Washington: President Donald Trump began recasting America's role in the global economy Monday, canceling an agreement for a sweeping trade deal with Asia as one of his first official White House actions.
- Mr Trump signed executive order to withdraw from TransPacific Partnership
- The move indicated that Mr Trump's tough trade talk is being executed
- Economists warn that many of his proposals could backfire on US economy
After meeting with business executives to discuss the U.S. manufacturing industry, Trump headed to the Oval Office to sign an executive order formally ending the United States' participation in the TransPacific Partnership. The move was largely symbolic -- the deal was unlikely to make it through Congress -- but served to signal that Trump's tough talk on trade during the campaign will carry over to his new administration.
That could point to contentious negotiations over the North American Free Trade Agreement down the road. Trump repeatedly promised to reopen the 22-year-old deal with Mexico and Canada while on the campaign trail, and he reiterated his threat to punish U.S. companies that build factories abroad in brief remarks on Monday.
Trump's protectionist rhetoric is part of a global backlash against the drive toward greater internationalization that has existed since the end of World War II. British Prime Minister Theresa May, who is in the midst of navigating her country's own break from established trading partners, is slated to visit with Trump later this week. A White House spokesman said meetings with Canadian Prime Minister Justin Trudeau and Mexican Prime Minister Enrique Pena Nieto are in the works.
"What we want is fair trade," Trump said during his meeting with executives. "And we're gonna treat countries fairly, but they have to treat us fairly."
Among the business leaders Trump met with Monday was Dow Chemical Chief Executive Andrew Liveris, who said the the president tasked the executives to return in 30 days with a plan to shore up the manufacturing industry. He said there was extensive discussion of Trump's threat to impose border tax on U.S. companies that build factories in other countries and ship the goods back home -- a proposal that is shaping up to be a centerpiece of Trump's trade policy.
"I would take the president at his word here," Liveris said. "He's not going to do anything to harm competitiveness. He's going to actually make us all more competitive."
Still, it remains unclear exactly how the tax would be implemented. Testifying before the Senate finance committee last week, Trump's nominee to lead the Treasury Department said any border tax would be targeted at specific businesses. However, the president does not have the power to levy taxes, and international trade experts have warned singling out companies could violate existing treaties.
House Speaker Paul Ryan has proposed allowing businesses that export goods to deduct many of their expenses, while those that import would not receive the same benefit. But in a recent interview with the Wall Street Journal, Trump dismissed the plan, known as border adjustment, as "too complicated."
Economists have warned that many of Trump's proposals -- including suggestions that he would impose blanket double-digit tariffs on goods from Mexico and China -- could backfire on the American economy by causing prices to rise or igniting a trade war. And business groups such as the U.S. Chamber of Commerce had lobbied extensively for passage of TPP, touting the deal as an engine of job growth and an important check on China's growing ambitions.
"TPP withdrawal will slow US [economic] growth, cost American jobs, & weaken US standing in Asia/world," said Richard Haas, president of the Council on Foreign Relations, said in a tweet early Monday. "China could well be principal beneficiary."
But other industry groups argued that Trump's approach would better leverage America's status as the world's largest economy. Scott Paul, president of the Alliance for American Manufacturing, said his group is hoping that opening up NAFTA could provide more leeway to combat currency manipulation in countries outside the agreement. His group, which represents both industry and unions, is also seeking more stringent rules of origin that dictate how much production must occur with member countries to qualify for free trade status.
"The details are going to matter a lot," Paul said. "Renegotiating NAFTA obviously entails some risks and some rewards."
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