President-elect Donald Trump made a campaign promise to “rip up” the nation’s longstanding trade agreements and tax goods from countries that refuse to negotiate.
The future commander in chief has said he wants to negotiate deals that will rejuvenate the American working class. Those deals, he claims, will bring jobs back to U.S. soil from companies that have shifted production and jobs overseas.
But local trade leaders say Trump’s protectionist stance could harm Washington — the most trade-dependent state in the nation.
“Like everyone else, I am considering what a Trump presidency might bring,” said Louise Tieman, president and CEO of World Trade Center Tacoma. “(Trump’s) 100-day plan has some pretty stark indicators, it’s just hard to tell if the rhetoric will turn into policy.”
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Because this is Trump’s first elected office, he has no track record to study to predict his actual proposals, said Tara Mattina, spokeswoman for the Northwest Seaport Alliance.
“If Trump proposes to unravel (trade agreements) or put trade barriers in place, it’s hard to know how Congress might react,” Mattina said. “Overall, it’s important to remember that trade barriers affect exports as well as imports.”
The North American Free Trade Agreement, signed by Mexico, the United States and Canada, phased out tariffs for goods exchanged among the three powers.
Trump has called NAFTA “the single worst trade deal ever approved in this country” and vowed to impose a tariff of up to 35 percent on goods from Mexico.
Canada is Washington state’s largest international importer to Washington, according to government trade statistics. Last year, imports from Canada to Washington state reached $13.3 billion. Canada is second to China in buying Washington’s exports. In 2015, that amounted to $8 billion compared with China’s $19.5 billion.
Local trade leaders predict dire results if Trump is able to make good on his campaign promise to renegotiate or kill NAFTA.
“If he decides to pursue that campaign promise there will be a lot of pushback from the state of Washington and we will object vociferously,” said Bruce Kendall, president and CEO of the EDB.
But Trump might not need to eliminate NAFTA. Canadian Prime Minister Justin Trudeau offered Thursday to meet with Trump to talk about renegotiating the trade pact.
Trump has said he would impose tariffs on imports from companies that have laid off American workers to relocate factory jobs overseas to increase their profits.
Notably, Trump criticized Ford for laying off workers and planning to move its small-car factories to Mexico. Trump said his administration would impose a 35 percent tax on Ford products from Mexico sold in the United States.
“That is unfortunately an inaccurate view of how tariffs work,” Kendall said. “High tariffs end up inevitably closing markets to the country that imposes the high tariff.”
Hay, hops, apples, wine and grain from Eastern Washington travel to points overseas through the ports of Seattle and Tacoma. Retaliatory tariffs would cut deeply into those lines of business, or close off trade routes entirely, forcing farmers to find other outlets for their goods, Tieman said.
Biomedical devices, software and pharmaceuticals, all produced here in Washington state, would face similar risks, she said.
But, Kendall said, “candidates make a lot of promises. They don’t always carry them out. … My hope would be the president and his advisers realize, when presented with the facts of what happens when you raise tariffs, would back off of that particular campaign promise.”
One only need look to the history of tariffs after the industrial revolution, Kendall said.
“It’s bad for you when you do that. It’s bad for the people who you would want to employ,” he said. “It’s folly.”
Trump’s desire for tariffs with primary trade partners could spark a trade war — and workers would be on the losing end. By far Washington’s biggest exporter is Boeing, Tieman said.
“Countries like Japan that manufacture some component parts here in Pierce County are a critical part of the total global business that Boeing participates in,” she said.
Higher tariffs mean those looking to buy airplanes might look to Boeing’s competitors.
Until Trump and his administration firm up a trade policy, businesses will hesitate on making firm plans, Tieman said.
“It’s all about uncertainty,” she said. “For all we know, trade won’t change at all — but it looks like it will and we can’t really predict how.”
The Trans-Pacific Partnership will not be ratified by Congress, U.S. Sen. Charles Schumer of New York told labor leaders Thursday.
The agreement among 12 Pacific Rim nations also was disliked by Trump on the campaign trail.
“There is no way to fix the TPP,” Trump said in a June address.
The EDB’s Kendall had a different take on the pact.
“We are a state and a county that’s very dependent on international trade and we are in favor of free and fair trade,” Kendall said. “We thought the TPP was headed in the right direction.”
Kendall said the EDB will work with the state’s congressional delegation “to ensure we have a Pacific-region trading partnership.”
Among the countries that vowed to sign it are Japan and Vietnam, the second- and fifth-largest trade partners by value through the Northwest Seaport Alliance’s container ports in Seattle and Tacoma, Mattina said.
“TPP would have a beneficial effect on the ports,” Mattina said.