The global view from the desk of Pablo Soria del Lachica indicates the global response to President-Elect Donald Trump’s economic policies holds a cautionary trading tale with powerful implications. President-Elect Trump’s protectionist agenda suggests dismantling the Trans-Pacific Partnership trade agreement, or TPP, likely to be accompanied by the unintended potential to initiate trade wars, depress global trade, and spark global recession. If the Trump administration chooses to impose increased tariffs on imports from China and Mexico, a 0.5 percent reduction in U.S. GDP could result, according to a Nov. 13, 2016 Business Insider article quoting Barclays chief US economist Michael Gapen. That reduction could go as high as a full percent, according to chief Citi economist Willem Buiter. Prices of goods in the US would likely rise, since parts for many items are manufactured overseas.
Destroying the TPP agreement after lengthy negotiations among 12 nations would also undermine US credibility not just in trade, but also in commitment. “To leave Asian partners hanging now would be disastrous for U.S. leadership in the region,” according to Euan Graham, a former U.K. foreign officer now studying regional security at Sydney’s Lowy Institute for International Policy. Further explaining the response to a TPP failure should the new administration deny passage, a U.S. Trade Representative was quoted “We’re a vote away from either cementing our leadership in the region or handing the keys of the castle to China.” Many experts believe that the deal is a critical point deciding whether the US or China will make future rules regarding global trade.
China, excluded from the TPP, is not waiting on the U.S. to move forward. Engaging in regional and bilateral agreements with other nations, talks with the EU, and a post Brexit agreement with the U.K., all agreements under consideration exclude the United States. Strengthening alliances with these Regional Comprehensive Economic Partnership, or RCEP nations, Pablo Soria de Lachica sees a strong bond is forming among Australia, China, India, Japan, Republic of Korea, New Zealand, and members of ten ASEAN member states, resulting in a weakened U.S. position. In an August 25, 2016 article in Bloomburg Businessweek, Bruce Einhorn notes that, ” Congressional rejection of Obama’s trade pact would provide a boost to RCEP,” focusing on improvements in trade agreements that strengthen the Asian dynamic. International trade scholar Giovanni Di Lieto of Melbourne’s Monash University notes, “China is using the RCEP to show they can drive international relations better than the Americans can,” sending a very big, strongly political message.
Pablo Soria de Lachica, with decades of global experience in international trade and stock brokerage, understands the intricate network of trade agreements and the ripple effects created by changing the rules. As a collaborator of Kartoshka, a sales, telemarketing, and customer support firm, Seria de Lachica is also a self-taught expert in FOREX trading, offering a broad range of competitive options and online trading tools suitable for both new and seasoned investors.
WSJ TPP Asian Setback: