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Talk about hitting the ground running.
As my colleague Larry Edelson reported yesterday, on President Trump’s first day in office, he kept his campaign promise to tear up trade agreements unfavorable to the U.S. by withdrawing from Trans-Pacific Partnership talks, and promising to renegotiate NAFTA too.
With that, all signs are pointing to a global trade war and to perhaps a new cold war with China, one of Trump’s favorite targets, aside from Mexico.
So who stands to win and who could lose the most from trashing TPP?
Winner: China exports to the rest of Asia.
Loser: U.S. political influence in East Asia.
The truth is, officials in Beijing were celebrating just as much as those in the Oval Office yesterday after the TPP decision.
Remember, China was excluded from TPP negotiations. If the deal had been done, it could have given the U.S. “significant influence in dictating trade policy across East Asia,” according to Bloomberg.
Ironically, America stands to lose more trade business to China as a result.
At present, the U.S. does almost $10 billion more in trade annually with the remaining members of TPP than does China. Expect that gap to close quickly now that Uncle Sam has dropped out.
With the U.S. now absent from TPP, China will be more than happy to fill the void and expand its influence in the region with its own version, already in the works.
| If this is indeed the opening salvo in a new trade war, it looks like the first shot from the U.S. backfired. |
The Regional Comprehensive Economic Partnership, which coincidentally excludes the U.S., is likely to move ahead with more enthusiastic participation from other Asian nations, and with China at the helm.
At the same time, China is expanding the Asian Investment Infrastructure Bank (AIIB), a key cog in the nation’s plans to buildout the new Silk Road – westbound trade routes, overland and by sea, from China through the Middle East and into Europe.
Twenty-five countries have already signed on to the AIIB this year, but the U.S. is also excluded.
Trump is right about one aspect of TPP, it wouldn’t have amounted to much to the U.S. economy anyway. However, geopolitically speaking, the U.S. loses significant influence over affairs in fast-growing East Asia, giving China the green light to write its own terms of trade in the region, in the absence of Uncle Sam’s influence.
If this is indeed the opening salvo in a new trade war, it looks like the first shot from the U.S. backfired.
Good investing,
Mike Burnick
Director of Research
Mike Burnick, with 30 years of professional investment experience, is the Executive Director for The Edelson Institute, where he is the editor of Real Wealth Report, Gold Mining Millionaire, and E-Wave Trader. Mike has been a Registered Investment Adviser and portfolio manager responsible for the day-to-day operations of a mutual fund. He also served as Director of Research for Weiss Capital Management, where he assisted with trading and asset-allocation responsibilities for a $5 million ETF portfolio.
{ 52 comments }
They will prefer the largest closed autarchic market run by a totalitarian dictatorship to the largest open free market in the world. And they will willingly submit to Chinese hegemony and financial domination. Is that true of India? Japan? South Korea? Indonesia? Why is every one jumping to dire conclusions after only a week of Trumpism? He hasn’t begun to complete his trade agenda with China in particular. Wait a few hours at least before calling doomsday.
What I took out of his article was that publicly proclaiming were out, without saying we are in, in so many other ways we could have been, is short cited. I get that he said it in the campaign, but this signaled to the other tpp nations that we are out of the tpp which is an very complex arrangement that we very well can still profit from if he has someone really good working on it.
Amen.
Indeed.
I would hold off on using “free market” for the US under Trump. His administration seems despotic already is looking more toward a 1930’s style protected market for US companies.
I think you are being overly dramatic with this article. $50b isn’t a lot of money. We are the nation that consumes the most. They all need us to buy their products.Not the other way around.
Then why were the terms of the TPP kept secret from the American people? From what I have read, the TPP would have set up a EU-style agency that could override the laws of the participating countries, aka LOSS OF SOVEREIGNTY. I am fed up with these corporate (not free) trade deals (NAFTA, GATT, WTO) that don’t benefit the people, but only the corporate elites. I favor bilateral deals to reduce trade barriers, not these monstrosities like TPP.
USA 1, Globalists 0
i agree with joe !
Trump will re-negotiate with each of those countries – individually. These countries cannot afford to lose the U.S. market.
