President-Elect Trump’s threat to withdraw the U.S. from the Trans-Pacific Partnership (TPP) should be taken seriously, despite how mercurial he has already proven to be in failing to follow through on a variety of other campaign promises. Withdrawal from the trade pact is a critical part of the core commitments Trump made to his constituency. Given that he has the Congress in his pocket for the next two years (at least), and that they will be similarly anxious to be seen as delivering on that particular promise, it should be expected that the U.S. will indeed be withdrawn from the pact.
If the pact had not been negotiated in such secrecy, and if the perception on the U.S. street was not that it benefited big business at the expense of the average working person, perhaps momentum would not be on Trump’s and the Republicans’ side. But the truth is that the way the pact was negotiated and kept in total secrecy left a rightfully sour taste in many peoples’ mouths. That has only exacerbated the economic nationalism, isolationist tendencies, and rise of the right that were already well underway in the U.S. and much of the rest of the world prior to Trump’s rise to power.
Assuming that the U.S. withdrawal occurs in the early part of 2017, what are some of the political and economic implications that may be expected? First and foremost, the U.S. will succeed in shooting itself in the foot by making it more difficult and costly to export its goods to the rest of the world, but also by ceding the ability to have a primary role in shaping the coming 21st century global trade architecture. The knee-jerk reaction Trump is succumbing to and promoting is simply self-defeating in the long term.
Second, while economic nationalism and isolationism ultimately end up hurting the nations that embrace them, it just so happens that what the U.S. does (or doesn’t do) still matters to the rest of the world…