A Trump transition team memo leaked to CNN on Tuesday outlines how the president-elect’s administration will aggressively approach trade reform starting on Jan. 20, 2017.
According to the document, the Trump administration plans to renegotiate the North American Free Trade Agreement, end “unfair imports” and “unfair trade practices”, enter only bilateral trade agreements and “retain and return manufacturing jobs” by cutting corporate tax rates and rolling back financial and energy sector regulations.
Specifically, on Trump’s first day in office, his administration will order the Commerce Department and the International Trade Commission to report on the effects of and legislative requirements needed to withdraw from NAFTA.
The Office of the U.S. Trade Representative will also be instructed to notify Canada and Mexico that the American government will being proposing NAFTA amendments related to currency manipulation and environmental and worker safety standards.
By May 2017, the U.S. executive branch may go far as to try and expel China from the World Trade Organization on the grounds that it has violated WTO’s currency manipulation clause.
In the first 100 days, the Trump administration will also seek bilateral trade agreements with Canada and Mexico, before formally withdrawing from NAFTA at the beginning of August.
“The Trump trade plan breaks with the globalist wings of both the Republican and Democratic parties,” the memo reads. “The Trump administration will reverse decades of conciliatory trade policy. New trade agreements will be negotiated that provide for the interests of U.S. workers and companies first.”
Such an aggressive trade policy, under the threat of withdrawal from decades-old agreements, has sent shock waves through Mexico since Trump’s assumed election on Nov. 8. Mexico City newspaper Reforma reported Tuesday that less foreign investment is expected in Mexico until specific U.S. trade proposals are announced.
Currently, 35 percent of Mexican-based business is financed by American investors and approximately 6 million U.S. jobs are supported by trade with Mexico.
Since Trump announced his candidacy for the White House in June 2015 and since proposing a 35 percent tariff on Mexican imported goods, the peso has fallen steadily against the U.S. dollar. On Nov. 9, the day after Trump was announced as the election winner, Mexico’s currency dropped 7 percent and has declined by a total of nearly 10 percent since Tuesday, Nov. 8, to-date.
In a Tuesday speech at his presidential library in Dallas, former President George W. Bush warned against the perils of protectionism, saying that “anger shouldn’t drive policy.”
“Trade and investment drives technology and innovation,” Bush continued.
The 43rd president concluded that the U.S. should cooperate “with the Mexican workers, and the Canadian workers, work together to make products to sell to the world. It’s a win, win, win.”
[CNN] [The Hill] [MacroTrends.net] [Photo courtesy Brian Snyder/Reuters via Newsweek]