By: David Giordano ‘17
The swearing in of President Donald Trump was the final blow to US involvement in the Trans-Pacific Partnership (TPP), a 12-nation free trade agreement encompassing 40% of global gross domestic product. This agreement, which would have eliminated more than 18,000 tariffs on American goods, includes three of our four largest trading partners: Japan, Mexico and Canada and numerous other countries across four continents. With the stroke of a pen, President Trump followed up on his “America First” campaign promises by withdrawing the United States from the TPP, citing the alleged adverse effects of trade among working-class Americans. The US’ withdrawal will have far reaching effects on the US and its interests both domestically and abroad.
Domestically, the benefits from trade agreements such as the TPP are spread between consumers and business in the form of lower prices, greater purchasing power and new market access abroad. According to the Peterson Institute for International Economics, the TPP would have increased annual national income in the US by $131 billion and given America’s poorest citizens a .5% pay raise by 2030. Without the TPP, US businesses lose access to millions of consumers in countries such as Vietnam and Japan while US consumers lose potential income gains which come in in the form of inexpensive imported products from abroad.
Internationally, the effects of the US withdrawal are equally alarming. A major goal of US TPP negotiators was to codify the rules of commerce in East Asia to the US’s advantage in an effort to expand influence in the region. US negotiators did this through the TPP’s environmental, labor, and intellectual property standards, which were the most advanced in a free trade agreement to date. Without the US being involved in the TPP, China will be emboldened to write the rules of commerce in East Asia through its own trade agreement: the Regional Comprehensive Economic Partnership. This will allow Chinese influence in the Asia-Pacific region to grow at the expense of American influence.
Withdrawal from the TPP signals a United States that is not willing to deepen engagement with its allies in the Asia Pacific region. The combination of uneasy allies and an aggressive China is a recipe for regional instability and will lead to greater Chinese influence in a region that encompasses half of the world’s population. For a President who claims that he is going to “win win win,” withdrawal from the TPP is a clear loss, which puts China, rather than America, first.