The start of a piece in yesterday’s TheStreet summarized a common viewpoint on the US withdrawal from the Trans-Pacific Partnership (TPP) trade agreement, when it said: “You can’t lose what you never had…” In fact, you can. It is becoming increasingly obvious that American companies are losing ground. The damage is two-fold—the United States has chosen to sit out from the TPP and it is also not benefiting from the range of trade deals that crisscross Asia, giving preferences to competitors in the region in key markets. Adam Behsudi nicely showed this week in Politico how international trade agreements are directly affecting farmers from one county in Iowa.
This is where things rapidly get tricky. Given the Trump team’s penchant for scoring countries with the crudest metric of all—the size of the bilateral trade deficit in merchandise goods—Japan is headed for a rocky road. Japan has had a substantial merchandise deficit (viewed from the Oval Office) for a long time. It will probably make little difference how many jobs come from Japanese firms in the United States, or how many services are sold by American companies into Japan, or how many parts and components are shipped back and forth, or how much is invested in either country. The Abe team is apparently heading to DC with a long list of details to show exactly how much Japan matters to American jobs now and into the future. They will have plenty of statistics on currency rates and investment portfolios and long-term metrics and pledges to buy lots more energy. Most likely, none of it matters. Not when the trade deficit stands at more than $60 billion and the guys that are in charge care about only one number.