According to reports in the American media, President Donald Trump has told officials to look into perhaps joining the Trans-Pacific Partnership (TPP), even though he rejected it when he first became president.
Former President Obama had set the ground work for the TPP with Pacific countries that have big economies like Australia, Japan, Vietnam and Singapore. The idea of the TPP was to reduce tariffs & trade barriers whilst also combating China’s influence in the region.
President Trump was originally against the idea because supposedly ‘foreign’ companies could take away American jobs and manufacturing. Apparently it’s not such a bad idea after all.
It would mostly be a good thing if the US were to join the TPP. It’s the biggest economy in the world, which should help Australian exporters. Australian agricultural in-particular could be a beneficiary, although food stocks should already benefit due to trade with the countries that are part of the TPP, like Japan.
A trade deal alone isn’t enough to justify a purchase of Australian Agricultural Company Ltd (ASX: AAC), Graincorp Ltd (ASX: GNC), Rural Funds Group (ASX: RFF) or Bega Cheese Ltd (ASX: BGA) but it could give them a boost.
Investors would be foolish (with a little ‘f’) to rely on Donald Trump following through with his decisions. I hope President Trump does see sense and works with other countries, but there’s a long way to go before the US joins up with the TPP.
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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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