And all is not clear sailing for China. Indeed, China is starting to grate on the sensibilities of a lot of countries with their heavy handedness power grabs (witness the Spratlys). In Africa, China has gone so far as to urge the leaders of various countries to reject democracy in favor of dictatorships. These people are not stupid as to their motives.
Based on your article, U have to forgive the newcomer, 4 he does NOT fully know what he has done nor what he is about to do.
TRADE MORE TO BUSINESS
What do you want to say please?
don’t ha ha too loud, wait until material in containers from china are not allowed to dock, You do not remember the embargo, no Russian ship allowed to dock, hence the Morflot container line terminal in the port of Montreal Quebec Canada flourished, Russia paid for the unloading switches, they had no choice, neither will china, and all the CO’s of American Co.’s that ran a way to China to cheap manufacture will be trapped off shore with their loads. Even if the Canadians unload, Canada is a foreign Country so import tax may apply. either way Trump will win usa jobs get filled. and your trade imbalance equals
“..either way Trump will win usa jobs get filled. and your trade imbalance equals..”
Eh? Make sense in your words please, or go rant somewhere else.
great comment John ..
China restricts how we do business in CHINA ,
so lets do like wise for China here in USA
!
There was always something very sinister about TPP. Whenever our government (under the Obama administration) has failed to let the American public in on the negotiations, we have been duped by the results! ie. the Iran negotiations; the Affordable Care Act; and the TPP if it had been passed.
You are wrong that we have lost political influence in SEA. We are just as important to the countries of SEA as we always have been since WWII. By trashing the TPP, we just aren’t being as absorbed into alliances involving may nations, that mimic NAFDA, NATO, SEATO, and some other entangling alliances that I believe are still on the books. There is nothing to stop us from negotiating for trade agreements with the same countries individually with perhaps the same, or better, results.
Larry is obsessed with the Far East.
It is interesting but anyone who has traveled
to different countries and done business with
them understands that China is not going to become
the replacement Super Power to the world. To be a
leader people and countries must follow. No one I
have ever met is fond of following the Chinese.
Now look at the mess President Chump has gotten us into over the TPP
Here in Australia I see our politicians running around like a bunch of headless chooks not knowing whether Japan will opt out if China would be admitted to the TPP and/or the consequence of choosing to allow more US military bases on Australian soil.
I don’t see the Chinese island bases as a threat to other countries in the region any more than those 700 US offshore bases that worry Vladimir Putin even though they could appear confronting.
I suggest we take some cool aid and simply ignore the possibility of hostilities.
That’s funny, we were in Australia and everyone loved the U.S. who saved them from becoming Japanese, Australia is a tiny insignificant cog in the wheel which has tried to become impoeratnt by growing their presence in S.E. Asia, mainly no doubt through their Commonwealth connections, Australia is also fairly Left Wing because it is populated by mainly ex Brits who could not make it in the U.K. China is far more dangerous to Australia!
I’m not sure I buy this whole trade war line of thinking that has been floated about for quite awhile since trump started talking tariffs. And, I’m not sure I believe the angle that the other Asian countries are going to flock to China. If I were in charge of one of these Asian countries why would I want to hook my trade to a Communist Dictatorship? You’re not going to start a business there because China will own 51% and they’ll steal any intellectual property associated with it. You’re not going to be able to manufacture anything cheaper than China. They have slave labor and the Gov’t subsidizes whatever they need to in order to have the advantage. I see very little advantage to one of these countries NOT waiting to see what we have to offer. They know we’re going to and they can negotiate from their perspective not as a conglomerate. I’m just not buying the whole premise.
Very dramatic! The Chinese may gain in trade with their Asian neighbors but will never control the life of their SE Asian neighbors. Duterte from Philippines is playing and so are several other elected leaders in Myanmar, Indonesia, Vietnam. USA has been a safety umbrella for SE Asia, particularly Japan, South Korea, and Taiwan for decades.
