On January 24th, the president officially pulled out of the Trans-Pacific Partnership, ending the ongoing efforts dating back to 2010. TPP aimed to free up tariffs and trade barriers between fourteen Pacific countries, the wealth of which added up to 40% of the world’s GDP. The deal was spearheaded by Obama’s administration, but over the campaign trail Trump rallied against it, citing globalism as a threat to American jobs.
The world’s response has been quick—in a recent Davos conference China’s President Xi Jinping attended and acted as a leader in free trade, stating, “No one will emerge as a winner in a trade war.” Jinping went on to explain how the US abandoned its role as a leader in capitalism, and as such, China was forced into this position.
In fact, an intended effect of TPP was to isolate China economically
from their neighbors. With the collapse of the deal, the reverse is quite possible—Australia cited possible deals with China, and New Zealand still hopes for a deal without US involvement. General diplomacy with the region has not been positive anyway, with a hostile phone call between the Australian Prime Minister and President Trump, and the development of Chinese encroachment on the South China Sea.
The president seems more than willing to use trade as a tool with which to negotiate, as seen with threats of an import tax on Mexican goods based on Mexican retaliation over the proposed wall, raising the possibility of a 20% tariff. This would contradict NAFTA, another
trade agreement including Canada, the US, and Mexico. NAFTA was the source of many campaign attacks from President Trump, despite evidence showing negligible economic impact on American workers.
Another example of dealing over trade was seen last week, with the British Prime Minister May’s visit to the US. In the press conference both leaders stressed
the “$1 trillion invested in each other’s economies” and “future economic cooperation and trade.” The meeting set a different tone to a traditionally protectionist President Trump, and shared optimistic views on the speed of such a deal. However, with Britain leaving the European Union’s trade zone and America pulling out of other such agreements, the two countries are likely to embrace bilateral trade.
President Trump’s official website calls for “tough and fair agreements” and does not hold back from threatening US withdrawal on deals such as NAFTA. However, most of the claims are vague and do not inform much—for example, the page says that negotiators will be the “toughest and smartest” yet doesn’t give any names or direct policy. Based on this aggressive approach, it is likely that the President will look for strategies as if they were being directed by a business. Whether this approach will reap benefits is yet to be seen.