Trump Administration Gets Down to Business
Jan. 23, 2017
US President Donald Trump is delivering on one of his most controversial campaign promises, drastically changing US trade policy by pulling out of the Trans-Pacific Partnership free-trade deal.
On Friday, Trump delivered a tub-thumping inaugural speech. He reiterated his protectionist policies, which he says will serve US interests.
"From this day forward, it's going to be only America First. We will bring back our jobs. We will bring back our borders. We will bring back out wealth. And we will bring back our dreams," Trump said.
On day one, Trump announced on the White House website his decision to pull the US out of the TPP. Twelve countries, including the US and Japan, signed the pact last year, but the announcement of the US withdrawal means it's unlikely to go into effect.
Trump also took action to renegotiate NAFTA, the North American Free Trade Agreement.
"We're going to start some negotiations having to do with NAFTA. / We're going to have a very good result for Mexico, for the United States, and for everybody involved. It's very important," Trump said.
But right after the start of the new administration, millions of people took to the streets across the US to protest against the new president's agenda.
"We believe that he does not have a mandate. If Donald Trump is going to be our president, he has to represent all of us," said one female protester.
US media say there have been anti-Trump rallies in more than 60 countries.
NHK World's executive commentator Akihiro Mikoda joins business anchor Yuko Fukushima in the studio.
Fukushima: What’s your main takeaway from Trump’s speech?
Mikoda: If you look at the language he used, it's clear that he was talking directly to his base. The line that really stood out for me was this one: "The forgotten men and women of our country will be forgotten no longer… millions of American workers that were left behind."
Who are America's forgotten people? In Trump's view, workers in the manufacturing industry who have lost their jobs as firms have moved offshore -- in other words, the people who voted for him. The way Trump was talking, it sounded like he was still in campaign mode. It made me think he's already preparing for the mid-term congressional elections 2 years from now.
Trump has repeatedly promised to bring jobs back to the US and he hit that theme again in his inaugural speech. Here's what he said: "Every decision on trade will be made to benefit American workers.... We will follow two simple rules: Buy American and hire American." So, how can he get people in the US to buy more American-made goods? Well, one way is to limit imports.
Fukushima: It seems the US is going to take a more protectionist approach. How will that affect Asian economies?
Mikoda: I think the new approach will impact China the most. Trump regards China as one of the main causes of job losses for the US manufacturing industry. He's even said he'll impose a 45 percent tariff on Chinese imports.
Fukushima: But can he actually do that?
Mikoda: It seems unlikely. A tariff that high would be a violation of WTO international trade rules. For years, the US has relied on all manner of low-cost imports from China. If Trump slaps tariffs on these things, prices will jump. And that will upset his middle-class supporters. That said, there are things the Trump administration can do. For example, it can declare that China is exporting steel products at inappropriately low prices, and it can introduce anti-dumping measures. In fact, Washington has been doing that more often in recent years as the trade deficit with China has grown.
China has its own set of issues to deal with. Leaders in Beijing have been implementing a range of structural reforms. As a result, they can’t expect strong growth in domestic demand. Last week they announced that economic growth in 2016 declined to 6.7 percent. That's the slowest pace in 26 years. Exports are vital to China's continuing growth. A sharp decline in shipments to the US would deal a big blow.
Fukushima: How about Japan? Trump recently used his Twitter account to target Toyota, which is planning to build a plant in Mexico to make cars for the US. Trump wrote: “If you don’t build a plant in the United States, you have to pay a huge tax.” It sounds ominous, not just for Toyota but all Japanese manufacturers? Where do they stand?
Mikoda: Back in the 1980s and 90s, Japanese car exports to the US became a thorn in diplomatic relations. The US claimed an increase in imports of cheap, high-quality Japanese cars was costing American jobs. Japan suffered a major backlash. Japanese carmakers responded by increasing their production bases in the US.
In 1990, they produced 1.5 million cars over there. By 2015, that number had risen to nearly 4 million. If you include parts-makers, Japanese car companies have created 1.5 million US jobs. Toyota President Akio Toyoda recently met US Vice President Mike Pence. He listed his firm's contributions to the US economy and outlined a plan to invest 10 billion dollars over the next 5 years.
Fukushima: Will that be enough to satisfy Trump?
Mikoda: I doubt it. Trump has put employment right at the top of his agenda. His main focus is how many new jobs he can create. Businesses usually have the freedom to decide for themselves where to invest their resources. There's an argument that the US president shouldn't be allowed to interfere in that process. But 3 US firms -- GM, Ford, and Chrysler -- have already responded to pressure from Trump. They've all announced they'll create more jobs at home.
The 35th president, John F. Kennedy, famously said Americans should ask not what their country can do for them, but what they can do for their country. Trump had a different message. He urged businesses that sell products in the US, domestic and foreign, to ask what they can do to bring back jobs for American workers. It's still early days, but there’s a chance more Japanese firms will look to start production in the US.
Fukushima: Trump has also made it clear he'll pull the US out of the TPP. That's been on the cards for a while. How will Japan respond?
Mikoda: Twelve countries in the Asia-Pacific region, including Japan and the US, were supposed to take part in the TPP. During negotiations, member countries agreed to a range of concessions. They did so because they assumed the world's biggest economy would join. Without US involvement, it's hard to see a way forward. So you can expect Japan to keep patiently touting the benefits of the deal to the Trump administration. To be honest, though, the chances of getting Trump to change his mind at this stage seem slim.
Fukushima: How will the policies of the Trump administration affect Asian economies?
Mikoda: There's another major free-trade agreement called RCEP, which stands for the Regional Comprehensive Economic Partnership. It would take in the ASEAN states and 6 other countries -- but not the US. Japan and China are both involved. Japan was hoping the high degree of freedom offered by the TPP would motivate RCEP members to adopt similar standards for that deal. But given the uncertain future of the TPP, that hope is fast fading. In the future, I think we can expect the influence of the US on Asian trade frameworks to decline. The influence of China, which wants more restrictive deals, will grow stronger.