WASHINGTON -- President Donald Trump, in a surprising reversal, told a gathering of farm state lawmakers and governors Thursday morning that he was directing his advisers to look into rejoining the multicountry trade deal known as the Trans-Pacific Partnership, a deal he pulled out of within days of assuming the presidency.
Rejoining the 11-country pact could be a sharp reversal of fortune for many U.S. industries that stood to benefit from the trade agreement's favorable terms and Republican lawmakers who supported the pact. The deal, which was negotiated by President Barack Obama's administration, was largely viewed as a tool to prod China into making the type of economic changes that the United States and others have long wanted.
Both Democrats and Republicans attacked the deal during the presidential campaign, but many business leaders were disappointed when Trump withdrew from the agreement, arguing that the United States would end up with less favorable terms attempting to broker an array of individual trade pacts and that scrapping the deal would empower China.
Republicans in Congress have also been skeptical of Trump's tendencies on trade, and 25 Republican senators sent a letter to Trump urging him to re-engage with the pact "so that the American people can prosper from the tremendous opportunities that these trading partners bring."
Trump had remained sharply critical of the pact and said that he would instead negotiate trade agreements one on one, a tactic he says gives the United States better leverage over its trading partners.
Trump's opposition to multinational trade pacts like the Trans-Pacific Partnership and the North American Free Trade Agreement was a central part of his campaign for president in 2016 and accounted for some of his appeal to working-class voters. He argued that the deals were terribly negotiated, ripping off the U.S. and hurting American workers and manufacturing.
"The Trans-Pacific Partnership is another disaster done and pushed by special interests who want to rape our country," Trump said in June of 2016. "Just a continuing rape of our country. That's what it is, too. It's a harsh word -- it's a rape of our country. This is done by wealthy people that want to take advantage of us and that want to sign another partnership."
Rejoining the pact could be a complex task. The remaining 11 countries have spent months renegotiating a pact that lacks the U.S. market and finally agreed to a sweeping multinational deal this year. Eswar Prasad, a trade expert at Cornell University, said it was difficult to imagine that the United States would be "welcomed with open arms" by the current members or have much leverage in reshaping the deal.
Lawmakers on Capitol Hill have been renewing their pitches for the pact -- rather than Trump's threats of steep tariffs on steel and other products -- as a way to counter China on trade. Sen. Ron Johnson, R-Wis., was among a handful of senators who recently visited China to meet with government and business leaders there. He said it's time to work with a coalition of trading partners to increase pressure on China.
"I have to believe President Xi [Jinping] is smiling all the way to regional domination as a result of our pulling out of TPP. I don't think we can get back into the TPP soon enough," Johnson said when talking to reporters about the trip.
Trump's decision to reconsider the deal comes as the White House tries to find ways to protect the agriculture sector, which could be badly damaged by the president's trade approach.
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The risk of an escalating trade war with China has panicked American farmers and ranchers, who send many of their products abroad. China has responded to Trump's threat of tariffs on as much as $150 billion worth of Chinese goods by placing its own tariffs on U.S. pork and threatening taxes on soybeans, sorghum, corn and beef.
China's aggressive response to Trump's tariffs is aimed squarely at goods produced in the U.S. heartland, a region that helped send him to the White House. A trade war with China could be particularly devastating to rural economies, especially for pig farmers and soybean and corn growers. Nearly two-thirds of U.S. soybean exports go to China.
The Trump administration says it has ordered the Agriculture Department to create a program to help farmers hurt by trade. Trade advisers say the department could use a program known as the Commodity Credit Corp. to purchase potentially billions of dollars of crops from American farmers harmed by tariffs.
But such a program would be time-consuming and costly and would come as the budget deficit continues to increase. Many American agriculturalists maintain that the easiest way to help them is to avoid a trade war with China in the first place. And many economists say the best way to combat a rising China and pressure it to open its market is through multilateral trade deals, such as the Trans-Pacific Partnership, which create favorable trading terms for participants.
"The best thing the United States can do to push back against Chinese cheating now is to lead the other eleven Pacific nations that believe in free trade and the rule of law. It is good news that today the President directed [economic adviser] Larry Kudlow and [U.S. Trade Representative Robert] Lighthizer to negotiate U.S. entry into TPP," Sen. Ben Sasse, R-Neb., said in a statement.
Among those who supported the Trans-Pacific Partnership was Trump's nominee to head the State Department, Mike Pompeo, who said during his confirmation hearing Thursday that the United States needs "to be deeply engaged" in dealing with China.
On Thursday, Republican senators, congressmen and governors from Iowa, Nebraska, North Dakota, Kansas, Texas and other farming states met with the president to express their concerns.
Sen. Chuck Grassley, R-Iowa, said in a tweet Thursday that the farm state senators who attended the meeting had each expressed concerns about "nervousness among farmers" because of Chinese retaliation.
Information for this article was contributed by Ken Thomas, Kevin Freking, Catherine Lucey, Jill Colvin, Paul Wiseman, Matthew Daly and James MacPherson of The Associated Press and by Erica Werner, Seung Min Kim and Damian Paletta of Bloomberg News.
Business on 04/13/2018