US trade policy: Concerns are likely overdone – Goldman Sachs


Offsetting the post-election optimism over President-elect Trump’s increased emphasis on his pro-growth policies (and softening of more controversial issues), protectionist trade policy tops the list of policy priorities on which economists and global markets have been most focused notes research team at Goldman Sachs.

Key Quotes

“We share these concerns but, relative to market views, we think the popular media narrative on the downside risk of a trade war is overstated.”

“When asked for his philosophy on trade, President-elect Trump answers “I’m a free trader. I want free trade, but it’s got to be fair trade.” And on his transition website, his policy statement on trade begins “Free trade is good as long as it is fair trade.” Considering that the Republicans in control of the House and Senate are committed free traders, we think that President-elect Trump will take a far more practical approach to US trade policy than his campaign rhetoric would suggest. Trump does not defend protectionism, but rather says he intends to push back on unfair trade practices.” 

“Of course, US-China trade tensions are already elevated. In May 2016, for example, the Obama administration levied a 522% tariff on Chinese steel in response to dumping charges. While the tit-for-tat strategies commonly deployed in trade negotiations can devolve into trade wars, this is not our baseline expectation. Our tentative view is that Trump’s use of punitive tariffs will be just as pragmatic as President Obama’s, albeit more vocal. This remains to be seen, of course, and we see a risk that Trump might be tempted to overplay his hand in trade negotiations. He has also threatened to “repeal NAFTA”. But this would be a disaster for US growth, which Trump surely hopes to avoid. Instead, we think, his intent is to renegotiate it. Any trade agreement involves horse-trading over details, and we would expect the Trump administration to place more priority on provisions designed to benefit US manufacturing and other Trump constituencies. But, like most trade agreements, we expect the broad emphasis to remain on free trade.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD hits two-month lows amid USD strength

EUR/USD has pared its gains that followed upbeat preliminary PMIs for Germany came out above expectations, pointing to a recovery. The USD is advancing amid fears of the coronavirus.

EUR/USD News

GBP/USD drops below 1.31 amid USD strength, fails to sustain PMI gains

GBP/USD is trading below  1.31 after hitting a fresh high of 1.3172. The UK Manufacturing PMI beat with 49.8 and Services PMI with 52.9. The USD is gaining ground across the board.

GBP/USD News

Cryptos: Bears take over and draw a bloody moon

Despite appearances, Bitcoin is the asset with the best risk/benefit ratio. The current falls are adjusted to the ranges of the previous rise. Downward momentum expires in the first half of February.

Read more

Gold rebounds above $1560

The XAU/USD pair dropped to a daily low of $1556.70 during the European trading hours as the easing worries over coronavirus becoming a global epidemic and a broad-based USD strength put the pair under bearish pressure.

Gold News

USD/JPY drops to two-week lows near 109.30

The USD/JPY pair reversed its direction during the American trading hours as the risk-off atmosphere allowed the JPY to find demand as a safe-haven.

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures