With the stroke of a pen on his first full weekday in office, Trump signaled that he plans to follow through on promises to take a more aggressive stance against foreign competitors as part of his “America First” approach.
WASHINGTON — President Trump upended the United States’ traditional, bipartisan trade policy Monday as he formally abandoned the ambitious, 12-nation Trans-Pacific Partnership brokered by his predecessor and declared an end to the era of multinational trade agreements that defined global economics for decades.
With the stroke of a pen on his first full weekday in office, Trump signaled that he plans to follow through on promises to take a more aggressive stance against foreign competitors as part of his “America First” approach. He effectively discarded long-standing Republican orthodoxy that expanding global trade was good for the world and America — and that the U.S. should help write the rules of international commerce.
Although the agreement had not been approved by Congress, Trump’s decision to withdraw President Obama’s signature trade achievement carried broad geopolitical implications in a fast-growing region. The deal, which was to link a dozen nations from Canada and Chile to Australia and Japan in a complex web of trade rules, was sold as a way to permanently tie the U.S. to East Asia and create an economic bulwark against a rising China.
Instead, Trump said U.S. workers would be protected against competition from low-wage countries like Vietnam and Malaysia, also parties to the deal.
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But some in both parties worry that China, which was not part of the agreement, will move to fill the economic vacuum as the U.S. looks inward, and will expand its sway over Asia and beyond.
The Seattle-based Washington Council on International Trade said TPP could have created as many as 26,000 additional jobs across the state, with exports rising for everything from apples to salmon to wheat to countries such as Japan and Vietnam. Lori Otto Punke, president of the Washington trade council, called it “a shame to let go of all those benefits.”
Trump’s decision to scrap the agreement reversed a free-trade strategy adopted by presidents of both parties dating back to the Cold War, and aligned him more with the political left. When he told a meeting of union leaders at the White House on Monday that he had just terminated the pact, they broke into applause.
“We’re going to stop the ridiculous trade deals that have taken everybody out of our country and taken companies out of our country, and it’s going to be reversed,” Trump told them, saying that from now on, the U.S. would sign trade deals only with individual allies. “I think you’re going to have a lot of companies come back to our country.”
Trump may also move quickly to renegotiate the North American Free Trade Agreement. He is scheduling meetings with the leaders of Canada and Mexico, the two main partners in that pact, which was negotiated by President George H.W. Bush and pushed through Congress by President Clinton. While NAFTA has been a major driver of U.S. trade for nearly two decades, it has long been divisive, with critics blaming it for lost jobs and lower wages.
But free-trade advocates said that in canceling the Pacific pact, Trump lost an agreement that had already renegotiated NAFTA under more modern rules governing intellectual property, internet access and agriculture, since both Mexico and Canada were signatories.
“There’s no doubt that this action will be seen as a huge, huge win for China,” Michael B. Froman, the trade representative who negotiated the pact for Obama, said in an interview. “For the Trump administration, after all this talk about being tough on China, for their first action to basically hand the keys to China and say we’re withdrawing from our leadership position in this region is geostrategically damaging.”
Some Republicans agreed. Sen. John McCain, R-Ariz., called Trump’s decision “a serious mistake” that would hurt the U.S. “It will send a troubling signal of American disengagement in the Asia-Pacific region at a time we can least afford it,” he said in a statement.
The Obama administration negotiated the trade pact for nearly eight years. House Speaker Paul Ryan and other congressional Republicans worked with Obama to pass legislation granting so-called fast-track authority to negotiate it over some Democratic objections. Obama never submitted the final agreement for approval amid vocal opposition.
The agreement, the largest regional trade accord ever, brought together the U.S. and 11 other nations in a free-trade zone for about 40 percent of the world’s economy. It was intended to lower tariffs while establishing rules for resolving trade disputes, setting patents and protecting intellectual property.
Obama officials argued that it benefited the U.S. by opening markets while giving up very little in return. In particular, it finally brought the U.S. and Japan, the world’s largest and third-largest economies, together in a free-trade pact.
Trump’s decision was a crushing blow for Japan, where Prime Minister Shinzo Abe spent considerable political capital to get the agreement through Parliament, which ratified it Friday. Just hours before Trump dispensed with it, Abe told Parliament that Tokyo would lobby the new administration on the merits of the deal.
Japan was the last to join the pact, which would give its manufacturers tariff-free access to export markets in the U.S. and other Asian countries but would bring its automakers into competition with lower-wage countries like Mexico. Abe became a strong enthusiast after making politically painful concessions on agricultural imports that the U.S. had sought.
China has already sought to capitalize by making a push to complete an alternative pact, the Regional Comprehensive Economic Partnership, which aims to unite 10 members of the Association of Southeast Asian Nations with Japan, South Korea, Australia, New Zealand and India.
“The U.S. will be seen as an unreliable partner both economically and perhaps even in the security arena,” said Victor Shih, an expert on China’s political economy at the University of California, San Diego. “While some countries in Asia have no choice but to be close to the U.S., others may begin to look to China.”
If Trump scrambled coalitions overseas, he did so at home, too. Democrats and labor groups praised his move. James Hoffa, general president of the Teamsters union, said Trump had “taken the first step toward fixing 30 years of bad trade policies.”
Trump has expressed his preference for bilateral trade agreements rather than the multinational pacts that administrations of both parties have pursued in recent decades. On Friday, Trump will welcome British Prime Minister Theresa May, elected herself last year on a populist wave, to the White House for his first face-to-face meeting with a foreign leader.
The agenda is expected to include the possibility of a bilateral trade agreement as Britain looks to realign its own economy after voting to exit the European Union.
Trump said Monday there will “be advantages” to companies that make their products in the United States and suggested he will impose a “substantial border tax” on foreign goods entering the country.
Trump met Monday morning with a group of top manufacturing leaders, including Elon Musk, the head of SpaceX, and the executives from Dell, Johnson & Johnson, Lockheed Martin, among others.