Trump Follows Through on Quitting the TPP — and What That Means for Jobs and Trade

January 23rd 2017

Kyle Jaeger

President Donald Trump made good on his promise to abandon the Trans-Pacific Partnership (TPP) on Monday, signing an executive order that formally withdraws the U.S. from the Asian-Pacific trade deal. The president framed the move as the first in a series of steps meant to revitalize the U.S. manufacturing industry.

The congressional response to the TPP decision has been mixed, with Vermont Sen. Bernie Sanders expressing support for the withdrawal, and pledging to work with Trump on a new trade policy, and Arizona Sen. John McCain (R) condemning the order as a "serious mistake that will have lasting consequences for America’s economy and our strategic position in the Asia-Pacific region." Though Trump claimed the order was "a great thing for the American worker" on Monday, economists aren't so sure.

Joshua Meltzer, a senior fellow in the Global Economy and Development program at the Brookings Institution, told ATTN: that the executive order is a "manifestation of a complete misunderstanding by [Trump] and his key economic people of the role of trade in the U.S. economy."

"The direction that manufacturing has gone in the United States is one that is sophisticated and requires increasingly high-skilled jobs and is increasingly focused on high-level, more technical, high value-added products," he said. "The challenges that have come from loss of jobs in the manufacturing sector — particularly low-skilled jobs — have been going on for decades. They were not going to be negatively impacted by the TPP anyway and require a completely different policy response to address."


Exiting the TPP — which removed trade barriers between the U.S. and 11 other countries primarily located along the Pacific Rim — represents a "drastic reversal of decades of economic policy in which presidents of both parties have lowered trade barriers and expanded ties around the world," The New York Times reported. But for observers of Trump's presidential campaign, the withdrawal comes as little surprise. It was a key tenet of the president's "America first" economic platform.

Some economists have voiced concerns about the trade pact's potential impact on American workers.


Last year, researchers at Tufts University released a working paper that warned of "increasing inequality and job losses in all [TPP] participating economies." Though the deal would generate economic growth in participating countries, including increased exports and GDP, the economists predicted that about 770,000 jobs would be lost as a consequence of the TPP, "with the largest losses occurring in the United States."

But Meltzer argued that abandoning the TPP would not get the U.S. any closer to Trump's stated goal of revamping domestic manufacturing because it ignores the dynamic forces that have contributed to the industry's decline. He agreed that the executive order represented a dramatic shift in U.S. trade policy.

"It's a reversal in a number of fronts," Meltzer said. "One is certainly the willingness of the president to harm the U.S. economy on day one of his administration. The second is that it signals enormous uncertainty to the rest of the world about the continuity of U.S. economic policy and the ability for other countries to place trust and rest political capital in following U.S. leadership on economic policies going forward."

What does the TPP withdrawal signal about Trump's trade policy going forward?

In addition to Monday's executive order, Trump is also planning to hold discussions with foreign leaders in order to renegotiate the North American Free Trade Agreement (NAFTA) — a deal meant to spur trade between the U.S., Mexico, and Canada — NBC News reported. The logic behind these sweeping decisions, according to Trump, is that the U.S. has failed to effectively negotiate international trade deals that directly benefit American workers, regardless of their overall impact on economic growth.

From here on out, the U.S. is going to pursue "one-on-one" trade deals, the president told union leaders during a meeting Monday.

"If somebody misbehaves, we’re going to send them a letter of termination: 30 days and they’ll either straighten it out or we’re gone — not one of these deals where you can’t get out of them and it’s a disaster," Trump said. "We’re going to have plenty of trade, but TPP wasn’t the right way. So we’re going back to those countries — one-on-one — and that’ll be beautiful."