Inside Trump’s ingenious ‘poison pill provision’ for dealing with China



Trade deals signed between the United States, Canada and Mexico include a provision that helps the United States in its trade war with China, the Washington Examiner reports.

Dubbed the “poison pill provision” by Secretary of Commerce Wilbur Ross, a key part of the agreements signed by the countries prohibit them from entering into a similar agreement with any country where “at least one Party has determined to be a non-market economy for purposes of its trade remedy laws.” In this case, that would be China per the United States’ classification, specifically in U.S. anti-dumping laws.

A novel clause in a trade agreement, the “Non-Market Country FTA” clause is a big win for President Donald Trump and is sure to tilt the scale in the trade and tariff war between the United States and China in the United States’ favor.

If other countries sign deals with the United States and subsequently do not sign with China, extra pressure will be exerted on the Chinese that will limit their market growth. The idea here is for the United States to circumvent the harm caused by Chinese tariffs yet ensuring China suffers from United States tariffs.

President Trump’s goal is to bring manufacturing jobs back into the United States and keep them away from China. He plans to do this by incentivising companies to relocate to the United States. In essence, he plans to make it cheaper for them to sustain themselves here rather than in China.

While two countries are on board so far, the president will need others to cooperate for his novel strategy to prove effective and be one for the history books.


Loading...

Leave A Reply

Your email address will not be published.

You might also like