What Donald Trump’s Decision to Pull Out of TPP Means for the Fashion Industry

Donald Trump Rally New Hampshire
Donald Trump speaking at a rally in Manchester, N.H., on Nov. 7.
REX Shutterstock.

President-elect Donald Trump has confirmed what his campaign promised on trade deals: Under his leadership, the U.S. would withdraw from the Trans-Pacific Partnership.

In a video message outlining his intentions when he takes office in January, Trump said that on day one he will issue a notification of intent to withdraw from the Trans-Pacific Partnership — calling the 12-country trade agreement “a potential disaster for our country.” (The countries that agreed to TPP in 2015 were the U.S., Canada, Malaysia, Australia, Japan, New Zealand, Mexico, Peru, Chile, Singapore, Brunei and Vietnam.)

“Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back onto American shores,” Trump added.

Several footwear and apparel organizations — including the Footwear Distributors & Retailers of America (FDRA) and the American Apparel & Footwear Association (AAFA) — as well as footwear brands such as Nike Inc. have been vocal proponents of TPP, which promised to eliminate more than 18,000 taxes and other trade barriers, strengthen ties among member countries and increase economic growth.

The massive trade deal also had its share of opponents, however, including longtime Made In America brand New Balance. Among their concerns, anti-TPP groups said the free-trade pact lacked transparency and would protect the rights of large investors and corporations at the expense of consumers and small businesses.

Matt Priest, president of the FDRA, said his organization is not surprised by Trump’s decision, but he’s hopeful that the president-elect will follow through on his promise to pursue bilateral trade deals.

“For us, the TPP was all about the inclusion of Vietnam — that’s where a lot of shoes are made and that’s where we have a strong strategic interest as an industry,” Priest said. “If he were to scrap the TPP but announce the negotiation of a bilateral agreement with the Vietnamese government, then we would be extremely supportive — and we would be at the negotiation table.”

Nevertheless, a bilateral trade agreement wouldn’t cover all of the potential areas that the TPP would have, Priest noted.

“We had a once-in-a-generation opportunity within our grasp. We had a Republican Congress and a Democratic president who wanted to pursue this,” Priest said. “We had a half a billion dollars in savings during year one and $6 billion in duty savings over a decade — those are big numbers, and they mean a lot.”

Priest said his organization believes that the nixing of the TPP means the end of an unprecedented opportunity to not only lower production expenses but also slash end costs to consumers and create more American jobs — something that Trump also campaigned on.

TPP supporters also believe the deal’s demise signals a new opportunity for China to strengthen its influence — something it is already aggressively pursuing via its Regional Comprehensive Economic Partnership (RCEP), which notably excludes the U.S., as the TPP excluded China.

Bart van Ark, chief economist at The Conference Board, said last week that he believes tearing up the TPP “could backfire” on the U.S., particularly when it comes to China.

“China was not part of that agreement, and therefore [the end of TPP] creates more room for China to push forward its own agreement within the region,” van Ark said.

Priest shared those sentiments. “It seems kind of nonsensical to scrap an agreement that would help us build our economic relationships in the region against a rising Chinese influence and also help American consumers. Now, two of those things have gone away, instantly,” Priest argued.