November 9, 2016
At this point, our analysis of Trump’s foreign policy and its impact on the world is necessarily tentative. This is because his own campaign pronouncements were inconsistent and vague, and because we know very little about Trump’s foreign policy team. And while Trump’s campaign was personality-driven to an unprecedented degree, his administration will be orders-of-magnitude larger, and he will be forced to outline broad goals and delegate the work to his appointees.
Trump has a few months to put a foreign policy team together. Finding suitable candidates will be difficult given that so many senior Republican policy advisors came out against Trump during the campaign. Still, given that he is now the president-elect, Trump will likely be able to cobble together a credible team of foreign policy thinkers. That should make a Trump administration somewhat more predictable than his campaign.
Trump is a transactional leader. He is a businessman who sees himself as a negotiator and deal-maker. His most consistent attacks in the campaign were against ‘bad deals’ and the ‘stupid’ leaders who had negotiated them. And Trump is not an ideologue. In fact, he was a liberal Democrat for most of his life, and he appears to wear most of his positions lightly. And the Breitbart crew that managed the last portion of his campaign brought an angry tone to his campaign, but not much policy substance.
Specifically on foreign policy, Trump is not a traditional Republican “hawk” on strategic issues. In fact, his administration is likely to place less emphasis on grand strategy and long-term strategic thinking, and more emphasis on short-term economic benefit. In general, we expect a harder line on trade and economic issues, and a skepticism about U.S. defense commitments overseas. So he may pursue opportunities to reshape the U.S.-backed global defense architecture by leaning on allies to take on a greater fiscal burden to support defense capabilities.
Turning to the key regions of the world, here are our analysts’ preliminary views.
The big issue for U.S. policy in Asia is China. U.S.-China relationship faces a phase of uncertainty that is unprecedented since relations between the two countries were reestablished in 1972. Trump will seek to rebalance the U.S. trade relationship with China. Trump sharply criticized U.S. trade policy throughout his campaign, decried the massive trade deficit with China, and vowed to strike “better deals” with key trading partners including China. He also promised to have the Treasury Department label China a “currency manipulator” on day one, a step that would potentially lead to the imposition of unilateral tariffs on Chinese imports. And his most well-known China advisor, Peter Navarro, is an economist who wrote a book called “The Coming China Wars,” which sharply criticized China’s trade and currency policies.
This suggests that a Trump administration will pursue a much harder line with Beijing in ongoing negotiations toward a bilateral investment treaty – making the deal tougher to achieve, but potentially raising the standard of the deal if it does eventually happen. Trump’s administration will face public pressure for increased reciprocity — keeping U.S. sectors closed to Chinese investment until those sectors are opened in China. Draconian restrictions on Chinese firms looking to enter the U.S. market are unlikely, given U.S. law and treaty commitments. But expect issues around inbound Chinese trade and investment to become even more politicized.
Elsewhere in Asia, Trump has key allies Japan and South Korea to take on a greater fiscal burden to support defense capabilities. Given the increasing level of provocation from North Korea, and Japan’s move toward easing the self-imposed limits on its armed forces, the U.S. may be able to find a modest rebalance that satisfies Washington, Seoul, and Tokyo.
Meanwhile, the Trans-Pacific Partnership (TPP), which the U.S. spearheaded with Asian allies over the past decade, is dead for now. That deal, which required the U.S. to ratify it by 2018 to take effect, will now need to be completely renegotiated.
A Trump presidency may test the economic and security principles that have underpinned transatlantic relations in the post-war world. His skepticism about the value of the U.S.-led alliances that underpin global security (such as NATO) and his open admiration for Russian President Vladimir Putin will bring anxieties in Brussels and especially, the Baltic countries that are the most exposed to Russia’s aggressive policy abroad.
Trump’s views on trade are another blow to Europe’s already tormented trade policy. Progress toward a U.S.-EU trade pact (TTIP) appears unlikely; those talks will be put on the backburner for the foreseeable future.
Trump’s victory will embolden nationalistic and anti-establishment parties across Europe and could bolster their chances ahead of crucial votes coming up in Italy, the Netherlands, France and Germany. Marine Le Pen, the leader of the French far-right National Front who is widely expected to make it into the second round of the presidential elections in 2017, rushed to congratulate Trump. Beppe Grillo, the leader of Italy’s Five Star party, which advocates Italy’s vote on Eurozone membership was equally jubilant.
