US international trade policy under the new Trump administration

Publication | June 2017

Introduction

We offer a concise update on the new Trump administration’s approach to international trade policy, including international trade and investment treaties as well as the key influencers of trade policy in the new administration.

Treaties

  • President Trump withdrew the US from the Trans-Pacific Partnership (TPP), a cornerstone of President Obama’s international trade policy. The TPP included the following countries: the US, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The TPP had not entered into force yet and would in any event have required Congressional approval for the US to accede to it. In the run up to the November election, both presidential candidates announced their opposition to the TPP.
  • President Trump has also focused criticism on the North American Free Trade Agreement between the US, Canada, and Mexico (NAFTA) and indicated during his campaign that he may seek to renegotiate or withdraw from it. Recently, he appears to have softened his position with respect to Canada, instead seeking to “tweak” the agreement as it applied to bilateral US-Canada relations. While President Trump has not yet announced specific policy with respect to US-Mexico trade under the NAFTA, it appears his administration will take a more forceful stance with respect to the trade liberalization measures in the NAFTA insofar as they govern US-Mexico trade. The NAFTA, which entered into force in 1994, was primarily negotiated under President George H.W. Bush and ratified under President Bill Clinton. Its withdrawal provisions require a party, like the US, to give the other states party to the treaty at least six months’ notice of such withdrawal. No such notice has been given yet by the Trump administration.
  • The future of a bilateral investment treaty (BIT) between the US and China is now in doubt. As recently as 2015, the treaty was in the early stages of negotiations, with both parties “reaffirm[ing] [it] as a top economic priority.”1. In light of the positions of Trump’s trade representatives on trade with China (see below), passage of that BIT – at least in the form envisaged under the Obama administration – may be unlikely.
  • The Trump administration has taken no official position on the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU. Between the recent US presidential election and various national elections in the EU in 2017, the future of the TTIP – the text of which is not final and which has not yet entered into force – is in flux.

Trade representatives/leadership

  • Trump selected Peter Navarro as Assistant to the President and Director of Trade and Industrial Policy. In this position, Navarro heads the National Trade Council, a group created in 2017 under the auspices of the executive branch that is tasked with “advis[ing] the President on innovative strategies in trade negotiations, coordinat[ing] with other agencies to assess US manufacturing capabilities and the defense industrial base, and help[ing] match unemployed American workers with new opportunities in the skilled manufacturing sector.”2 Navarro, an academic and economist, has published extensively on China-US economic relations.
  • President Trump has nominated Robert Lighthizer to lead the Office of the US Trade Representative (USTR). The USTR, which was created in 1962, “negotiate[s] directly with foreign governments to create trade agreements, to resolve disputes, and to participate in global trade policy organizations.”. Lighthizer, who previously served as deputy trade representative under President Ronald Reagan, has criticized China’s economic policies towards the US and prior US administrations’ approach to US-China economic relations. Lighthizer is awaiting legislative hearings and approval before formally joining the Trump administration.
  • Other US government agencies, including the US Department of Commerce, may also influence international trade policy under the Trump administration. Wilbur Ross, Trump’s nominee to head the Department of Commerce, recently stated that amending NAFTA would be his top priority if confirmed to that position.


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Kevin  O'Gorman

Kevin O'Gorman

Houston