Trump kills Obama’s Trans Pacific Partnership (“TPP”)

In one of his very first actions as President, Donald Trump has signed an Executive Order pulling the US out of the Trans Pacific Partnership (“TPP”).

Trump’s order is not surprising, having been clearly signalled by him during the Presidential election.   The TPP fits ill with Trump’s more protectionist policies – clearly signalled by him in his Inauguration Day Address – and was unpopular in the US.  Importantly during the US election Hillary Clinton – who had previously a supporter – also said (rather unconvincingly) that she opposed it.

I would add that whilst the TPP was heavily promoted by the Obama administration, the US Congress has never ratified it, which is why Trump has been able to end the US’s participation in it by Executive Order.

A point that is rarely made about TPP, as well as about TTIP (the “Trans-Atlantic Trade and Investment Partnership”) – the analogous trade deal the Obama administration was negotiating with the EU – is that their primary purpose was geopolitical: to bind the Asian and European economies more closely to the US.  In both cases TPP and TTIP were ultimately targeted against what the Obama administration saw as the US’s geopolitical competitors – Russia and China – in an effort to prevent the US’s European and East Asian allies from drawing closer to these countries as a result of trade connections.  TPP and TTIP were intended to prevent this by integrating the European and East Asian economies more closely with that of the US.

In the case of TTIP this was less obvious because EU-Russia trade – though having a huge potential – is still very much at its early stage.  However in the case of TPP it was entirely transparent, with TPP clearly intended to draw other Asia economies away from China, and to defeat China’s rival project known as the Regional Comprehensive Economic Partnership (“RCEP”).

As I have previously discussed, as a hardheaded businessman Donald Trump is fundamentally uninterested in grand geopolitical strategies, and he is not prepared to sacrifice the US’s economic interests (as he understands them) in order to achieve some grand geopolitical goal.  Indeed his Inaugural Address said as much.  In this he differs not just from the Obama administration, but from every other US administration since Harry Truman’s.

With TPP gone, there is a strong probability that Trump is planning to pull out of the negotiations for TTIP, and there are also strong indications that he is looking to renegotiate NAFTA (the “North Atlantic Free Trade Agreement”) with Mexico as well, irrespective of the fact that NAFTA has been in operation since 1994.

It seems that when Trump signalled in his Inaugural Address that he is moving away from free trade, and from trade agreements which place the US’s geopolitical strategies above what Trump sees as its economic interests, Trump is being as good as his word.