Trump takes aim at US trade policies
After his first full week in the Oval Office, President Donald Trump has shown that his time in office will be unlike any other in recent history. Over the last 18 months, Trump voiced his disapproval with the previous administrations’ trade deals, which, in his opinion, hurt the U.S. economy. The Trans-Pacific Partnership and North American Free Trade Agreement are the two deals Trump labeled as the clear sign that neither former President Barack Obama nor Hillary Clinton were capable enough to bring the United States back and regain its millions of lost jobs.
TPP is a 12-nation trade deal that was signed in early 2016 to improve trade relations and boost economies in developing countries. The Obama administration claimed the deal aimed “to strengthen economic ties and boost growth, including reducing tariffs.” The deal also covered over “40 percent of the world’s economy.”
Trump signed the executive order to withdraw the United States from TPP because the deal has cost Americans millions of jobs with even Democratic Sen. Bernie Sanders calling the deal a “disaster.” But those who supported the deal argued its main focus is to keep a close eye on China and raise U.S. influence in the Asia-Pacific region.
China’s growth in the 21st century has not gone unnoticed. Its economy is booming and so has its geo-political position as a world power. Some speculate that several nations joined TPP in order to ensure a greater U.S. presence in the region. The other deal on Trump’s first week agenda was NAFTA. Formed in 1994, the deal involves the countries of Canada, Mexico and United States.
Under former President Bill Clinton, the deal intended to, as Time Magazine writer Andrea Ford states, “promote economic growth by easing the movement of goods and services” between the three North American nations.
However, a hostile relationship between Trump and Mexican President Enrique Nieto may have put the trade deal in jeopardy. After the two leaders exchanged a few words on Twitter, Nieto tweeted that he would be willing to work with the United States for the benefit of both nations. For many including Alexia Fernandez Campbell of The Atlantic, this indicates “how Trump plans to renegotiate NAFTA: in the public sphere.” He also publically mentioned his intention to raise tariffs on Mexican imports as far as 20 percent and that he would use that money to pay for his border wall between Mexico and the United States.
These personal attacks on each other have had a huge impact not just on Trump but Mexico’s position in negotiations. Mexicans have been angered by Trump’s controversial comments over the last 18 months and have been invigorated with national pride; this puts Nieto, who already has low approval ratings, in a tough position heading into the country’s 2018 election. He is faced with two options: stand up to Trump and face the possibility of losing Mexico’s biggest trade partner or cooperate and possibly lose the respect of the people.
As of Monday, Jan. 30, any citizen from the nations of Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen were temporarily restricted from entering the United States. Trump’s overnight immigration ban came as a surprise to the markets, as all three major indexes recorded their biggest drops of the year.
As William Watts writes from MarketWatch, many top financial market bulls believe that Trump’s “pro-growth agenda” is a good thing for the economy and markets. But with talks of a border wall with Mexico and the sudden immigration ban, concerns have risen to the idea of whether or not it would be more difficult for Trump to “enact the tax cuts, deregulation and infrastructure spending.”
Despite the massive rally in the markets since Election Day, Trump’s new administration has brought with it a wave of uncertainty that could easily bring it back down. “When they focus on more controversial parts of the agenda, whether it’s immigration or trade, the market boos,” said Michael Arone, chief investment strategist at State Street Global Advisors.