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As the world waits to see how firmly President Trump sticks to his pledge to implement trade tariffs in a bid to bring manufacturing jobs back to the US, it’s worth looking at the experience of another country for which protectionism proved too tempting to resist. Argentina has a long and depressing history of economic mismanagement, much of it due to repeated attempts to discourage international trade in order to protect local jobs and businesses.
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Argentina is now at the opposite end of the cycle in comparison to the US, with President Macri giving domestic businesses until 2020 to wean themselves off protectionism and prepare themselves to compete on a level playing field. This is a recognition of the damage that restrictive trade policies have wreaked on the Argentine economy. While it is true that many manufacturing jobs and businesses exist in the country today because of protectionist policies, the greater and more negative impact has been felt by Argentina’s taxpayers and consumers who have subsidised these enterprises and overpaid for their products.
The downside of President Trump’s trade policies may take some time to be noticed by the average American consumer, but the impact is inevitable. Unemployed factory workers in the “Rust Belt” and opportunistic local businessmen are likely to be the only beneficiaries of a restrictive US trade policy. The fear is that most Americans will learn about the perils of protectionism the hard way.
Guy Dunn
P.S. Here are a few articles on this topic from the EMIS platform last week. On a lighter note, you might also want to try our weekly quiz.
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XI JINPING DEFENDS GLOBALISATION IN DAVOS
The irony of the world's most powerful communist leader defending the capitalist system is testament to the threat of protectionism to the global economy. President Xi Jinping's keynote speech to the World Economic Forum in Davos, Switzerland, was a spirited defence of globalisation against forces trying to turn some major economies inwards.
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EMIS FORESIGHT 2017: GROWTH IN ASIA
In 2017 demand in the Asian economies will be the key growth factor supported by increase in private consumption and spending on infrastructure projects.
The coming 2017 will be another year of growth slowdown in Asia. Struggling under shrinking global trade, uncertainties over the Federal Reserve’s interest rate hike and the spillover effect of China’s re-balancing, emerging and developing Asia will experience lower growth for the seventh consecutive year.
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Below are the most read articles in the past week on EMIS Perspectives, our daily blog of emerging market news and insights.
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THAI FLOODING DAMAGES RUBBER PLANTATIONS
The severe flooding that has hit southern Thailand since January 2 has been slowly eroding the profits of a number of industries, including farming, fishing and tourism.
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IMF LOWERS 2017 GROWTH FORECAST FOR MEXICO TO 1.7%
The International Monetary Fund (IMF) revised down by 0.6% its 2017 growth forecast for Mexico to 1.7% due to the uncertainty of future USA foreign policy under Donald Trump’s administration, CEEMarketWatch reported.
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ABOUT EMIS
EMIS operates in and reports on countries where high reward goes hand-in-hand with high risk. We bring you time-sensitive, hard-to-get, relevant news, research and analytical data, peer comparisons and more for over 120 emerging markets.
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EMIS CHARTING TOOL
EMIS CHARTS uses selected data points from the subscription-based EMIS service, to provide you with an interactive overview of sectors, key players and macroeconomic trends across 120+ emerging markets and allows you to create your own charts.
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