Finally, Trump victory may be good news for the post-Brexit UK. In the wake of the June referendum, Trump cheered the outcome and rejected the President Barack Obama’s warning that the UK would go to the “back of the queue” for a trade pact with the U.S. It may also stir hopes among Brexiters that Washington will use its influence in Brussels to push for a more favorable exit deal for the UK.
Currency volatility is only the beginning of Mexico’s troubles with a Trump presidency. NAFTA has profoundly changed the Mexican economy since 1994; 80% of Mexican exports now go to the U.S., and the country’s economies are deeply interdependent. Trump’s promises to “rip up” the agreement would produce a rarely seen external shock at a moment when Mexico is enacting crucial economic reforms under the highly unpopular President Enrique Peña Nieto. It would also cost millions of private-sector jobs in the US.
But while Trump could abrogate NAFTA and return to WTO-based trade arrangements with Mexico (and Canada), he cannot unilaterally impose the kinds of punitive tariffs he has spoken about. But any of these steps would initiate a massive trade war that will undermine the rule-based trade system led by the U.S. for seven decades, and therefore remain very unlikely.
More likely, Trump will attempt to renegotiate U.S.-Mexican relations at the margins. But it remains unclear how much room President Enrique Peña Nieto would have in this regard. His decision to host Trump in Mexico City during the campaign was disastrous. Mexicans are profoundly upset with Trump for his various campaign comments. Peña Nieto’s political (as opposed to economic) incentives for concessions are almost non-existent.
More broadly, until last night Mexico and the other big Latin American economies – Brazil, Argentina, Colombia, Peru and Chile (with the exception of Venezuela) – were determined to improve their ties with Washington, push forward trade agreements and attract foreign investments through new pro-business regulations. Only the U.S. portion of this equation has changed. The region will continue to look for commercial partners and investors, but in other corners of the world – particularly in Asia. In this sense, Trump has already damaged U.S. soft power in the region.
Trump has called the Iran nuclear deal “disastrous” and suggested it would be one of the first arrangements he would “renegotiate” upon assuming the office of the presidency in January. However, it is unclear what Trump can usefully do to the terms of the deal. If he approaches other parties to the negotiation to see if there interest in toughening the deal (lengthening the time constraints or adding other limitations to the agreement around ballistic missiles) he is likely be rebuffed. Given the commercial opportunities with Iran and the limits on the Iranian nuclear program, it is unlikely that China, France, Russia and Germany would be interested.
So Trump could pursue unilateral concessions from Iran, which Tehran is highly likely to reject. But more likely, he retains the deal, while talking tough on Iran. In fact, in August 2015, Trump conceded it would be hard to destroy a deal enshrined in a UN resolution and said he would not “rip up” the nuclear deal, but that he would “police that contract so tough they don’t have a chance.” However, a Trump presidency may energize hard-liners in Iran, who have opposed the nuclear deal from the start. There is a risk that, as positions in the U.S. and Iran harden, it precipitates an unintended crisis in the region.
On the issue of ISIS, Trump is unlikely to make significant changes to current U.S. policy. At the time he takes office, U.S. special forces and advisors will likely still be deeply engaged in support of local allies working to dislodge ISIS from Mosul and Raqqa. Trump has called for “pursuing aggressive joint and coalition military operations to crush and destroy ISIS, international cooperation to cutoff their funding, expand intelligence sharing, and cyberwarfare to disrupt and disable their propaganda and recruiting.” Short of adding additional U.S. ground troops to these battles, which Trump has not been in favor of, the likeliest scenario is continuation of current policy at least until the Mosul and Raqqa campaigns are finished.
Syria may see the most significant change, at least stated U.S. policy. Unlike the Obama Administration which called for the removal of President Assad from Syria, but did little to further that policy, Trump has expressed a willingness to tolerate President Assad staying in power because “he is fighting ISIS”. The likely overt acceptance of Assad remaining in power is further underpinned by the fact that Trump has stated his disdain for U.S. intervention in Libya and other parts of the world.