24.1.17

The U.S Leaves the Trans-Pacific Partnership

President Donald Trump signed an executive order pulling the United States out of the Trans-Pacific Partnership (TPP) free trade pact. The TPP was signed by all 12 parties – representing almost 40% of the global economy – in February 2016, but it was never approved by the U.S. Congress. Thus, with Monday’s order, Donald Trump has effectively ended the prospect of American participation in the deal, at least for the next four years. According to Trump, this is “a great thing for the American worker,” and Press Secretary Sean Spicer hinted that renegotiation of the North American Free Trade Agreement (NAFTA) will soon follow.
The Cipher Take: This executive order is not unexpected, but it has solidified Mr. Trump’s fiery anti-trade rhetoric with action. It now seems evident that U.S. trade policy is set to depart radically from years of presidential free trade initiatives. Whether this will translate into a period of outright protectionism, or whether Trump will simply use the threat of such measures as a hard-nosed negotiating tactic designed to extract new concessions from U.S. trading partners, is not yet clear. However, the TPP’s 11 other members – including Japan, Canada, and Australia – must now decide whether the pact is worth saving, even without the world’s largest economy.

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