Economy, Regs, & Taxes

Trade and Pipelines: Trump's First Economic Actions

He's pulling out of TPP, while giving the green light for major oil pipelines.

Lewis Morris · Jan. 25, 2017

President Donald Trump signed two significant executive orders this week — one taking America out of the Trans-Pacific Partnership (TPP) trade agreement, and the other removing the ban on construction of the Dakota Access and Keystone XL oil pipelines. Both orders reverse decrees issued by Barack Obama and serve to show that Trump has set about fulfilling his campaign promise to boost the American economy.

The order to take America out of the TPP doesn’t come as a surprise, given that Trump had promised repeatedly to do so before the election. Indeed, his opposition likely helped him win the Rust Belt.

The TPP deal, which was negotiated behind closed doors by the Obama White House and 11 other Pacific rim countries, would have created a trade block larger than the European Union. Democrats and their union constituents, however, generally oppose free trade. And Republicans didn’t trust Obama to negotiate in a way that would protect America’s interests or workers.

Now, in a rare moment of solidarity, many American union leaders voiced their support for the Republican president’s actions. “With this decision, the president has taken the first step toward fixing 30 years of bad trade policies that have cost working Americans millions of good paying jobs,” declared Teamsters president James Hoffa.

Trump has promised to renegotiate bilateral trade deals and hold each country accountable. He has also suggested that he’s looking to renegotiate NAFTA, though he hasn’t quite pledged to scrap that deal altogether. In any event, NAFTA would be far more difficult for Trump to undo unilaterally as it’s a long-standing treaty backed up by Congress.

There is a lot of controversy surrounding Trump’s move to scrap TPP. It can’t be denied that the agreement had some shady underpinnings, like much of the work done during the Obama years. It was never put before Congress for formal review and passage, and Obama gave few details about what was in the deal, encouraging Americans to simply trust that he had our best interests at heart. We all know how that turned out.

But by withdrawing from the TPP, Trump must guard against sliding into protectionism. Protectionist trade policies can be notoriously bad for American consumers because they tend to raise the price of goods. Such policies might keep jobs from drifting overseas, but the total cost of keeping those jobs in the U.S. rises significantly when you factor in the rise in consumer prices.

This negative impact on the economy can be prevented if the U.S. pursues free trade policies with other countries — particularly if we enter bilateral trade deals that are beneficial to American jobs.

Speaking of American jobs, Trump’s executive order Tuesday to restart the Dakota Access and Keystone XL pipelines will certainly be beneficial and move us toward a sounder energy policy.

Obama waffled on Keystone for years, wanting to placate the unions who wanted it but finally giving in to his ecofascist base and shutting down the project. He did so citing the alleged detrimental impact that Keystone would have on the environment, even though State Department studies he asked for proved that the pipeline would be safe. He likewise ended the Dakota Access project after Native American groups engaged in a vocal and widely televised protest because the pipeline would have crossed their land.

Trump says he wants the pipelines to be built with U.S. steel, so he will be looking to renegotiate terms with TransCanada, the Canadian group that is working on the Keystone project.

Both pipelines will increase domestic oil production and move America toward a more independent and self-sustaining energy policy, something that was not of concern during the administration of Trump’s predecessor.

In both cases, though with mixed results likely to ensue, Trump is doing what he considers best to put America first.

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