US president elect Donald Trump has nominated Robert Lighthizer, a famously protectionist lawyer, as US trade representative (USTR), confirming his intention to fulfil his campaign’s anti-trade promises.
This is the last appointment in Trump’s trade team, after Jason Greenblatt was named special representative for international negotiations, Peter Navarro as head of the newly-created National Trade Council, and Wilbur Ross as commerce secretary.
Several members of this team have led anti-China and anti-trade efforts in the past: Lighthizer was involved in hiking tariffs against Japan as deputy USTR under Ronald Reagan, and Navarro has penned a book called Death by China.
A political analyst who preferred to remain unnamed tells GTR: “You’re starting to see a real tendency here. Ross is the only one that we’ve seen so far that is a moderate on trade and even he shifted in the last two years, getting closer to Trump’s policy. The big question is, how does this protectionist policy get implemented?”
With each trade appointment, the likelihood of trade tariffs being imposed on China has grown, and today this is a very probable scenario.
“Companies should begin to look at hedging: how easy would it be to move facilities away from China, not back to the US, but maybe to Indonesia, Vietnam, Thailand or Malaysia etc. It’s not easy because of the supply chain but at least you have to have a contingency plan in place. Things could start to get substantially more expensive,” GTR’s source says.
As the possibility of tariffs against China grows, so does the idea that the US could withdraw from the World Trade Organisation (WTO) – one of Trump’s more far-fetched threats during the presidential campaign.
“The odds of tariffs against Chinese goods are especially high now. The problem is that these directly contradict WTO commitments. One point I’m starting to raise with clients is that there’s the potential here that he’s actually going to pull the US out of the WTO. It’s unlikely but it’s starting to grow in likelihood,” the analyst adds, placing the odds of it happening at 20%.