Economic Nationalism: US Trade Policy VS. BREXIT

Abstract

In 2016, both the election of President Trump and the UK’s vote to leave the European Union represented important shifts in the approach of both countries to their international trading relationships. In the case of the US, the Trump administration has sought to target tariffs against countries such as China, while the UK is seeking to exit a highly integrated market and assert its sovereignty. In this article, it is shown that both events were a response to the China import shock, which in turn led to a dramatic rise in populism resulting in a substantive shift in each country’s trade policy, each generating substantive actual and expected economic costs. However, the policy responses to populism are quite different: the US has chosen to be explicitly protectionist, a feature of economic nationalism, while the UK is not seeking to raise trade barriers as it adjusts its trading arrangements. Nonetheless, both countries are following a path of economic “dis-integration”, the US undermining its multilateral obligations under the WTO, the UK seeking to leave the European Union of which it has been a member since 1973.