Briefing note: Scenarios for US protectionism

Briefing note: Scenarios for US protectionism The election of the first explicitly protectionist American president in decades has injected a deep sense of uncertainty into a global trading system already mired by paralysis in the World Trade Organization (WTO) and fractures in the EU. [...] The new administration has already expressed deep scepticism of the policy, asking the State department: “Most of AGOA imports are petroleum products, with the benefits going to national oil companies, why do we support that massive benefit to corrupt regimes?” Historically, AGOA enjoyed widespread Congressional support, having passed the Senate 91-1 and the House 397-32 (with four abstentions). [...] The impact on trade from the proposed tax occurs because US firms would pay the tax when they sell their goods in the US, but not when they export. [...] The net result of the tax, then, would be to effectively subsidise exports by US firms; to slash the effective tax rate for virtually all US companies; and to increase the tax on imports without actually imposing a tariff. [...] Whatever the specific outcome, the protectionist and unilateral approach apparently preferred by the Trump Administration poses a threat to global trade and in that context to South African and African interests.