Special

Article 2

Will “America First” Leave America
Alone? – The Trump Administration’s
Trade Policy in the Indo-Pacific Region
By Darah Phillip
President Donald Trump withdrew the United States from the TransPacific Partnership (TPP) in one of his first acts in office on Jan. 24,
2017. The withdrawal was an early demonstration of his nationalistic,“America First” trade philosophy. Trump’s initial argument behindleaving the TPP was that the US, and American workers in particular,
would be worse off in the trading bloc. He also insisted that he was a
tougher negotiator than former President Barack Obama and that hecould negotiate a better deal for Americans. Three and a half years
after leaving the TPP, however, the Trump administration has notproduced a trade framework in the Indo-Pacific region to surpass, letalone rival, the TPP. Instead, the US may be more isolated from its
economic partners in the region today than it was in 2016.
The reality of growing Chinese economic influence – the impetus
behind the TPP – has not changed since Trump came into office.
Instead, Asian countries continue to weigh the benefits of the Regional
Cooperative Economic Partnership (RCEP), a proposed trade bloc that
could bring Southeast Asia and India closer to China, while China
continues to offer massive infrastructure financing through its
expansive Belt and Road Initiative (BRI). As China actively worked to
expand its economic clout in the region and around the world, theTrump administration slowly moved ahead with its plans for bilateral
trade negotiations with countries it could convince. The result of these
efforts is a limited, Phase One agreement with Japan, another limited,
Phase One deal with China focused on increasing US agricultural
exports to the country, and a series of smaller, industry-levelagreements with other countries in the region.

Obama Administration Approach to TPP
After eight years of negotiations, the US, Australia, Brunei, Canada,
Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, andVietnam signed the TPP on Feb. 4, 2016. The expansive agreement
included 30 separate chapters focused on areas such as agriculture,
autos, digital trade, worker rights, environment, and intellectual
property rights (Photo 1).
In some ways, the TPP was considered the trade agreement of the
future due to its enhanced labor, environmental, and intellectual
property standards, and due to the inclusion of a chapter on digitaltrade. In one respect, the agreement was intended to build upon andmodernize existing US free trade agreements (FTAs), most notably theNorth America Free Trade Agreement (NAFTA) with Canada and
Mexico. The TPP also bolstered existing US FTAs with Australia, Chile,Peru, and Singapore for the 21st century. For the remaining fivecountries involved in the TPP – Brunei, Japan, Malaysia, New Zealand,
and Vietnam – it offered an opportunity to expand or deepen economic
https://www.jef.or.jp/journal/

Author Darah Phillip

ties with the US.
For the US and Japan, the TPP created an opportunity for the twocountries to pursue an economic relationship to match andcomplement their longstanding bilateral security alliance. Under theguise of tying Japan’s economy with that of the US, the TPP enabled
Japanese negotiators to counter domestic resistance to trade in areas
such as agriculture by leaning on the strategic imperative of using theagreement to mitigate Japan’s growing economic dependence on
China.
The TPP was also expected to encourage growth in US trade with
Vietnam and Malaysia, two countries with high trade barriers and yet
increasing levels of trade with the US. For Vietnam specifically, theagreement was expected to support the government’s economic
liberalization efforts, expand US access to Vietnam’s rapidly growing
market, and simultaneously reduce Vietnam’s economic dependenceon trade with China.
The Obama administration advertised the TPP as an agreement withadequate protections to protect US jobs, and with tariff reducing,trade-opening provisions to reduce costs for US consumers. In
support of these claims, the US International Trade Commission’s
2016 report on the expected outcomes of the TPP found that uponentering the TPP, US annual real income would increase by anadditional 0.34% after 15 years. US officials also highlighted the TPP’s
important strategic benefits. For example, then-US Trade
Representative (USTR) Michael Froman noted in a June 2014 speech,“Beyond its impact on jobs, growth and the strength of the US
economy, trade negotiations are strategic because they are themechanism by which we define the rules of the road, the standards
countries should adhere to, the norms which create a sense of fairness
among economies, and the mechanisms by which disagreements – asthey inevitably arise – can be peacefully resolved.”
PHOTO 1: Government of Chile via Wikimedia Commons