The USA could buy “significant influence in dictating trade policy across East Asia” if we were willing to sacrifice a few million jobs to pay for it. We have more free trade today than we have ever had. Where is the prosperity those past free trade agreement promised? NAFTA was going to give us high paying jobs, stop illegal immigration, and curtail drug trafficking.
Free trade is an Ivory Tower theory surrounded by a bodyguard of lies. Advocates claim great things but deliver nothing but illusion. Voters elected Trump because they started believing their own eyes instead of the elites who have been pushing snake oil for decades.
A close look at our real world experience with tariffs tells us that, unlike free trade, tariffs actually produce prosperity.
Go Trump.
Wait until the Chinese want the money owed to them .
The dollar is worth nothing ,we are beggar nation we owe the world billions.
Now we have a so call bussiness man he will screw you has he has done before in is bankruptcy.
But I don’t think the Chinese government will let him get away with any thing.the
Way Amerlcan do.
Always thought he will start a war
This going to be the last president the US will have that is what believe.
God or who ever please help the US we have a lots of morrons.
This article itself starts with a fallacy. The author says that a “trade war” will interrupt our “influence” in Asia.
That is ridiculous. Even after our corporations moving to Asia to manufacture and sell here, and “kissing” China around the block, WE have no influence there.
China can only be expected to follow its own goals for its own benefit. We have no influence there. We never did.
sanjosemike
Bilateral trade that benefits both parties makes more sense than being snookered by a Trade Pact Group that is another political trap just like the UN.
Not that I agree with everything said but. Every world power has eventually lost it’s position. No nation has ever had so many parallels to Rome before it’s fall. The salvation lies in optimizing the new reality, not denying and trying to fight against it
Point, and a lot of good counter points (all of them) in the comments section. Great job guys! Thanks.
China has robbed us long enough.
As much as I admire and support President Trump,he may well find “American-assembled”to be a more realistic goal than “American-made”.I worked in electronics for 16 yrs. before retirement,and while most of our base “raw boards” were made here,the components that went on them were sourced from all over the world.We did use a coil that was made by a Native-American owned Co. based in Northern Michigan for some years-how’s that for irony?
Globalization in manufacturing is here to stay,and in fact is an absolute neccessity for virtually every aspect of modern living.Personally,I do not believe the young people of today would ever be content(even for the high pay) to do the mind -numbing repetive work I did-they have better ideas–for example,my daughter and her freinds who work in real estate,are convinced they can create eco-freindly,storm-resistant housing,without a penny of government help(There Is Hope!)
Work for fair trade for all,not trade wars….
Steve R, the World is awash with oil, the U.S. has been curtailed in production because Obhammer was a Lefty and had to be subservient to his base who wish to diminish the power of the U.S. You can never have a New World Order controlling everyone while the Crazy U.S. citizens can resist their Government. The U.S. will now become the World’s leading supplier of Oil, Gas, LPG and remain in the forefront of oil production technology, don’t forget, our U.K. partners are also world leaders in oil production and we are going to get much closer after Brexit! We will also help Russia to produce!
I’m afraid Trump’s trade war shenanigans are going to cause prices of the goods we buy to inflate. Mexico is our third largest partner with oil. When that goes up too look out. The poor working stiff won’t understand why all his stuff will cost more.
Mike
This is completely inflammatory rhetoric. DJT wants FAIR trade not FREE trade. China has been eating our lunch for decades which was initially essential to advance their economy. That was fair, however as a seventy percent consumption economy we have a right and responsibility to our fellow countrymen to pursue fairness and not just be taken advantage of. Just look at the damage being done to our steel industry. Or maybe you would like to see our steel industry shut down and undermined by imports. As far as China is concerned. If they want to play on a world stage then they must learn and respect the rights of other countries.
Don’t you remember Obama care? You could read it but nobody did. And we had to implement it to find out how good it is. We found out and this became one of the many nicks that cost Killary the Holy Grail.
Ocare was only a warm up. Because with TPP they tried to gift us with another good thing we dare not refuse. But we couldn’t even read it. Why? Because after Ocare, believe me, we would have read it.
I’m so glad this crap is over, even if I couldn’t read it. I’m convinced there was nothing good for us in it.
