WASHINGTON — On the first Monday of Donald J. Trump’s presidency, trade was front and center as he formally withdrew the U.S. from a 12-nation Asia-Pacific trade pact and ushered in a new era of trade with an agenda that places a premium on American workers, companies and bilateral trade deals and rejects multilateral pacts.
While Trump did not sign an expected order for the renegotiation of the North American Free Trade Agreement with Mexico and Canada, his chief spokesman said officials are reviewing how they can formally notify the other two leaders of the intent to renegotiate.
The topic of trade dominated the White House press briefing on Monday.
Trump signed the executive action on the Trans-Pacific Partnership shortly after meeting with a group of top business chief executives, including Kevin Plank, founder, chief executive officer and chairman of Under Armour, at the White House. He touted his Made in America plans and urged them to keep their companies in the U.S. and explored ways to create new jobs, warning he would impose a border tax on their imports if they shutter and move offshore.
Trump’s executive action withdrawing the U.S. from the TPP was highly anticipated and more of a formal and symbolic gesture. He has vowed for months that he would take the U.S. out of TPP on his first day in office.
The trade deal was seen as a cornerstone of President Obama’s legacy but it ran into strong resistance in Congress, not only from Republican lawmakers but also from Obama’s core base of Democrats. Trade ministers signed TPP in early February. It includes the U.S., Australia, Japan, Mexico, Canada, Vietnam, Malaysia, Peru, Singapore, Chile, Brunei and New Zealand and aimed to remove barriers to trade to encompass nearly 40 percent of the world’s GDP if enacted.
White House Press Secretary Sean Spicer was asked if the Trump administration planned to negotiate bilateral trade deals with the individual TPP countries, seven of which already have existing trade deals with the U.S.
“We have existing relationships with many of the countries that were part of the 12-nation makeup of TPP. We are going to continue to explore how to strengthen those the relationships or look for bilateral agreements with nations that we didn’t have one with through TPP,” Spicer said. “This [TPP] was not a deal that was in our country’s best interests. A president could have come into office and renegotiated and sent people back to the drawing board. This executive action ushers in a new era of U.S. trade policy in which the Trump administration will pursue bilateral trade opportunities with allies around the globe. This is strong signal the Trump administration want free and fair trade throughout the world.”
Trump’ s aides said he plans to meet with British Prime Minister Theresa May on Friday, marking his first meeting with a foreign leader at the White House, and is interested in discussing a bilateral trade deal with the U.K.
Spicer said the administration is still reviewing whether Trump will have to sign an executive order to renegotiate NAFTA and may have to use a trigger within the NAFTA itself to formally send notices to Mexico and Canada about the intent to renegotiate.
“He [Trump] has already spoken to the President of Mexico [Enrique Peña Nieto] and the Prime Minister of Canada [Justin Trudeau] about his desire to renegotiate,” Spicer said. “As he meets with both individuals over the next 30 days, that is going to be a topic. If they come in and express a willingness to do that, you could negotiate within the current parameters and update it through the existing structure. If they don’t and they decide to pull out then we would have go back to the drawing table in the future.”
The same goes for the Transatlantic Trade and Investment Partnership, a trade deal between the U.S. and European Union that has largely stalled during the presidential transition.
“He’s going to increase market access wherever he can,” Spicer said. “He is in the process of looking at potential bilateral deals going forward and is going to figure out where to expand U.S. market access. What today’s decision starts to show is that it is not about multilateral agreements under the Trump administration. It’s about bilateral agreements where we will figure out country by country how to fight for the American worker and gain access and benefits [for them.]”
“What we want to do is bring manufacturing back to our country,” he told the room of chief executives.
Trump said he plans meet with them regularly at the White House, most likely on a quarterly basis.
Other business executives and leaders at the White House meeting included Jeff Fettig of Whirlpool, Mark Fields of Ford Motor Co., Alex Gorsky of Johnson & Johnson, Elon Musk of SpaceX and Wendell Weeks of Corning.
“This is one of my most important subjects,” Trump said. “It’s what the people wanted. It’s one of the reasons I’m sitting here instead of somebody else sitting here.”
Trump said several major U.S. corporations have already announced they see a different business climate with Trump.
“We want to start making our products again,” Trump said. “We don’t want to bring them in. We want to make them here. That doesn’t mean we don’t trade because we do trade but we want to make our products here.
He said there will be advantages for companies that make products in the U.S.
“We’ve seen it,” Trump said. “It is going to be a wave. I’ve always said by the time you put [products made offshore] on massive ships or airplanes, I think it’s going to be cheaper [to make them in the U.S.]”
The biggest incentive for companies, Trump said, will be cutting taxes “massively” for both corporations — to 15 to 20 percent from the current 35 percent — and the middle class.
But Trump’s big warning to the executives was something he has repeatedly vowed to do — impose a border tax on the imports of companies that shut down factories, lay off workers and move offshore to produce their goods and then look to import them back to the U.S.
“You now have incentive [the corporate tax reduction], but there is one thing I do have to warn you about,” Trump said. “When you decide, if you decide, to close it, and you no longer will have real reason because your taxes will be lower…we are going to be imposing a very major border tax on the product when it comes in, which I think is fair.”
Trump reiterated earlier comments that companies will still be able to move within the 50 U.S. states to be competitive. He has vowed to impose a 35 percent tax on the imports of companies that move offshore, which has many importers in the fashion industry concerned.
Trump and Congressional Republican leaders have said comprehensive tax reform is a top priority this year. The House GOP blueprint on tax reform released last year included a “border adjustability tax” that is similar to what Trump has proposed.
Essentially, the border tax proposed by House lawmakers would be assessed on the full value of imports, but not on U.S. exports. Companies that import products can deduct the cost of the product, including materials and labor costs, when determining income taxes, according to industry officials. However, under the House GOP proposal, companies would not be allowed to deduct any of those costs on imported products.
U.S. companies, on the other hand, would be able to continue to deduct the cost of their products if made here and would only be taxed on the profit.
“They are going to have [to pay] a substantial border tax. Now some people would say that is not free trade. But we don’t have free trade now. We are only the ones that make it easy to come into the country. If [you] look at China, many other countries, they can’t believe what we are doing,” Trump said. “We take in things for free and yet if you want to [build] a plant or you want to sell something into China and other countries, it is very, very hard. In some cases it is impossible.”