Eleven U.S. allies intend to sign a sweeping trade agreement Thursday in response to President Donald Trump’s proposed steel and aluminum tariffs.
Key U.S. trading partners, including Japan, Canada, and Australia, are among the countries joining forces to counter Trump’s tariffs on steel and aluminum imports, which he plans to implement Thursday afternoon without congressional approval. Their agreement will reportedly mirror the Trans-Pacific Partnership (TPP), which President Obama signed but Congress failed to ratify before Trump discarded it in one of his first acts as president.
Sans U.S. participation, the revived TPP, now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, will lower tariffs and introduce new trade rules affecting the consumption of some 500 million people, representing one seventh of the world’s economy. Once signed, the pact will spur an additional $147 billion in global income, according to The Peterson Institute for International Economics.
The Obama White House initially conceived of the original TPP as a way to spur free-market reforms in China and prevent the abuses that flow from the PRC’s so-called socialist market economy. But the very allies that once viewed the U.S. as a global leader in checking China’s influence now fear that Trump, unbound by the newly announced departure of free-trade proponent Gary Cohn from the White House, will retreat further into protectionism.
The U.S. has “gone from being a leader to actually being the No. 1 antagonist and No. 1 source of fear,” Jeffrey Wilson, head of research at the University of Western Australia’s Perth U.S.-Asia Center, told the New York Times. “If you’re a trade policy maker in Asia, your No. 1 fear is that Trump is going to take a swing at you. . . . The U.S. is really delivering the region to China at the moment.”
The absence of the U.S. will significantly weaken the agreement, which formerly affected roughly 40 percent of the world economy. Certain allies, including Japan — now the most powerful signatory to the pact — remain hopeful that Trump, or subsequent presidents, will come around and reenter the agreement.
Trump signaled a willingness to reconsider his position on the pact last year at the World Economic Forum, telling allies that, “If we did a substantially better deal, I would be open to TPP.”
Other nations that plan to sign the pact Thursday in Santiago, Chile, include Mexico, Vietnam, New Zealand, Chile, Malaysia, Peru, Singapore, and Brunei.