President Trump wants tariffs, he wants to nix or renegotiate trade deals so that everything’s “fair” and he wants to reduce the U.S. trade deficit—the problem with all of that, however, is that while his administration works on it, the rest of the world is carrying on with trade and the U.S. seems to be getting left behind.
In looking at Trump’s first 300 days in office, it’s largely been more talk than anything else when it comes to trade.
Speaking at the United States Fashion Industry Association’s Annual Apparel Importers Trade and Transportation Conference in New York Wednesday, John Fee, a partner at Alston & Bird law firm who focuses on trade, said he would put Trump’s tenure to date between two book ends, starting with the launch of the America First ethos at the inauguration, and ending with his recent speech debasing multilateral trade deals at the recent APEC summit.
Between those book ends, Fee said, the remaining Trans-Pacific Partnership countries have continued their talks and agreed on a way to carry the trade deal forward, the EU is working on a trade agreement with Vietnam (which was supposed to be the biggest beneficiary country of the TPP pact), and talks are ongoing for the Regional Comprehensive Economic Partnership (RCEP)—also known as TPP’s rival—which includes China and India but not the U.S.
[Read more about trade around Trump: Infographic: The U.S. May Be Losing Its Grip as Global Trade Leader]
“Within those 298 days we started with America First and we are now at America alone,” Fee said.
The outlook on NAFTA
The entire NAFTA renegotiation could be considered posturing, though Fee said “sabotage” might be more accurate.
The U.S. demands that have ended up on the table have in different instances been distasteful to both Canada and Mexico, and have largely been the cause of the renegotiation’s paltry forward movement.
“It’s almost as if they’re designed to ruin the renegotiation,” added David Spooner, partner at Barnes & Thornburg LLP and the former chief textile and apparel negotiator at the Office of the United States Trade Representative. “But that’s a vast improvement of what could have happened,” which would have been scrapping the deals altogether, he said.
The Republican party has largely been on the free trade side of things, but many are remaining mum in the face of apparent protectionist plans. As Fee put it, they’ve become “invertebrate,” and he thinks they’re hardly likely to put up a fight if the NAFTA renegotiations start heading in the no deal direction.
“Whatever this administration does with NAFTA, the Republicans are going to cave,” Fee said. “They love this America First business.”
What’s more, he added, thinking that our free trade deals are going to reduce the U.S. deficit, is an idea that may be more farfetched than fact.
“How is renegotiating NAFTA going to encourage Mexico to buy more beans and corn from the U.S. instead of Brazil?” he posed.
The NAFTA agreement also includes Tariff Preference Levels (TPLs), which maximize the ability to use North American content in global supply chains. The United States Trade Representative has proposed eliminating those TPLs, which would make it harder to do things like produce duty free apparel in Mexico.
“It’s a misguided proposal, it would only drive apparel production in Asia,” Spooner said.
The outlook on TPP 11
The 11 remaining TPP countries the U.S. dumped in January are trying to pick themselves up and carry on without the deal’s leader, and so far they’ve at least come to an agreement about the framework for moving forward.
What happens now could go either way, depending on who you ask.
“I’m really happy to see TPP go forward even if the U.S. isn’t with it. I think it’s important to send that message about globalization,” USFIA president Julie K. Hughes said in a separate session at the conference Wednesday. She also thinks the U.S. may look to rekindle what would have been a flame. “If TPP really does go ahead and go into effect, the United States will eventually go back to the fold.”
Auggie Tantillo, president of the National Council of Textile Organizations, however, doesn’t think so at all.
“I’m a pessimist on TPP 11. I don’t think it’s going to happen,” he said. “It’s kind of like having a party and not serving alcohol, or food, or dancing. People are going to leave pretty quickly. That’s what the environment is like without the U.S.”
That said, from Tantillo’s perspective, the U.S. also won’t miss out on much if TPP carries on without it.
“I don’t think it’s a big deal for us in terms of the fact that we have free trade agreements with most of those countries,” Tantillo said.