Willson: The risky cost of Trump’s economic policy

Lauren Willson

Editor’s Note: The views expressed in the following column are those of the writer only and do not necessarily represent the views of the Collegian or its editorial board.

During his campaign Donald Trump repeatedly promised that, if elected, he would shut down a trade deal known as the Trans-Pacific Partnership. True to his word, Trump signed an executive order on January 23rd declaring that the U.S. would no longer consent to the pact. On the same day Trump announced plans to renegotiate the North American Free Trade Agreement (NAFTA) and deliberations are tentatively set to begin in May.

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Very early in his administration Trump has made it clear that he is determined to change the way in which we trade—and interact—with other nations. Trump’s decisions to withdraw America from the TPP and renegotiate NAFTA are supported by the assertion that his actions will create American jobs and stimulate economic prosperity. However, international relations may suffer as a consequence, a ramification which, in the long run, may be far costlier than any trade deal in history.

In order to understand why Trump’s executive order concerning the TPP is significant one must have a semi-firm grasp of what the deal entails. Essentially the TPP is a proposed trade deal between 12 Pacific Rim countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam) that aims to strengthen international economic connections by removing tariffs and encouraging GDP-bolstering trade. In order to be ratified the U.S. would need to provide approval of the deal. In doing so a variety of highly prosperous and influential countries would be linked through a vast trade network, like a modern Silk Road. Indeed, if passed, the TPP would be the largest trade pact to date.

The international connections that would have resulted from enactment of the TPP might have given the U.S. an upper hand against the competitive Chinese economy. Additionally it could have served to ease economic and political tensions between the member nations. By killing the partnership, which the Obama administration worked on for almost eight years, Trump has practically ensured none of these things will happen. Consequently, nations that can no longer rely on the TPP may now turn to China for trade and investment.

Trump asserts that joining the partnership would result in the loss of American jobs to East-Asian nations where labor is significantly cheaper. This, in theory, would hurt U.S. workers and the companies who employ them. But one cannot know definitively that the passage of the TPP will have these effects. Perhaps the reason Trump is so vehemently opposed to the TPP is because he sees it as an extension of NAFTA, a pact whose effects cannot be clearly classified as good or bad.

The North American Free Trade Agreement is a trade pact between the nations of Mexico, Canada and the United States. It was established for basically the same reasons as the Trans-Pacific Partnership: to bolster trade, remove limiting tariffs and raise interest in corporate investment. Since its enactment over twenty years ago, NAFTA has elicited mixed reviews.

Some, such as Trump, argue that the agreement resulted in a number of detrimental effects. For instance the strength of American trade unions declined, U.S. jobs (especially in the manufacturing sector) were outsourced to Mexico and wages for some citizens decreased. Furthermore, increased industrialization came at the cost of environmental exploitation; in Canada shale fields destroyed natural spaces while massive factories in Mexico tore up the land. On the opposite end of the spectrum, those who support NAFTA point out that it greatly increased trade, removed much-despised tariffs and boosted member economies. In addition the cost of imported goods such as oil and food decreased.

Regardless of whether one believes NAFTA was a success or a failure, it is Trump who will be doing the negotiating with Mexico and Canada in the near future. And it was also Trump who withdrew the U.S. from TPP, thereby negating years of work not just by Obama, but the other 11 affiliated nations as well. Our president has done these things in the name of preservation and national primacy; he believes by cutting ties to other economies American fiscal health can be maintained and improved. Although focusing energy on domestic development will probably yield more jobs and boost GDP, one must consider what is being sacrificed in return. Is a slightly better economy really worth the dismantling of strategic, peace-preserving alliances?

Prior to entering the Oval Office Trump was first and foremost a businessman. It seems his entrepreneurial aspirations have carried over into the presidency, as demonstrated in his feverish attempts to stimulate the economy. Unfortunately I fear that decades working in the Tycooniverse has rendered Trump ignorant of anything that does not pertain to wealth or personal benefit. Maybe I’m just not the kind of person who’s motivated by money, but even if I were I doubt I would put revenue before relationships. President Trump, on the other hand, seems to have no qualms about doing this. Whether his actions will permanently damage foreign relations, only time will tell. Until then I’m just going to hope the NAFTA negotiations go well, because I love cheap Mexican avocados and I really don’t want prices on imported produce to skyrocket.