Featured image : AFGE activists participate in #StopFastTrack rallies in the D.C. in April, 2015, Photo by AFGE via Wikimedia Commons
The shock following the election of Donald Trump as America’s 45th President has given way to anticipation, and some anxiety, regarding decisions he will make after Inauguration Day and the start of his four-year term in office.
Much attention is being given to likely appointments to his Cabinet, the state of his wealth and business concerns, and his criticism of media coverage of the transition. An issue generating fewer headlines, but one likely to have profound long-term economic impact on the US and its allies, is that of trade between the United States and other world markets – particularly in Asia.
In a recent Facebook message on several issues Trump said that, regarding trade, he will be guided by a “core American principle – putting America first.” Toward this end, he said, he will issue a notice of intent on his first day in office to withdraw from the proposed twelve-nation
Trans-Pacific Partnership, referring to the TPP as “a potential disaster” for the United States. Instead, he said his administration “will negotiate fair bilateral trade deals that bring jobs and industry back onto American shores”
The TPP has been years in the making, going back to the administration of President George W. Bush. Early in the Obama administration it became a key element of his foreign policy pivot away from the Middle East and toward Asia. Obama led TPP supporters by saying it would enhance job growth and provide new markets for American goods by reducing or eliminating tariffs. East Asian and South American partners said it would benefit them too, by breaking down existing trade barriers. Signatories also agreed on another principal advantage of the TPP – that it would curb China’s effort at creating a dominant economic profile in the Pacific region.
In the last few years, however, enthusiasm for the TPP has waned in the US, while China – which has profited greatly through the mechanizations of globalization – has proposed its own multilateral trade structure for the region.
US opposition to the TPP has been building throughout Obama’s second term among labor unions and politicians fearing job losses and lower wages in the diminishing American industrial sector. Democrats Bernie Sanders and Hillary Clinton voiced such concerns in campaign speeches leading up to last summer’s nominating conventions. Many Republicans – long-time champions of free trade – opposed the TPP for the same reasons, but also because Obama had made it a landmark of his presidency. Then came Donald Trump, whose loud and frequent denunciations of US trade agreements generated support among voters who felt they were victims of US trade policies that had shipped their jobs overseas and left them ignored, disenfranchised, and unemployed.
The Long View
East-West trade has existed for millennia, across the Alps and down the Silk Roads through Central and South Asia, and in more recent times across the Pacific between North America and China. For centuries, Western dominance in trade relationships was assured by superior economic and military power, enabling Europe and the United States to bargain from a position of strength.
Change came rapidly during the last decades of the 20th century as China moved from an agrarian communist state marked by vast poverty and tight economic controls to the socialist market economy implemented by Deng Xiaoping. Deng’s successors continued to build the country’s industrial and economic strength, and early in this century China climbed the ranks of the world’s nations to become second only to the United States in annual GDP. Japan, one of the TPP partners, is a distant third.
China’s explosive economic growth has been accompanied by an expansion of its military profile – particularly its naval fleets – giving rise to questions about its intentions in East Asia and the western Pacific. American presidents, starting with Ronald Reagan, have embraced policies aimed at keeping Chinese military expansion in check while developing productive bilateral economic relations. This protective US posture was welcomed by East Asian nations that have always been uncertain about Chinese objectives and fearful of its hegemonic aims.
Then, during the 2016 presidential campaign, President Obama’s foreign policy goals of trade liberalization in East Asia, a mutually productive US-China economic relationship, and carefully managed containment of Chinese expansion in the region, lost ground to domestic economic and political concerns.
Candidate Trump was the loudest voice in a rising chorus of those who repeatedly criticized US-China trade relations. Trump often roused supporters by accusing Beijing of cheating in its dealings with the United States, manipulating its currency to favor its economy, and causing millions of American jobs to be lost or shipped overseas.
Despite TPP support among respected US economists who differed with this appraisal – saying the TPP would add jobs and increase US economic growth – voters on Election Day were inclined to show sympathy for the American worker, and support for making significant changes in long-standing US trade policies.
What Next?
If the Trans-Pacific Partnership loses US support in the White House, in the words of Japanese Prime Minister Shinzo Abe, the pact would likely not be renegotiated – it would, he said, be “meaningless without the United States.” It remains to be seen whether the remaining signatories would go on without American membership – and, if so, how.
Now that Trump is the President-elect, he has not backed away from his hardline positions on trade and his pledge to withdraw from TPP to bring jobs home. He has not offered specifics as to how this will happen – though he has suggested a tariff of up to 45% on selected Chinese goods. This has drawn a predictable response from Beijing.
“If Trump imposes a 45 percent tariff on Chinese imports,” according to an editorial in the Chinese Communist Party’s official newspaper Global Times, “China-US trade will be paralyzed.” Beijing, according to the editorial, will take a “tit-for-tat” approach, cancelling orders of American aircraft and agricultural products and limiting the number of Chinese students in the US. “If Trump wrecks Sino-US trade,” the Editorial concludes, “a number of US industries will be impaired. Finally, the new president will be condemned for his recklessness, ignorance and incompetence and bear all the consequences.” Donald Trump has grown used to hearing this kind of assessment of his actions and decisions, and China’s harsh appraisal isn’t likely to change his views.
The proposed trade policies of the new White House have, however, given a boost to China’s nascent alternative to the TPP – a 16-member trade pact called the Regional Comprehensive Economic Partnership. Talks among the RCEP’s proposed signatories continue, as China seeks additional partners – not likely to include the United States.
US policies on international trade, and decisions made to change those policies, are just one item on the new administration’s agenda – an agenda that will take shape after Donald Trump takes the oath of office on January 20, 2017.