A summit with leaders of the (then) negotiating states of the TPP. From left: Naoto Kan (Japan),Nguyễn Minh Triết (Vietnam), Julia Gillard (Australia), Sebastián Piñera (Chile), Lee Hsien
Loong (Singapore), Barack Obama (US), John Key (New Zealand), Hassanal Bolkiah (Brunei),
Alan García (Peru), and Muhyiddin Yassin (Malaysia).
Japan SPOTLIGHT • November / December 202039

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PHOTO 2: Communications Workers of America Union(used with permission)

PHOTO 3: USTR Twitter Account,https://twitter.com/USTradeRep/status/866437017210691584

After the TPP was signed, the Obamaadministration failed to convince the US
Congress to ratify the agreement. Despite its
projected benefits, the TPP was rejected by
the anti-trade labor movement in the US, andsubsequently vilified during the politicaldebates leading up to the 2016 presidential
Lighthizer welcomed to APEC 2017.
Members of the Communications Workers of America union
election (Photo 2). As part of his strategy togather in Omaha, Nebraska to protest the TPP in 2016.
attract blue-collar workers in the Midwest,
vowed that the US would put America’s interests first and foremost,
Trump argued during his 2016 presidential campaign that tradeand no longer allow other countries to – in his words – take advantage
agreements such as the TPP, which he claimed as one of the “worstof the US.
trade deals in history”, undermined US workers and hurt
Essentially, for Trump, international trade was not about
manufacturing. Similarly, Democratic candidate Senator Bernie
geostrategic considerations or economic influence. Instead, under the
Sanders argued that free trade agreements benefited corporations at“America First” vision, increasing US exports and supporting
the expense of everyday Americans. Pressured by the rhetoric fromprotecting US industry manufacturing and workers were now the mostboth the right and the left of the US political spectrum, the eventual
important guiding principles for US trade policy in the Trump era.
Democratic nominee for president, Hilary Clinton, was forced to pivot
By mid 2018, the Trump administration trade policy evolved toto an anti-TPP stance despite her role in negotiating the TPP during
implement this “America First” approach. Indeed, the USTR’s 2018
her tenure as Obama’s Secretary of State.
Trade Agenda Report embraced this approach, and noted that US trade
Consistent with his 2016 platform, Trump withdrew from the TPP
policy would now officially be driven by: support for US national
within days after his inauguration, on Jan. 24, 2017. The TPP neversecurity; strengthening the US economy; negotiating better tradeentered into effect after US withdrawal from the agreement. Instead,deals; enforcing US trade laws, and; reforming the multilateral trading
the remaining 11 signatories revived the agreement as thesystem. Initially, the 2018 Trade Agenda prioritized renegotiating
Comprehensive and Progressive Agreement for Trans-Pacific
NAFTA with Canada and Mexico, and the nascent US-Korea Free Trade
Partnership (CPTPP), which went into effect on Dec. 30, 2018.
Agreement (KORUS FTA). The Trump administration also prioritizeddiscussions for a bilateral FTA with Japan, the largest economy among
Evolution of the Trump Administration’s Trade
TPP signatory countries. For the other four countries, namely Vietnam,
Priorities in the Indo-Pacific
Malaysia, New Zealand, and Brunei, Trump was still willing (if not
eager) to engage with them on trade issues.
At the bureaucratic level, the Trump administration initially sought tonegotiate bilateral trade agreements with US partners in the IndoPacific region as a replacement to the TPP. The USTR’s 2017 Trade
US Trade with TPP Signatories During Trump’s
Agenda report, published in March 2017, noted that these bilateralFirst Termagreements would “present unique opportunities to engage our AsiaPacific partners in areas in which the TPP failed to provide adequate
The effectiveness of Trump’s “America First” trade policy can bemarket access of American-made goods and agriculture products.”
assessed through a variety of metrics. For example, has the US beenThis push continued after the swearing in of Trump’s US tradeable to conclude comparable trade agreements with CPTPP countries?
representative, Robert Lighthizer. Lighthizer’s first official overseas
Or, has Trump met his own standards for improved trade outcomes,
visit was to Hanoi for the Asia-Pacific Economic Cooperation (APEC)
by increasing US exports or decreasing the US trade deficit withtrade ministers meeting in May 2017. In his public statement on the
CPTPP countries?
meeting, Lighthizer noted: “It was important to me to come to APEC
Since 2017, the Trump administration has concluded agreements
first and foremost to reaffirm the president’s strong commitment towith its top three trading partners among the CPTPP’s signatories:
promoting bilateral free and fair trade throughout the Asia-PacificCanada, Mexico, and Japan. These agreements have modestly
region.” Afterwards, Lighthizer met with Vietnamese officials todeepened economic ties with major trade partners, created additional
discuss bilateral trade. Lighthizer and other USTR officials also met
opportunities for US exports to these countries, and thus helpedwith officials from other TPP signatories, including New Zealand,
Trump to at least nominally achieve his goal of increasing market
Japan, Malaysia, and Cambodia, between June and September foraccess for US exports. Yet, the lack of substantial agreements withbilateral trade discussions (Photo 3).
other TPP signatories, particularly those that do not have FTAs with the
Despite the administration’s initial groundwork towards bilateralUS, is a clear weakness in the administration’s approach.
trade deals to replace the TPP, Trump’s November 2017 speech at
The administration’s most notable accomplishment with TPPAPEC laid out a fairly stark vision for US trade in the region. In it, hesignatories is the completion of the United States-Mexico-Canada
outlined his vision for a renewed economic partnership between theAgreement (USMCA), which went into effect on July 1, 2020. USMCA
US and the Indo-Pacific region based on his “America First” trade
is a comprehensive trade deal that updated NAFTA by including
philosophy. Trump emphasized that the US would no longer accept
enhanced labor and environmental protections, stricter rules-of-origin
massive trade deficits with its trading partners; instead the US would
for trade in the automobile sector, as well as additional provisions topromote fair and reciprocal trade relationships. In his speech, Trumpaccount for developments in digital trade and other areas that NAFTA
40 Japan SPOTLIGHT • November / December 2020

