After almost five months in the White House, Donald Trump’s trade policy is still unclear. This uncertainty is affecting Swedish export companies.
“The only concrete things we have seen is that he wants to renegotiate the North American free trade agreement Nafta, and that he has withdrawn the USA from TPP, the deal with Asia. We do not know more than this,” says Anna Stellinger, director general for the National Board of Trade. She continues, “Uncertainty is never positive. Not for trade and not for companies that want to invest.”
Anna Stellinger points out how important a market the USA is for Swedish companies. The board has calculated that 139,000 Swedish jobs are linked to Swedish exports to the USA.
Two months into protectionist Donald Trump’s presidency, WTO Director General Roberto Azevêdo warns of the risks of a global trade war.
Speaking to Svenska Dagbladet ahead of his visit to Stockholm today, Thursday, the WTO head says he hopes a trade war can be avoided. “There are no winners in a trade war, only losers,” he remarks.
He does not believe there will be a return to the global trade growth of 8 to 9% seen in the years prior to the financial crisis, but there is no reason why it should not pick up to 5%, although this is unlikely to happen any time soon.
Roberto Azevêdo is cautious about drawing any swift conclusions over US-China relations, convinced the two nations will reach agreement despite difficulties.
Diplomats in Washington are unsure about the direction the US may take on trade policy and the WTO head is in a similar situation. “I don’t actually know if Trump is for or against trade. What I am hearing, however, is that the Americans consider the WTO an important organisation and that they are for free trade but against unfair trade,” he says.
Writing in Dagens Industri today, Fredrik Reinfeldt, the former prime minister, argues that the election of Donald Trump as president reflects a high level of voter dissatisfaction, and politicians would do well to listen to the electorate.
Noting the high number of older people among Trump’s voters, Fredrik Reinfeldt claims that politicians need to ensure that society gives this demographic group the opportunity to work longer and show more respect for the experience they actually have. Additionally, older people have purchasing power, which makes them important consumers, who need to be taken seriously. They are the consumers of tomorrow for many of the services that are now being launched, which is why both companies and opinion leaders need to be more responsive to their views.
Nevertheless, “we should not listen too much to demands to turn the clock back and re-create something from the past,” he states.
In an interview with DI at the World Bank’s annual meeting in Washington DC, finance minister Magdalena Andersson says she is concerned about protectionist tendencies across the globe. “The big discussions are about what happens to global trade. There are signs that it is slowing. This could be due to the economic cycle but there are other reasons, such as the many countries undertaking more protectionist measures just now.”
She points out that this is not great from a Swedish perspective as it is a small, open economy. “Our welfare is based on there being the potential to trade,” she says.
She continues, “Not all individuals benefit from the world as a whole growing richer and we therefore must have policies that can compensate for that. Politics has failed there, especially here in the USA.” She considers this to be one of the reasons there is strong support for Donald Trump in the coming presidential election.
She is concerned about economic development if Donald Trump becomes president and points out that there is a huge difference between a leader in the USA with political experience and one without political experience who is, furthermore, extremely impulsive.
Defence company Saab is expecting a dramatic lift if Donald Trump wins the US presidential election and frightens NATO countries into increasing their military spending. Even Hillary Clinton is clear in her election campaign that European NATO countries should contribute more.
“When you look at the countries that do not meet NATO’s target and what that is of their GDP then you can quickly see that the defence industry in Europe, and to some extent the USA, does not have the capacity to deliver in the case of sudden demand and a fast increase,” says Håkan Buskhe, CEO of Saab.
Donald Trump has said that countries that do not pay their part in NATO, two percent of GDP, cannot expect the USA’s support in the event of an attack.
With just over ten weeks remaining until the election in the USA more economists are warning of the effects of a Trump victory. Many dread that, as promised, he will tear up existing trade agreements. Arne Bigsten, professor in economy at the Gothenburg School of Business, says, “Sweden is very integrated and very dependent on the world markets being open.”
Willem Buiter, head economist at Citigroup, predicts that global growth could fall by 0.7-0.8% if Trump wins, but warns that the world is facing more protectionism whoever wins. Professor Bigsten agrees: “It could lead to some kind of more or less declared trade war in which we trade less with one another.”