Trump’s trade plans will put his deal-making skills to the test
By JOSH BOAK
AP Economics Writer
President Donald Trump said he was protecting jobs as he officially pulled out from the proposed Trans-Pacific Partnership trade deal Monday.
But his ability to help the U.S. economy might depend on whether Trump can strike better deals on his own.
Most analysts say the 12-nation agreement, the product of years of negotiations during the previous administration, would have reduced prices and boosted sales abroad for automakers, farmers and tech companies.
But Trump vowed he could do better. The businessman who wrote “The Art of the Deal” sold himself as a sharper negotiator than his predecessor. He now plans to shun multinational deals and begin focusing on one-on-one agreements with other countries.
White House spokesman Sean Spicer told reporters Monday that the decision to abandon TPP “ushers in a new era of U.S. trade policy in which the Trump administration will pursue bilateral trade opportunities with allies around the globe.”
The Trump administration hasn’t spelled out many details about how it would structure these new trade deals to create and keep jobs. Anchoring his trade team would be Wilbur Ross, the billionaire investor in distressed companies who is Trump’s commerce secretary nominee; lawyer Robert Lighthizer, the U.S. trade representative nominee; and economist Peter Navarro, a fierce critic of China who would lead a new White House council on trade.
The White House has said it believes it is easier to negotiate bilateral agreements on equal terms, instead of a multinational pact such as TPP.
Mastering arcane details about labor standards and domestic goods could determine whether Trump can deliver on his promise. Trump could bargain for protections for workers that could be undermined by other sections of the agreement that give companies incentives to move abroad, said Lori Wallach, director of Public Citizen’s Trade Watch and an opponent of TPP.
Wallach stressed that voters will be able to measure Trump’s performance in monthly government reports about employment and trade – the best way to see firsthand if he fulfills his pledge to increase factory jobs and reduce the trade deficit.
The first test of that new approach will come early.
Trump is slated to meet Friday with British Prime Minister Theresa May, who is coming to discuss Britain’s departure from the European Union. The exit means May must begin negotiating new trade agreements that could reduce tariffs.
But the far bigger test will be Trump’s promise to renegotiate from the North American Free Trade Agreement. The president also has early meetings planned with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto, the NAFTA partners that account for 24 percent of U.S. imports.
Those negotiations could be tricky for U.S. workers because Trump’s victory has led to a decline in the Mexican peso. Part of Trump’s solution is to place a border tax as high as 35 percent on companies that move factories abroad and then sell back to U.S. consumers.
Saving factory jobs by amending trade agreements will prove difficult.
Foreign trade accounted for only 13 percent of lost U.S. factory jobs, according to a 2015 study at Ball State University’s Center for Business and Economic Research. Almost all that decline came from automation as manufacturers needed fewer workers.