When it became impossible to sell the Trans-Pacific Partnership (TPP) on its economic merits, proponents of the deal began to argue for it as a way to contain China’s power in the region. Thomas Friedman picks up this line and runs with it in his latest column.
“Trump came into office vowing to end the trade imbalance with China — a worthy goal. And what was his first move? To tear up the Trans-Pacific Partnership, the trade deal that would have put the U.S. at the helm of a 12-nation trading bloc built around U.S. interests and values, potentially eliminating some 18,000 tariffs on U.S. goods and controlling 40 percent of global G.D.P. And China was not in the group. That’s called leverage.
“Trump just ripped up the TPP to “satisfy the base” and is now left begging China for trade crumbs, with little leverage. And because he needs China’s help in dealing with North Korea, he has even less leverage on trade.”
Let’s see, we’re eliminating 18,000 tariffs. That sounds really impressive, except the vast majority of these tariffs were near zero anyhow. Admittedly, a zero tariff is more supportive of trade than a tariff of 1.0 percent, but it’s not exactly going to lead to a flood of exports. It has roughly the same impact as a 1.0 percent decline in the value of the dollar, the sort of change in currency values that we often see in a single day.
The touting of the number of tariffs, rather than the impact on trade is the sort of cheap trick propagandists resort to when they can’t make a serious argument. It’s worth also noting that the 18,000 tariff figure includes many altogether meaningless tariffs, like Brunei’s tariffs on ski boots made in the United States and tariffs on items that are already banned from international trade, like shark fins.
Serious efforts to evaluate the impact of the TPP on the economy showed it having very little impact since trade is already very open between the countries in the pact. (The U.S. already has trade deals with six of the eleven other countries in the pact.) The United States International Trade Commission projected that the pact would boost GDP growth by an average of 0.015 percentage points over the next fifteen years. And this projection did not include any negative impact from the higher patent, copyright, and related protections that are a major feature of the deal.
