The United States under its new Chief Donald Trump is a different America and indeed, as he embarks upon making his “America First” slogan a reality, announcing to the world that U.S. will no longer be “taken advantage of” anymore; the rest of the world is resoundingly saying, “sure, we can do without America”.
Just days after being sworn in as President, Trump pulled out of the much debated Trans-Pacific Partnership (TPP) which was the brainchild and legacy of his predecessor Barrack Obama. But the eleven countries in the Pacific Rim sans the U.S. are now closer to signing the deal that would bring trade barriers down across several sectors among the partners which include Japan, Canada, Mexico, and Australia.
During the course of his campaigning and since he set foot in the Oval office, Trump has been clear that Americans are losing jobs at multiple levels while unemployment rates have been staggeringly low for years. He believes that American jobs are not only stolen by the influx of illegal immigrants and skilled persons coming into the U.S. through the H1B visa but also because American companies have been shifting operations overseas in favour of low costs havens.
His new tax plan announced days ago aims to substantially cut down taxes for these companies so they will have an incentive to stay on American soil and use American labour. Whether these tax reforms will work or not is contentious but it is safe to say, the direction Trump is taking America in is a deliberately different one from the America that took the first steps toward globalization and open markets.
The U.S. economy accounted for more 60 percent of the combined GDP of the then-twelve nations that were signing on TPP. After U.S. withdrawal; Australia, Japan and Canada will take the spotlight to carry a major portion of the agreement’s weight. TPP was known to be what analysts called “a hallmark of U.S. engagement with Asia” under the Obama administration to not only take the lead on the potentially game-changing trade deal of the times but to also counter the rising influence of China.
Even though Trump has been leveling blame at China for unfair trade practices that as per him none of the previous U.S. administrations took actions against—from incentivizing industries to shift operations to Chinese hinterlands to dumping its over production across the world at dirt cheap rates—his impulsiveness may have backfired. Analysts believe that by walking out of the deal like the TPP, he seems to have himself fueled a little of China’s vision for global economic domination. After all, TPP would have helped the U.S. to bolster ties with China’s neighbors, excluding China itself.
Some also contend that by not being part of the TPP, American industries will outsource more to Asia because in order for them to avail the concessions within the Asian trade deals, they will have to be physically located in Asia. This would have the opposite affect to what Trump believed his withdrawal from the TPP would manifest.
On the other side, China has been pushing an alternative vision for regional trade against the TPP under the Regional Comprehensive Economic Partnership (RCEP), with16 potential signatories including Japan, India and members of the Association of Southeast Asian Nations (ASEAN).
Other regional cooperation deals are also cropping up. Japan and ASEAN recently reached an economic partnership agreement covering investments and services that lower down barriers on foreign investment and improve trade in financial and telecommunications services.
The new America seems to have moved past its recent history of upholding ideals for free and open trade and combating protectionism. Ideals that ironically, it pioneered. Trump has been deliberating on whether to end NAFTA or not and it will no doubt hurt businesses in Canada, Mexico as well as the U.S. but these countries are now making contingency plans. Trump’s rhetoric however hasn’t changed. Even during his Asia tour, Trump reiterated that he will not allow for more American jobs to be lost and trade imbalances to exist further.
It is unlikely that these countries will get on board with him on the terms that he wants. With the way things stand, his policies will clearly not translate into desired outcomes. What he has yet to understand is what Micheal Froman, a former TPP negotiator succinctly stated: “As the U.S. retreats, the rest of the world is moving on”. And moving on it is, but with a much stronger force, whether with China or not, but definitely without America.
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