Dour Outlook for Trade Emerges in Wake of Trump Election

NEW YORK -- Donald Trump's presidential election victory likely further reduces the chances for the approval of pending free trade agreements with Asia and Europe, trade policy experts said Nov. 9 at the Apparel Importers Trade and Transportation Conference. There also are some early indications as to who might head up trade policy under Trump, most of whom have a more "protectionist" bent, said David Spooner, a lawyer with Barnes & Thornburg who was assistant secretary of commerce for import administration under President George W. Bush. Still, the likely "chaos" from Trump's trade policy may also provide for new opportunities for positive change, he said.

It's now clear that the Trans-Pacific Partnership won't pass "anytime soon," Spooner said. Although there's been a push by President Barack Obama for a lame-duck session vote on it, and the House Ways and Means Committee is reserving time for potential TPP hearings, the votes simply aren't there, Spooner said. At the same time, Transatlantic Trade and Investment Partnership negotiations are "falling apart," Spooner said. Adding Trump's election to those existing hurdles further complicates a path forward, he said. While the chances for those FTAs seem bleak, there may be other benefits. For example, "if Trump brings in new faces to USTR and is rethinking trade policy, it might give us opportunity to convince the new administration to do things in trade policy," such as changes to the yarn-forward rules of origin, Spooner said.

Trump's trade advisers during the campaign included Dan DiMicco, a former CEO of Nucor Steel; billionaire investor Wilbur Ross; and Peter Navarro, an economics professor at the University of California, Irvine, Spooner said. Spooner said during his time at Commerce, he clashed regularly with DiMicco over issues such as "Buy American" policies. Despite the uncertainty that those advisers may present for trade policy, there will be a set of "second tier" government officials at Commerce and in the Office of the U.S. Trade Representative that will likely be more "pragmatic," he said. It will be important for trade groups to work closely with those officials just below the leadership, he said.

There may also be trouble ahead for existing trade policy, such as NAFTA and World Trade Organization participation, if Trump fulfills campaign promises on those issues, said Jon Fee, a lawyer with Alston & Bird. There are a number of open questions as to what a renegotiation or exit from NAFTA would look like, Fee said. One likely immediate result of the U.S. pulling out of NAFTA would be the Canada-U.S. FTA going back into place, as stipulated under NAFTA. Protracted litigation over the president's ability to withdraw from NAFTA would also be expected, Fee said. Trump also previously expressed a willingness to leave the WTO in order to pursue significant tariffs on goods from China. The president does appear to have the authority to withdraw from NAFTA and the WTO without approval from Congress, Fee said.

Less affected are some smaller trade bills expected to come up during 2017, such as a Miscellaneous Tariff Bill and Generalized System of Preferences renewal, Fee said. An MTB appears to be especially safe considering Congress recently revamped the MTB submission process, he said. Also expected to be largely unaffected are the new enforcement efforts on antidumping and countervailing duty evasion and goods made through forced labor, said John Pellegrini, a lawyer with McGuireWoods. It's also possible that exports could suffer under Trump due to retaliatory tariffs in other countries on U.S. goods, he said.