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did not address. Interestingly, although Trump was quite harshtowards the TPP, the USMCA in fact borrows from and builds upon the
TPP provisions that the US, Canada, and Mexico had already agreed toin 2016. In this sense, the USMCA is a modernized TPP with tweaks toraise trade standards in order to satisfy US domestic critics of both
NAFTA and the TPP.
The Trump administration’s second trade agreement concluded witha CPTPP signatory is its limited trade deal with Japan. Although theadministration initially pushed Japan to negotiate a comprehensive,
bilateral trade agreement, the Japanese government balked at these
efforts and encouraged its US counterparts to consider the CPTPP.
However, following the entry into force of the CPTPP in late 2018 andthe EU-Japan Economic Partnership Agreement in early 2019, US
agricultural exports to Japan faced higher tariffs in Japan thancomparable goods from the European Union and from CPTPP
countries. In order to maintain US access to the Japanese market,
especially for politically sensitive agricultural products, the Trumpadministration shifted its stance to prioritize a “limited” trade
agreement with Japan. The US-Japan Trade Agreement is the result of
this shift. The agreement is comprised of two separate trade
agreements: one focused on digital trade, and the second focused on
agricultural and industrial products. Like the USMCA, the limited tradedeal was negotiated relatively quickly by focusing on issues that werenon-controversial between the US and Japan during TPP negotiations.
The digital trade agreement in particular draws on the USMCA’s digital
chapter, which built upon TPP digital trade provisions.
These agreements are indeed successes, and have modernized the
US trade relationship with three of its four largest trading partners. Yet,when compared with the TPP, and from the overall perspective of US
trade in Asia, the glaring omission of comprehensive, market-opening
agreements with non-FTA countries such as Vietnam, Malaysia, New
Zealand, and Brunei represents a missed opportunity for the UnitedStates to confirm its economic commitment to the region.
With respect to the Trump administration’s overall goal of increasing
US exports, Chart 1 shows that from 2016 to 2019, US exports to

