President Trump on Monday signed an executive order formally ending the United States’ participation in the Trans-Pacific Partnership (TPP), following through with his long-standing campaign promise. At this point, the move is largely symbolic since TPP had little chance of being approved by Congress.
TPP was one of President Obama’s signature efforts and part of a larger strategy to increase American clout in Asia and check China’s economic and military ambitions. Congress granted President Obama “fast-track” authority to negotiate the agreement in 2015. However, political sentiment shifted and TPP never made it to Capitol Hill for approval.
China had not been included in the trade deal and has been a longtime critic of the TPP and Trump’s action this week is seen by China as a sign of U.S. retreat from Asia and a possible boon for China. However, while the U.S. withdrawal from the TPP could boost China’s role in the region, Beijing is concerned about other actions President Trump might take. During his campaign, Trump said he would list China as a currency manipulator and put a 45-percent tariff on imported Chinese goods. “It could be counted as good news for China that the pressure of TPP is now gone. However, there is a great uncertainly as to whether China stands to benefit,” said Tu Xiguan, a trade expert at Beijing’s University of International Business and Economics.
China is pursuing its own regional trade agreement with 15 other Asian countries, including Japan. It has been reported that a deal between just China and Japan could jeopardize $5 billion in U.S. exports, according to analysis by White House economists working during the Obama administration. The Philippines and Singapore are reportedly already shifting toward the China-backed Regional Comprehensive Economic Partnership. And, New Zealand Prime Minister Bill English said it was imperative that his country pursue new trade deals.
Chinese President Xi Jinping spoke about China’s commitment to globalization during his first appearance at the annual gathering of the world’s economic elite last week in Davos, Switzerland. In his Davos speech, Xi warned that America’s protectionism could wind up damaging the world economy. “No one will emerge as a winner in a trade war,” he said.
Trump has also said he will renegotiate the North American Free Trade Agreement (NAFTA) with Mexico and Canada. Trump’s Commerce Secretary Wilbur Ross said he considers reopening NAFTA to be one of his first priorities for his agency. In addition, Mexico’s President Enrique Pena Nieto said Monday that his country hopes to bolster trade with other nations and limit its reliance on the United States. He said one of Mexico’s top priorities will be to diversify its trading and political partners and begin trade talks with other countries that had signed onto TPP.
