Sheila Smith’s take on the TPP and a potential trade war with China

Here is part of a post I sent to the NBR Japan Forum, responding to Council on Foreign Relations Sheila Smith’s essay: U.S.-Japan Relations in a Trump Administration

1. Smith wrote: “A trade war with China [and the U.S.] would of course be a disaster for most of the Asia-Pacific economies, and Japan’s economy would be badly affected. Any protectionist impulse by the United States would affect China’s exports not only to the United States but also to Japan.”

A trade war, and these are very unlikely, where certain U.S. tariffs would suddenly increase significantly would hurt American companies like Walmart that depend on selling cheap goods from China. There is no reason why it would be “a disaster for most of the Asia-Pacific companies”, nor would Japan be hurt much. How would China’s exports to Japan change over a dispute with the U.S?

2. “Moreover, attempts to levy tariffs on Chinese manufacturers would affect the global supply chain so necessary to Japanese companies operating in the United States.” (p. 14)

Japanese companies like Toyota and Honda could be slightly hurt by high tariffs placed on auto parts imported from China, although that is not a given as they would likely shift any auto part imports from China, which only accounts for 8% of global auto part exports, to other countries like South Korea at 7%, Thailand at 2% and Mexico at 7% among several others.

3. “Should the new administration follow through on Trump’s campaign promise to back away from the TPP, it will be a tremendous setback for Japan and for Abe.” (p. 16)

TPP not being passed, and I can’t see how it will be anytime soon, would hardly affect Japan. The TPP is overwhelmingly a thousand page intellectual property agreement, which Japan has already followed the U.S. laws with patents and has already agreed to extend copyright protection to the (crazy) 70 years found in of U.S. copyright laws. Abe’s approval rating last month after Trump was elected was around 50% when those polled already took into account that TPP was not going through – if that was even an issue to the voter.

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