on his own people by Syria President Bashar al-Assad prompted an immediate retaliatory strike by the United States.
U.S.-Russian relations were strained as a result, and a more realistic President Trump is probing where the United States and Russia can cooperate to stabilize the region. President Trump also has said some reassuring things about the Iran nuclear deal he vilified during the campaign, but he still keeps his threat to tear it up near at hand.
The Trump administration began moving boldly to deliver on campaign promises to curb illegal immigration, repeal and replace Obamacare, lighten the regulatory burden on banks and businesses and reform corporate and individual income taxes. Here it quickly encountered the reality of American government’s system of checks and balances. Courts have stayed two initiatives from the Trump Administration on immigration, although immigration rates have dropped noticeably.
The first attempt at health care reform had to be withdrawn to avoid an even more embarrassing defeat because House Republicans could not round up enough votes to pass it.
Though encouraged by some to abandon the effort because of its political risks, President Trump and the House leadership pressed ahead, eventually passing a measure by the close vote of 217 to 213. The issue now moves to the Senate and may yet founder over different priorities for expanded access versus lower insurance costs. Still, the stigma of failure has been at least temporarily removed.
Perhaps of greatest interest to businesses and the agricultural community is President Trump’s tax reform proposal. For individuals, it would go down to three tax brackets (10%, 25% and 35%) while eliminating some deductions (including for state and local taxes) and repeal both the alternative minimum tax and the estate tax. For corporations, it would lower the maximum rate to 15%, grant a lower, one-time tax on repatriated earnings and implement a territorial tax.
It also appears to have moved away from the idea of a border-adjustment tax but leaves open how to offset reduced revenues. The prospect of lower business taxes has already encouraged many U.S. companies to announce plans to invest more in U.S. plants.
The May 3 issue of The Wall Street Journal even reported that Chinese companies are looking afresh at investing in America. Approval of the proposals, however, is a long way off, facing procedural hurdles in the Senate, worries about tax avoidance from its “pass-through” provisions and the many parochial interests that will lobby for their specific desires.
Many other initiatives have been launched or are under consideration within the Trump administration. Given all of the barriers that impede change in the American system of government, it is way too early to predict which will come to fruition. The future looks full of uncertainties.