Question

One of the first actions of President Trump was to withdraw from negotiations on establishing the TTIP. Why do you think he did this? How does withdrawal benefit America? What are the opportunity costs of not pursuing the TTIP? Is Trump’s decision good for American business? For American consumers?

Answer 1

Transatlantic Trade and Investment Partnership:

It is an agreement made between US and the European Union ,in order to promote trade and multilateral economic growth

Withdrawal reasons -

The US, under the presidency of Donal Trump on 15 April 2019, decalred the negotiations on the Agreement to be OBSOLETE ,owing to

• Logically it's been Trump's first policy for America had been this withdrawal
• It is more of an way to shut the trade war against China
• He believes that it will improve employment levels in America
• He believed that this agreement just hampered American business however to the other big player i.e. JAPAN does not even manipulate it's currency value

How it will be beneficial for America -

• Trump from the start of campaigns of presidency, was against this agreement
• As owing to this agreement , US in itself is suffering from high unemployment cause normally ,companies there use to outsource there work to developing nations as over there labor costs are less and labor laws are also less
• So now employment can rise as companies in US will have to work more within the nation

Opportunity Cost of not pursuing TTIP -

• It is not only for US but also for its other members for the real GDP, welfare,trade balances and exports and imports
• As per results , for US the loss in GDP - 0.76%, welfare loss -$107 billion,fall in exports and imports by 8.43% and 6.31% respectively

Effect on American Business -

• More or less now that US companies can't outsource there work to cheap labor available out of boundaries , heiring expensive labor within nation can drop the profits
• As Trump is aiming at US independence from trade , there might be barriers in opening foreign branches and also taxes and subsidy for the companies will be part of play
• However ,with it competitors from other nations can now bring cheap subsidies in nation while other nations can keep high taxes on their goods

Effect on American Consumer-

• Lesser variety of goods now in market
• If goods will be available then at higher prices as free trade is abolished ,now tariff duties will rise the price
• Causing more of budgetary problems.

Conclusion:

The withdrawl done by US from the agreement can be seen from any prospective and judgement would vary as per different theories and philosophy but the actual outcome of it can only be observed in long run .

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