Pakistan’s Conundrum – Trump, Trade, Tight-Rope

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Say what you may about Donald Trump, he keeps things interesting! From signing a plethora of executive orders to planning to take over countries to firing federal employees and effectively shutting down USAID – all is par for the course, pun intended.

Just like in 2018, the second stint of President Donald Trump has kicked off what could only be described as modern day trade war Olympics. It is a competition where tariffs, and self-ridiculing explanations, are the weapons of choice and everyone and his dog is vying to become the “best in unpredictable economics”. The main target? China, Canada and Mexico – not all in the same league, I assure you. The result? An upcoming global economic rollercoaster that will affect everyone, even countries who are just silent spectators and trying to enjoy their snacks on the sidelines before someone throws up on them. Enter: Pakistan.

Let’s first look at the basics – why did Trump continue this trade war from where he left off in his first term? Well, like any good reality TV villain he doesn’t need reasons. But let’s indulge ourselves and say that Trump believed China was playing too fast and too loose with trade rules, especially when it came to intellectual property and other questionable practices. In response, he decided to start slapping tariffs on Chinese goods like he was at a summer yard sale. For Canada and Mexico, Trump’s official reason for pilling on the tariffs was to secure the borders to the North and South respectively. Though, I believe he thinks Canada is that noisy Northernly neighbour whose house should be demolished and made part of the original mansion. No wonder he talks about Canada being the 51st state; deluded that notion as it maybe.

The idea behind this trade fight? “Balancing the books” for the American government. Not that Trump took that much care in balancing the books of his corporate empire. This again is part of the age-old American dream to bring back manufacturing jobs to US shores and Make America Great Again. The wheeler-dealer that he is, Trump’s original motivation would have been to raise the stakes high enough to get substantial concessions from the other side subsequently. The ancient wisdom of the Sicilian Mafia comes to mind, “a favour accepted is a favour owed”!

While Canada and Mexico try to fall over each other to reach a lasting agreement with the White House, Trump still has China in his cross-hairs. Though, cross-hairs could mean other things to his stylist. When Trump collided with China in his first term, I had written that he has more to lose than China – he lost the next election. This time around, the American people maybe about the pick the tab more than they did four years ago. China will certainly retaliate further, in due kind and in due time and all including Pakistan will be hurrying to avoid the “trade splash zone”.

Pakistan is already dealing with its own sets of economic challenges. Add to that the unpredictability of global trade, a trigger-happy American President and a dice as loaded as the one in a Las Vegas casino and you get a sense why Pakistan must feel like trying to keep its cool at a water park while the wave pool keeps knocking it over.

China and Pakistan have been trade buddies for quite a while. They share a robust economic relationship, with China being Pakistan's largest source of imports and one of its major export destinations. As the US – China trade war intensifies, China’s exports to the US may decline and it will want to fill that gap with other players. This isn’t all bad news for Pakistan. As China’s products become more expensive for American consumers, Pakistan will think “maybe we can slide into the empty spots in the market”. Of course, China will also adapt quickly, turning to other countries to buy up its excess goods, leaving Pakistan to compete with everyone for the same limited markets. It will be akin to aiming for a seat at the cool kids' table – except everyone wants the same seat!

China-Pakistan Economic Corridor (CPEC), part of the ingeniously named Belt and Road Initiative (BRI), may also suffer. While China focuses on its own trade issues, there won’t be much space left for pushing the CPEC agenda farther, deeper and quicker. Such a slowdown was also witnessed during Trump 1.0 taking on the Chinese goods market and it seems to be heading in the same direction with Trump 2.0.

If walking the diplomatic tight rope between US and China was a feat previously, then Pakistan will need to double its dexterity if it wishes to keep its existing relationships with both countries on a similar footing. If ever prayers were to get to angels and result in miracles – let this be it! Imagine being at a college ground and a fight breaks out between two of your classmates and suddenly you are just trying to figure out how not to antagonise both! That’s Pakistan in a nutshell during the Trump unleashed trade war. Nevertheless, Pakistan’s close ties with China and US nexus with India, would give a good hint as to which side Pakistan should look to placate more.

But hey, if there’s one thing Pakistan knows, it’s how to roll with the punches and getup expecting the next one! Trade wars come and go but unpredictability is forever. And that dear reader is the sucker punch – when one’s own house is not in order, any external shenanigans are merely a distraction because even if they are gone, the original plight of the nation will remain.

Published in Daily Times