???”but the U.S. is also excluded”???
u.s. was not excluded from joining the Asian Infrastructure bank, they were just to stupid to join.
O’bommer got the sulks because China keeps spoiling u.s. hegemony dreams.
Of course you neglect trumps comment that he will negotiate with individual countries.
One size does not fit all. Also tpp required us to fund their pollution reduction.
The devil is in the details. learn the details then comment.
The status quo is no longer an option.
This certainly has not started well, aye? Just wait until the Republican Farmers in the Midwest suddenly find their subsidized agricultural sales to China have vanished in favor of cheaper products from South America to China! Perhaps they get more sensitive to their Democratic neighbors in the “Rust Belt” states, aye?….. :(
Chinese eat PORK, potatoes from where in South America? Cherries? American farmers lead the world in production and agricultural technology, China has to import food because they cannot supply it, we supply the world because we are good at it! Aye, what’s that supposed to mean, it’s a rough world out there and the fittest survive, unleash the U.S. on the World, unfettered and unlimited and UNTAXED TO DEATH and see what happens, OH and stop them stealing our Intellectual property, you ever noticed how every Communist Product looks like ours? I would build destruction into all od the Industrial plans I let them steal, uncertainty would kill the deal!
ITS AMAZING WITH OBAMA IN OFFICE CORN WAS DROPPING LIKE A ROCK IN WATER SAME WITH OTHER GRAINS and pigs going for under a buck a pound and cattle 1.30 a pound then trump takes office for less than a week and suddenly its all his fault claim all you whiny progressives
Pivot Asia/TPP was and is about Military bases. The USA wants to surround China as with Russia visa vie the European union. Yes there was CORPORATE business advantages and money to be made BUT for the worlds leading colonist super power……it is about control and domination. Within the TPP were good ole mafia protection agreements that the lesser countries would have to have signed onto.
After the upcoming European election cycle we will see a couple election results that would surely be another brick that will be the demise of the European union.
China’s economy is in trouble and this article is no doubt politically motivated, the South East Asian countries know which side their bread is buttered on, their major market is the U.S. Should the U.S. take on China in a trade way, China would no doubt lose, we have given away the crown jewels for long enough, these countries are very afraid of China and will not want to annoy Trump in case he moves manufacturing back to the U.S. because of cheap, plentiful energy, a skilled labor force, near market circumstances, U.S. market and industrial strength being finally realized through advanced robotics and technology, we don’t need their cheap textiles and can compete head to head in all other areas, If China’s GDP crashes, the population will revolt, we do not have that type of situation since we do not keep citizens in order at the point of a gun!
Are you shorting the market?
The work ethic of the last two generations have been lost because of government food stamps, getting monthly checks for having babies out of wedlock and I cannot work because I stumped my toe. What a precious thing to lose, I don’t know how to fish so just give me one. We have watched our factories close, jobs lost along with the pride of so many. This control by a few over so many is hopefully going to change and getting out of the TPP along with NAFTA and using the 22 Billion to the UN to our advantage along with Jesus chosen people. Using our own resources such as Oil and Gas instead of trying to keep the gone petro dollar propped up. Fair trade to both sides and let citizens from all countries live in peace with their own culture without the threat of it being taken from them over money and power of a few.
Let’s slow down and really take a look at what Trump and Ross have in mind. USA will remain very active in East Asia, and the rest of the world, with a sample approach.
1. Individual trade agreements that fit both good use of trade policy to increase jobs for both countries, keep in mind each country in Asia has different assets and liabilities.
2. Individual security Treaty which will lead to a solid targeted path to establishing military aid and future bases of operation if needed.
3. By dealing with each country individually we will be in a much better position to balance trade and security policies with our current allies in Easr Asia.
We must realize that comprehensive Trade Agrements, Heath Plans, Security Agreements have not worked well for the USA in the past.
