President Donald Trump tweeted early Monday morning that he had a “busy week planned.” Just hours later, he signed an executive action to withdraw the U.S. from the Trans-Pacific Partnership negotiations. This doesn’t come as a shock, as Trump was very clear on his stance on international trade, especially the TPP, throughout his campaign.
The TPP, which was negotiated by former President Obama, was never ratified by Congress, CNN reported. That means that President Trump’s decision doesn’t have an immediate, tangible effect on the U.S. economy, but it does set a precedent and tone for what’s to come in terms of international trade during Trump’s tenure in Washington.
He’s also expected to sign an executive order today to renegotiate the terms of NAFTA, the trade agreement between the U.S., Mexico and Canada.
The Trans-Pacific Partnership is a potential agreement that, as explained by the BBC “aims to deepen economic ties between [12] nations, slashing tariffs and fostering trade to boost growth.” Basically, this meant, for member countries—Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile, Peru and formerly U.S.—there would be a new single market trade system, similarly to how the European Union works. This 12 nation group would account for 40 percent of world trade. For industries that source heavily from manufacturing giants in Asia, like Vietnam and Malaysia, this lack of tariffs and stronger economic ties would, in theory, have made things easier.
Trump has described the TPP as “a potential disaster for our country,” according to The Independent. Trump also called NAFTA “the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country.”
It’s also a strong power move to rescind as many of the former administration’s legislation as possible. In the same tweet as mentioned before, Trump said he was meeting with “top executives” to discuss domestic manufacturing.
The newly-inaugurated president laid out his plans for the U.S. economy in no uncertain terms during his inauguration speech:
“From this moment on, it’s going to be only America first. America first. Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families.”
What does this mean for suppliers and distributors who source their products from overseas, especially from Asian countries? Again, nothing immediate, since the TPP wasn’t ratified. But it certainly could have impacted those businesses. Now, it serves as a bit of a warning call: Source domestically, or pay.
We’ll monitor this story as it develops.
