Feature: Trump and AU | Australian Political Analysis Review

Pax Americana and the Consequences of Trump's Protectionism on Australia

Political scholars challenge Trump’s shift in economic policy as revisionist to liberal multilateralism led historically by the United States.

Article by Jasper Wiggins

Image: Hermitage US Department of Commerce

American Protectionism in the 21st Century

Australian Political Analysis Review - Open Source Independent Education

The United States Dollar is the world’s debt-based reserve currency which has been used as a bargaining chip with other economies to secure cooperation and agreements. Over the weekend, Donald Trump threatened BRICS states (Brazil, Russia, India, China and South Africa) with a 100% tariff on imports into the United States. Readers in Australia will be interested to know whether Trump’s shift toward protectionist trade barriers will implicate US and European businesses if exports from China incur higher costs. Political scholars challenge Trump’s shift in economic policy as revisionist to liberal multilateralism led historically by the United States.

What is Happening?

Trade protectionism on imports into the US has characterised much of President-Elect Donald Trump’s 2024 campaign as a bargaining chip to enforce compliance with states. Less so than President Biden, President-Elect Trump has observed China as a more important actor to address than Russia as they total a $367.2 billion trade deficit with the United States. As of the 1st of December 2024, Trump has voiced his concern on X with BRICS economies’ alleged departure from the US dollar as unacceptable. Trump has threatened infringing economies with a “100% Tariff”, signalling his commitment to America First over the principles of liberal institutionalism.

While US exports from China between 2012 and 2022 have increased by $2.6, assigning total negligence to the Biden Administration would prove unfeasible. Although some political scholars have argued Bidenomics as a normatively mercantilist policy, the President-Elect’s rebranding of America First marks a profound and historical shift away from the United States’ commitment to multilateralism and free trade into newfound waters. While Trump’s scepticism toward economic interdependence can be traced back to the termination of NAFTA, observing Trump as a completely revisionist voice may also be misrepresentative due his emphasis on developing ties with South Korea and Japan in 2020 even if they were for strategic reasons.

On the contrary, contemporary evaluations may observe Trump invalidate the new United States-Mexico-Canada Agreement as outdated or no longer abiding by the principles of America First, seeking more fortuitous deals with partners. With Canadian Prime Minister Justin Trudeau’s departure from Mar-a-Lago without guarantees from the United States, it is likely to conclude that allies will be implicated by this change in course.

The President-Elect’s extension of liability from China to include all BRICS countries also challenges Russia in its separatism from the liberal international order. If Trump is committed to ending the Russo-Ukrainian War in his first 100 days in office, then enforcing further punitive measures against Russia will invariably strain diplomatic efforts for peace.

Although US media have characterised Trump’s likely cabinet appointments as ‘China Hawks’, the means and consequences of enforcing these tariffs remains difficult to quantify. Not only does it problematise resolving peace in Ukraine along economic terms, but it also resurfaces Cold War “Us Vs Them” mentality shared formerly between the West and the Soviet Union’s Eastern Bloc. If states like India and Saudi Arabia are forced to take sides, accessing the liberal international order as a universal forum for multilateralism and dialogue may incur decreased participation out of fear of sanction.

Implications on Free-Trade, Global Markets and Australia

If Trump’s 25% tariff on Chinese exports into the United States is lifted to 100% as a punitive sanction for ‘revisionist’ economies threatening the US dollar, then the collateral damage yielded will be significant. Not only will this produce overtly hostile economic relations between affected states, but it will also undermine multilateralism as a governing principle for liberal-endorsed trade in the 21st century. Free trade as a defining principle of rational cooperation and commerce may become subject to mercantilism and self-help behaviour. This has been widely criticised by financial institutions, intergovernmental bodies and human rights organisations as it poses significant consequences on most dimensions of globalisation if exchanges between states incur higher costs.

At the heart of this issue resides ordinary individuals and businesses. If a US small business imports shipments under 10kg it will incur a 5% customs duty, or 27% levy for clothing of commercial utility. Tariffs increase the sum of customs duties and thereby restrict the flow of goods internationally. A business that relies on the re-selling of products to market from Chinese manufacturers will incur any increase imposed by higher tariffs, forcing them to locate alternative supplies or manufacture products at their own expense. In the short-term, this will affect both the importer and the supplier, particularly if business operations require a constant flow of stock to fill inventory.

Further tariffs imposed on BRICS states that refuse to ‘buy-into’ US terms, then exchange between the US and affected economy at a barrier of 100% would become unthinkable, de-incentivising the US as a destination to market products. For international readers that reside outside of BRICS states, investment per export may appear a more lucrative destination for suppliers than the United States such as the EU and Australia.

Conclusion

It remains uncertain how President-Elect Trump intends to define and target BRICS states undermining the US dollar. While punitive tariffs on smaller economies like South Africa might yield limited economic fallout for the US, such actions could erode America’s commitment to multilateralism, amplifying BRICS' strategic leverage.

When enacted, these tariffs may drive further de-dollarisation trends, particularly among countries like Saudi Arabia, which have already diversified currency reserves to reduce reliance on the US. This could push BRICS to expand their financial networks with new supply chains, weakening the dollar’s position as the global reserve currency and further challenging US economic dominance.

Ultimately, increased protectionism would risk rendering multilateral exchanges under a zero-sum framework that considers the threat of disagreement and hostility a new reality. Trump is also yet to assume office, therefore there is no guarantee he will implement these changes. However, if he is to punish BRICS states with sanctions, then it is necessary to consider the consequences of this agenda both in economic and structural terms with international liberal institutionalism in mind.

Bibliography

FIORENTINI, RICCARDO. “On Trump’s Trade War.” Rivista Di Studi Politici Internazionali 86, no. 3 (343) (2019): 369–84. https://www.jstor.org/stable/26863000.

Bown, Chad P., and Douglas A. Irwin. “Trump’s Assault on the Global Trading System: And Why Decoupling From China Will Change Everything.” Foreign Affairs 98, no. 5 (2019): 125–37. https://www.jstor.org/stable/26798254.

WORDLICZEK, Rafał. “FROM NORTH AMERICAN FREE TRADE AGREEMENT TO UNITED STATES–MEXICO–CANADA AGREEMENT (USMCA): US–MEXICO ECONOMIC RELATIONS IN THE CONTEXT OF US NATIONAL SECURITY.” Politeja, no. 74 (2021): 293–313. https://www.jstor.org/stable/27107284.