Thank you Doug Walker “Real Results with Common Sense”
From the article: “Trump is right about one aspect of TPP, it wouldn’t have amounted to much to the U.S. economy anyway. However, geopolitically speaking, the U.S. loses significant influence over affairs in fast-growing East Asia, …”
Geopolitical entanglements are often, if not almost always, led to wars and other bad problems. Before Commodore Perry, peace and quiet. After Commodore Perry, Pearl Harbor, and the dropping of duel a-devices. Now there are too many people in the world for the US to be the policemen all over the world. Historically, trade invariably precipitates wars sooner of later. That’s the facts of life. For example, trading allows people to get hooked and addicted on goods that they don’t produce, and thus should not consume in the first place. Once addicted as a result of trade, they fight, and rob to continue their addiction of foreign goods. For example, the US got addicted on foreign oil, rather than conserving, and using alternative fuels, and that precipitated long drawn out oil-wars. After Commodore Perry, Japan got hooked on foreign oil and natural resources, that Japan has little of, and Japan invaded other nations to satisfy its addiction of foreign goods, and Japan attacked Pearl Harbor, as addicts would do any extremely bad things to feed their addiction.
While trading can be done on an amicable level with the rare perfect equal balance of trading, trading often, and frequently promotes addictive behaviors in the trading nations, which addictive behaviors promote extreme conflicts and wars, which the economists tend to not consider in their tunnel-vision view of their narrow field.
What would the world look like today if Commodore Perry was never directed to go to Japan to open up trading?
Japan stayed none industrialized, so that it did not need a lot of oil, and natural resources, so that Japan did not invade other countries, and it did not attacked Pearl Harbor, so that the US did not join WW2. Without the US joining WW2, the German invasion of Soviet Russia might had succeeded, although Germany might had to endure a protracted-type-of-war after that, which exhausted its economy. France with the help of England, and material help from the US could had pushed Germany out of France eventually after Germany got stuck in a protracted war in Russia. Pretty sure that the US would not had developed the a-devices, if the US stayed out of the war. With the Soviets defeated, the cold war would had been averted, and no countries would had turned Communist after WW2. There would be no problems of nuclear proliferation, as the US did not push its a-projects to completion. General Ike would had not driven into Germany, and he would not had seen the Autobahn. He would not had been election as US President, as he would not had been a war hero, as the US did not enter the war. He would not had pushed to build a large network of Autobahn like Limited-Access-Super-Highways in the US, which enabled commuters rich and poor to buy vest numbers of suburban houses ever further away from their jobs in the cities. Vest numbers of US commuters driving their cars to work rapidly burned up all of the easy-to-get, and cheap US oil reserves, forcing the US to import ever increasing amounts of foreign oil, precipitating never ending “oil-wars”. This would had been averted if the US did not join WW2, that made Ike a war hero US President, who promoted the Autobahn like US super-highway system. Limited-access-super-highways will eventually be adopted in the US, but at a slower pace, with less people fleeing from the cities to the country side, and with US oil reserved being depleted at a slow and more manageable pace. Without Perry going to Japan to open up trading, the world most likely would had become a much less dangerous place.
Yes, ric, and if Nixon had not opened up China to trade with the US, they would not now be a threat to our world dominance. And so, the world would be a less dangerous place.
the china trade i never trusted and hated nixon AND kissinger for that agreement ! The corporations took advantage of it and took all that wealth from america and gave it to China
Now we have to live with that !
sigh
As I recall China agreed not to devalue their currency. Then turned right around and did it twice. They have seized the manufacturing assets of foreign companies. You may move some of tooling used to produce your products, then suddenly your tooling belongs to the Chinese government. The Chinese government demanded General Motors turn over certain manufacturing secrets to Chinese automakers. How rampant Chinese hacking and industrial spying. I think China fired the first shots years ago.
After reading the comments on the implications of Trumps trade policies I am happy to observe the intellectual dexterity of ordinary citizens making sharp insights from every spectrum of consideration.Keep up great work!
Hasn’t the phrase “beneficial to America” been used to describe every trade deal? It is ironic that both ends of the political spectrum, Bernie/Progressive and Trump/Tea Party were against the deal while the mushy middle corporate stooges like Obama, (Clinton b4 Bernie) and most Republicans were for it.
https://twitter.com/charliekirk11/status/825448477412962304
also on immigration , the prez speaks about the wall