With many changes expected in terms of new US policies to be introduced by the President-elect, Donald Trump, Australia is now suffering a slight setback on the Trans-Pacific Partnership (TPP) scenario. Initially, a lot of negative sentiment prevailed with notions of scrapping the agreement. In fact, the negativity prevailed across the globe while the Peterson Institute for International Economics in the US sometime back even reported that Trump’s trade policies could trigger trade wars with China and Mexico and lead to a recession costing 4 million American jobs. On the other hand, Foreign Affairs Minister Julie Bishop said it is not likely that Australia’s 11-year-old trade agreement with the US would be at the top of the list of renegotiation. Ms Bishop also said Australia has continued to urge the US Congress to ratify the TPP in its session during the transition period before Trump’s swearing-in.
Lately, there is some balanced version coming in from Australian experts that Trump’s victory might just limit the trade horizon for Australia and everything under the sky might not fall as earlier thought. Primarily, TPP would have delivered valuable new markets for Australian beef, wheat and dairy industries. Further, economic growth forecasts from TPP were said to be moderate with GDP growth of around 0.7% by 2030 (as per World Bank). Moreover, Australia’s free trade agreements with most of the TPP member states (Japan etc.) will help Australia mitigate the fall side. However, if the US does not ratify the agreement, the opportunity to work on regional trade and investment might fall apart. Also, the new US Administration might get to play a prime role in Asia-Pacific Economic Cooperation (APEC), if TPP is annulled.
Overall, the economic implications for the US and rest of the world are mixed, with many Trump policies, including big tax cuts and increasing defense and infrastructure spending expected to provide some boost. On the other hand, investors do fear that Australia, which is heavily exposed to global trade currents, could be affected if Trump’s economic and trade policies result in global tariff rises and restriction on import and exports around the world.
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