Ten Winning and Losing Industries from the Pacific Trade Deal
A 788-page report forecasts which sectors would ultimately gain or lose from the pact over 15 years
By William Mauldin
The proposed Pacific trade agreement that has generated so much controversy in the 2016 campaign season would likely benefit the U.S. economy overall, but would distinctly help some businesses and types of workers more than others. A nonpartisan U.S. commission released a 788-page report that estimates the extra economic gains or losses that dozens of industries would incur after 15 years under the Trans-Pacific Partnership, or TPP, assuming it wins passage in Congress and is ratified by other nations.
Here are some findings from the report of the U.S. International Trade Commission, with the figures representing the net economic effect of that TPP on that industry over 15 years:
Passenger cars: +$1.6 billion
Lower barriers to car markets in Vietnam and Malaysia–and special measures designed to get American cars on Japanese roads–would boost the car-assembly industry in the U.S., which includes Detroit and foreign producers. But beyond 2032, the U.S. tariffs on foreign cars would also fall, eliminating an advantage in Detroit.
Apparel: +$425 million
The TPP could result in more fast-fashion items, sports uniforms and other specialty items being produced in the U.S., the ITC says.
Dairy production: +$1.8 billion
American dairy farmers would get some new access to big markets in Japan and Canada under the deal, even though the U.S. agreed to accept more milk products from New Zealand.
Retailers and Wholesalers: +$7.4 billion
Lower tariffs on certain types of clothing and other items mean bigger profits at Wal-Mart and other American stores.
Business services: +$11.6 billion
The services sector that dominates the U.S. economy would get the biggest boost from the TPP, and competitive services provided to businesses in the U.S.—think the big accounting firms—would benefit from new overseas business.
Auto parts: -$1.4 billion
The TPP would lower U.S. import tariffs on parts more quickly than on whole cars and also loosen up existing rules from the North American Free Trade agreement that require much of a car to be produced on the continent in order to be shipped duty-free.
Textiles: -$329 million
Vietnam’s presence in the TPP would likely put pressure on less competitive textiles plants, as well as some other manufacturing operations. But specialized and competitive textiles plants could still benefit, and a key industry group supports the deal.
Soybean production: -$407 million
Soybeans and wheat wouldn’t get significant new markets under the deal, and the ITC expects the TPP to raise land prices and take resources away from these products.
Transportation and tourism: -$720 million
The TPP wouldn’t liberalize air travel, and Americans would likely use the extra income from the TPP to travel abroad, which has the effect of giving other countries additional tourism exports to the U.S., the ITC says.
Chemicals and drugs: -$2.9 billion
The TPP’s reduced barriers at the border and complicated trade rules would likely lift U.S. chemical and pharmaceutical imports by $5.3 billion, outpacing gains in exports, the ITC says. The economic hit is small compared with the overall size of the industry.