TPP signatory countries generally increased, but these increases aremost substantial with countries that were already major US trading
partners: Canada, Mexico, and Japan. When compared with broader
changes in US exports between 2016 and 2019, these increases are
consistent with official US Census data showing that total US exports
to TPP countries increased from $1.45 trillion in 2016 to $1.64 trillion
in 2019.
Despite the positive results for US exports between 2016 and 2019,
the US trade deficit with these same countries also increased between
2016 and 2019, as shown in Chart 2. The US trade deficit with all TPP
signatories combined grew from $172 billion in 2016 to $252 billion in
2019. Again, this is consistent with trends in the US trade deficit withall countries during that time span: US Census Bureau data shows thatthe trade deficit increased from $735 billion in 2016 to $854 billion in
2019. Although critics of the TPP argued that it would flood US
markets with cheap goods from countries like Vietnam and Malaysia,
as the data shows, Trump’s “America First” trade policy was ineffective
even by its own standards, and actually saw the US trade deficit
significantly grow from 2016 to 2019.

“America First” Trade Policy & US-China Strategic
Competition
The administration’s ability to counter China’s rise – a metric that is
a bit harder to calculate – is another critical indicator of the success or
failure of Trump’s “America First” trade policy.
Since the start of the Trump administration, strategic competition
with China has come to define the US policy towards the Indo-Pacificregion. “Economic security is national security” is now a guiding
principle for the administration’s policy towards China, and is thejustification for increased export restrictions, tariffs, and other policies
that promote an economic decoupling from China and attempt toprotect and strengthen certain US industries. Consistent with Trump’s
rejection of the TPP and multilateral trade agreements, the Trump
CHART 2US trade deficit with TPP signatories

CHART 1

US exports to TPP signatories(in thousands)

IC

O

PE

RU

CH

$20,000

IL

VI
E

M

ET

NA

AL

M

SI

NG

AY

SI

A

AP

OR

E

M

VI

A

M

Source: US Census Bureau; chart by author

S

G
IN

B

N
RU

AN

P
JA

S
AU

A

LI

A
TR

W

NE

ND

ZE

A
AL

$(100,000)$(120,000)

PA

W

N

RA

ZE

LI

A

AL

AN

D

$(24,833.22)$(27,375.09)$(31,987.02)$(55,769.45)$63,247$74,376

EI

RE

O
AP

EI

NE

ST

2016

$(68,753.40)$(69,189.06)

A$(80,000)$(63,271.77)

SI

Y
LA

$(60,000)$3,575$3,948AMNET$22,145$25,990

E

$614
$288

IL

CH

$26,816$31,218

RU

PE$(40,000)$(101,400.62)

C

CO

I
EX

$11,774$13,192

DA

A
AN$10,098$10,860$-$12,937$15,728$50,000$7,927$9,668$100,000$(10,985.35)$(26,794.79)$(20,000)$150,000

UN

AU

JA

$(461.69)$(165.98)$-$200,000BR$12,636.95$15,145.58$40,000

EX$600.59$246.45

2019

DA

M

$8,983.48$4,819.53

2016

NA

$1,673.75$3,523.87$250,000CA$230,229$256,570$300,000$266,734$292,633$350,000$4,139.61$5,335.43(in thousands)

2019

Source: US Census Bureau; chart by author

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Article 2administration has focused its efforts on the bilateral trade relationshipwith China by imposing unilateral tariffs on Chinese goods and by
conducting bilateral negotiations with China to address concerns with
the US-China trade relationship.
Yet, just as the “America First” approach to trade failed to shift thebalance of US trade with TPP signatory countries, the trade policy has
also been counter-productive with respect to increasing US economic
security and countering China’s economic influence. For one, theadministration’s rampant use of tariffs has created economic rifts
between the US and close allies like Canada and Germany at a time
when China is expanding its economic influence globally. In addition,
the “America First” trade policy has impeded the US’s ability tomaintain market access in the region – especially in competition with
Chinese exports – in light of the growing, international trend towards
multilateral trade blocs. The US was already pushed to react to theprospect of decreased market access in Japan after the CPTPP and the
EU-Japan EPA went into effect. If and when the long-awaited RCEP
goes into effect, the multilateral trade pact, which includes seven TPP
signatories, China, and eight other Indo-Pacific nations, is likely tofurther erode US market access and influence in the region.

