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What Does the World Expect of President-elect Trump: Trade

November 8, 2016

Biggest trade related challenges:

  • Remaining competitive
  • Avoiding a trade war with Asia 
  • Addressing the growing income divide in the U.S.

Q: What is the greatest challenge facing the United States and trade relations?

A: President-elect Donald Trump has made no bones about his objections to trade agreements.. Under his leadership, the U.S. will not be ratifying the Trans Pacific Partnership (TPP) trade agreement with Asia, nor the Trans-Atlantic Trade and Investment Partnership deal with the European Union. Mr. Trump is also likely to try to renegotiate some of the 20 existing trade deals the United States has already signed, including the North American Free Trade Agreement or NAFTA.

The biggest challenge for the Trump administration will be to ensure that U.S. businesses do not lose out on opportunities to profit in overseas markets. Making sure U.S. businesses can remain competitive in Asia, which is the world’s most populous region with the most economic potential, should be an economic priority for Washington. It is important to keep in mind that Asian countries will be moving ahead with their own regional trade deals such as the Regional Economic Comprehensive Partnership agreement (RCEP), from which the United States is excluded.

The new administration needs to make sure U.S. businesses can operate in foreign markets that are open, transparent, and follow clear and established rules. Mr. Trump must avoid unpredictability, both for foreign goods, services, and businesses coming into the U.S., and for those going overseas.   

Q: What will Mr. Trump need to do to manage obstacles and expectations?

A: More than 95 percent of consumers in the world are outside of the United States, so American companies, both large and small, have no choice but to look outside borders if they are to flourish.

During the election cycle,trade became synonymous with lost economic opportunities. The issue was used as a scapegoat for the very real and growing income divide within the United States. That divide must not be ignored by the incoming administration.

One of the biggest reasons for that economic polarization is the technological revolution which is not just changing the manufacturing sector, but all industries from transportation to financial markets and education. Mr. Trump must make clear that with the right rules in place, trade can benefit consumers, create jobs, and enhance U.S. competitiveness. This should be an opportunity for the president elect to take public anger about economic dislocation and turn it into chance to invest in areas that have been neglected. For the United States to retain its competitive edge, the country must invest more in infrastructure and educate the workforce with skills that are required for an increasingly service sector-focused economic base.

Q: What are the prospects for trade and economic relations with Asia?

A: Mr. Trump must avoid a trade war with Asia. Too many U.S. business opportunities are at stake, American consumers will be hard hit, and U.S. jobs dependent on foreign investment will be affected if trade ties are severed. If the TPP is off the table, the United States needs to establish alternative trade rules that will ensure close economic ties that are at the foundation of strong political and security ties.

Without TPP, , the United States will still not have a bilateral trade agreement with Japan, which remains the world’s third largest economy. Making sure that U.S. agricultural products, automobiles, pharmaceuticals, and financial industries have access to Japanese markets, and do not lose out to countries like Australia that already do have free trade agreements with Japan, is critical.

The United States cannot afford not to be deeply invested in Asia. By backing out of the TPP after years of negotiating for the treaty, relations with the 11 other member countries including Japan, Vietnam, Malaysia, and Singapore will be hurt. U.S. credibility as a Pacific power will be questioned. Asia will undoubtedly remain the economic dynamo of the world. It is in the United States’ best interest to ensure that it continues to enjoy solid relations with its allies, and to allow U.S. businesses to remain competitive in the region.


Shihoko Goto

Shihoko Goto

Director, Indo-Pacific Program

Shihoko Goto is the director the Indo-Pacific Program at the Wilson Center. Her research focuses on the economics and politics of Japan, Taiwan, and South Korea, as well as US policy in Northeast Asia. A seasoned journalist and analyst, she has reported from Tokyo and Washington for Dow Jones and UPI on the global economy, international trade, and Asian markets. A columnist for The Diplomat magazine and contributing editor to The Globalist, she was previously a donor country relations officer for the World Bank and has been awarded fellowships from the East-West Center and the Knight Foundation, among others.

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