Donald Trump is walking the walk: His first executive order during his first full working day as president was to withdraw from the negotiations process over the Trans-Pacific Partnership, the gargantuan free trade agreement that he’d railed against on the campaign trail as a job killer and promised to do away with.
The move fulfills one of Trump's signature campaign pledges to get out of the sweeping 12-nation trade deal, which he once deemed "a rape of our country,” and marks a major blow to the Washington consensus on free trade. While Trump made the move in a bid to protect American jobs from going overseas, it does entail a trade-off with the country that he considers the American worker’s foremost threat: China will now have more space to ramp up its economic dominance in Asia.
The deal was one of the Obama administration’s signature foreign policy initiatives, making its death the first one of President Obama’s major efforts that Trump has dismantled. It would have strengthened trade ties between 12 Pacific Rim countries accounting for 40 percent of global GDP, making it the largest such deal in history. Trump railed against the polarizing agreement over and over again on the campaign trail, and promised to torpedo the deal upon taking office. Now he has.
It’s the first concrete action that indicates that Trump will indeed be reshaping the US’s trade relationship with the world in accordance with the “America First” ethos he promoted on his path to the White House. Combined with reports that he could also sign an executive order calling for a renegotiation of NAFTA as early as Monday, it’s clear right out of the gates of the Trump presidency that there’s at least one part of the bipartisan Washington consensus that Trump is willing to upend: free trade.
Why the TPP mattered so much
The TPP would’ve boosted trade ties between the US and 11 countries along the Pacific Rim that have a combined GDP of $27.4 trillion. During the 2016 presidential campaign, the accord garnered criticism from both sides of the aisle. Trump, Sen. Bernie Sanders, and eventually Hillary Clinton criticized it as an agreement that would cause an uptick in unemployment and suppress wages. Sanders and many advocates on the left also stridently opposed it for a host of other reasons, ranging from concerns about environmental regulations and labor standards to provisions that would potentially have given corporations enormous power in shaping member countries’ public policies.
After five years of arduous negotiations, the TPP was signed by trade representatives of the 12 countries last February. But it still had to be ratified by the individual countries’ governments, and Congress didn’t do so while Obama was in office. Now Trump’s withdrawal ensures that Congress will never be voting on it.
Trump’s decision to ax the TPP is also effectively his first major move on China — although it’s actually one that weakens the US’s hand relative to Beijing. The accord would’ve strengthened ties between the US and a number of China’s neighbors, but didn’t include China itself; it would’ve served as a counterweight to Beijing’s increasing influence in the region. With the TPP in tatters, China has a major opportunity to step into that vacuum and negotiate a regional trade deal that basically serves as a China-centric version of the TPP. It’s already been making efforts to do exactly that.
Trump has also indicated that he’s going to renegotiate NAFTA — the free trade agreement that virtually eliminates tariffs on goods flowing between the US, Canada, and Mexico — in order to curb the flows of US jobs and factories to Mexico, but at the moment it’s unclear how he would actually go about pursuing that goal in a manner that Mexico would agree to.
TPP isn’t the only big trade decision Trump has to make
So what’s next? The TPP was a giant lightning rod for criticism, but it’s not the only major free trade deal in Trump’s hands. There are two other major initiatives that have hardly gotten a fraction of the attention of the TPP but are at least as important for the American economy — the Transatlantic Trade and Investment Partnership, or TTIP, and Trade in Services Agreement, or TISA.
TTIP is a free trade accord that would significantly reduce trade barriers between the US and the European Union, and has been in the negotiation stage since 2013. Its fate is entirely up in the air — and not only because Trump has a demonstrated aversion to big free trade deals. Europe has expressed deep concerns about threats to regulations and standards on issues like food safety that it fears would be degraded by TTIP’s stipulations.
TISA, which trade representatives have been negotiating since 2013, is a 50-country accord that would dwarf even the TPP. There’s good reason to think that Trump would be hostile to this one, considering that a service accord would be accompanied by rules on freedom of movement in a manner that would be very much at odds with Trump’s hawkish immigration positions.
Other than those free trade agreements, Trump is indicating that he’ll pursue bilateral trade agreements — accords between the US and just one other country. The biggest one trade observers are anticipating would probably be between the US and the UK, which is now in the process of leaving the EU in part due to its own skepticism of the trade-offs that accompany lowering trade barriers between countries. Trump could also try to pursue bilateral trade deals with major economies that would’ve lowered trade barriers with the US under the TPP like Japan.
Trump’s views on certain issues like what will be done with the Affordable Care Act or Medicare are difficult to divine. But on trade, he has a fairly clear vision that he’s pursuing quickly, in a way that’s bound to swiftly reshape the status of vital economic relationships and trade the world over.