The 2020 Presidential Election: a Referendum on“America First”?
If the 2016 election offered a referendum on the Obamaadministration’s approach to trade, then the results of the 2020
presidential election will similarly reflect US voter sentiments
regarding Trump’s “America First” trade policy. While Trump has
essentially promised to deliver more of the same in his second term,
former Vice President Joe Biden has offered a more collaborative
approach to US trade relations (Photo 4).
The US under a second term Trump administration is likely to stickwith the “America First” approach to trade. In practice, this would
mean continued tariffs on US imports, a continued focus on bilateralnegotiations, and an emphasis on US “gains” from trade, such asincreased US exports. While this could very well mean the continuationof a reactive approach to trade in the Indo-Pacific region, based on
maintaining instead of increasing US market access, the administration
has already expressed its intention to complete a comprehensive
agreement with Japan and has long promised to conclude a trade
agreement with India. The Trump administration’s ability to complete
these bilateral trade agreements would support increased US economic
engagement with its partners in the Indo-Pacific region, even without
US participation in a multilateral trade pact. Indeed, if re-elected, Trumpis nearly certain to continue to reject multilateral trade agreements
such as the CPTPP.
PHOTO 4: Gage Skidmore via Wikimedia Commons
Biden, meanwhile,
has promised toincrease US
collaboration withinternational partners
if he is electedpresident. A Biden
administration is thus
likely to consider
broader, geostrategic
President Donald Trump at a campaign rally in 2016.

42 Japan SPOTLIGHT • November / December 2020

concerns as part of its trade policy, and to pursue agreements and trade
remedies in support of these concerns. Biden has said that, like Trump,
his trade policy would focus on protecting US jobs and workers bybolstering domestic industrial growth and by enforcing existing trade
agreements. To this end, Biden is promising to deliver the same results
to American workers that the “America First” policy promises. However,unlike Trump, Biden has stressed that the US can achieve these results
without entering into costly tariff wars and without alienating criticalpartners. A Biden administration is also likely to be less antagonistic
towards multilateral agreements – although Biden has not yet expressed
any interest in joining the CPTPP. Instead, Biden has left space for his
potential administration to determine how to approach trade in the IndoPacific after he comes to office, meaning there is no guarantee that
Biden would prioritize either multilateral or bilateral trade agreements toincrease US market access and economic influence in the region.

Challenges Ahead for US Trade with Indo-PacificCountries
While US entry into the CPTPP is still promoted by American Asiahands who championed the TPP agreement during the Obamaadministration, the trade agreement remains politically unpopularamong US voters and among the US labor movement. Whether Trump
or Biden is elected in November, both administrations would facepolitical challenges if they attempt to join the CPTPP. Based on the
USTR’s recent experience negotiating the ratification of the USMCA
with Democrats in Congress, labor, environment, and enforcement
provisions may again be the main points of Congressional concern
with the CPTPP.
The Trump administration’s explicit preference for bilateral trade
agreements may also come with obstacles, such as the political will of
individual CPTPP member countries to negotiate bilateral agreementswith the US, especially if negotiations are conducted under the threatof US tariffs. The US has already struggled to convince Japan, its
fourth-largest trading partner and one of its most important allies, toenter into a comprehensive bilateral trade agreement. Without the buyin of critical partners like Japan, a series of bilateral agreements withsmaller countries such as Brunei or New Zealand will likely fail todeliver the strategic and economic gains that would accrue were the
US to join the CPTPP.
As great power competition between the US and China continues tointensify, the US will increasingly face the need for a strategic,
proactive economic approach to the Indo-Pacific region. While the TPP
offered one remedy for this need, regardless of who is in the WhiteHouse, US leadership will need to commit to finding a solution to thisquandary that addresses domestic US concerns, strengthens relations
with allies, and effectively helps the US to compete in the region. The
last four years have proven that hitting these three points is easier said
than done, and indeed, substantial barriers remain. Yet, commitment
by leadership, and collaboration with allies, will be the key forachieving greater trade ties between the US and the Indo-Pacific region
moving forward.
Darah Phillip is a trade and investment analyst at International Technology
and Trade Associates, Inc., where she focuses on international trade policy,
development and export financing, and US sanctions policy.