The Trans-Pacific Partnership (TPP) trade deal was a major step forward for Barack Obama’s administration in offsetting China’s rising global economic and diplomatic influence. As with many Obama milestones, Donald Trump has sworn to repeal the current president’s actions. However, unlike the Affordable Care Act, Trump has now reaffirmed his commitment to withdrawing the U.S. from the pending TPP deal. What exactly is the TPP? And what are the pros and cons of exiting the agreement?
What Does Trump Want To Do With The Pending TPP Deal?
China was a major talking point for Donald Trump in his campaign to win the white house. Trump spoke often and at length about renegotiating deals involving China in America’s favor. So it’s a little ironic that this newest promise by the president-elect actually helps our largest global rival. If the move helps China, what was Trump’s rationale behind the decision? Well, another Trump promise; jobs.
The Trans-Pacific Partnership (TPP) trade agreement is a deal meant to monitor trade among a dozen Pacific Rim countries – not including China. But the countries the deal does include – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam – account for a third of global trade. And while the U.S. has agreements in place with many of the countries, the TPP offered a strong opportunity to build a partnership with Japan and Vietnam. The deal focused on lowering tariffs and regulating standards and regulations for service and investments between member countries, and regulated areas ignored by the World Trade Organization.
While the deal was signed in February of this year after seven years of negotiations, the TPP is awaiting ratification to go into effect. And with Trump promising to veto the deal on his first day in office, what happens to the other 11 countries in the pact? That’s where China comes in. China is just waiting for the U.S. to back out so it can fill America’s shoes and expand its trade influence.
But Trump sees the agreement as a hurdle to American jobs. His isolationist stance is to raise tariffs, not lower them. This in effect decreases imports to the U.S. and encourages domestic manufacturing of goods. And he has an unlikely ally. “TPP will be a disaster for American workers,” said Bernie Sanders, who ran against Trump and opposed him on many (most) ideas. So when they agree on something, it may actually make sense. But the trade deal is strongly supported by businesses seeking to boost exports in the world’s fastest growing markets. Much of the Senate support for trade authority came from states with the most to gain from increased trade with Asia.
Watch this news report from RT America to know more about the TPP:
Just like with everything, there are pros and cons to this decision. As President, there will be pros and cons to every decision Donald Trump makes. If he does follow through on his promises, expect American manufacturing companies to see a big spike in share price, but steer clear of companies whose biggest revenues come from exports to Asia.
The statements, views, and opinions of any article, contribution, editorial, or advertisement in this publication are not necessarily those of The Capitalist or its editorial staff, and are not considered an endorsement, sponsorship, or recommendation of any referenced product, service, issuer, or groups of issuers.
This publication provides general information about certain subjects, and should not be construed or taken as advice (legal, financial, investment, tax, or otherwise). Do not construe or take any information in this publication as a solicitation, offer, opinion, or recommendation to buy or sell any securities, bonds, or other financial instruments or to provide any legal, financial, investment, tax, or other advice or service about the suitability or profitability of any financial instruments or investments.
The Capitalist disclaims any liability for the accuracy of or your reliance on any statements, views, opinions, or information in this publication.