Blocking Trans-Pacific Partnership (TPP) May Raise Local Prices Of Imported Goods and Make It Harder For American Companies To Export Locally Produced Goods
As one of his first executive orders, on Monday January 23 Trump canceled the Trans-Pacific Partnership (TPP) trade agreement.
The TPP covers 40% of global GDP, more than 10% of world trade, and includes 12 countries around the Pacific rim (both in Asia and the Americas). One of President Obama’s signature trade deals, the agreement eases trade regulations and limits tariffs between all member countries. It notably excludes China and India and includes the United States, leaving the U.S. in the driver’s seat of trade in this region (simply from the volume of goods consumed and produced).
Because Trump has blocked adoption of this agreement, Pacific Rim countries will likely proceed with the Regional Comprehensive Economic Partnership (RCEP) agreement, which is nearly identical to the TPP except that it excludes the United States and includes China. If the RCEP prevails, U.S. producers will find it more difficult to export goods and will sell less (because of higher export tariffs), while U.S. consumers will have to pay more for the products produced in these regions (because of higher import tariffs).