Trump Ending Trans-Pacific Partnership Might Hurt NJ Businesses

By Brenda Flanagan

As Leo Cervantes fries up fajitas in his Monmouth County restaurant, Chilangos, he points to ingredients imported from Mexico.

He said, “We have fresh serrano peppers that come straight from Mexico, cilantro, nice and fresh, and cactus.”

Chilangos also imports 275 brands of tequila. Not surprisingly, Cervantes supports the Trans-Pacific Partnership, a 12-nation trade deal to lower tariffs and taxes for member nations — including Mexico — on the Pacific Rim. But President-Elect Donald Trump has announced he wants no part of the TPP.

“I am going to issue our notification of intent to withdraw from the Trans-Pacific Partnership,” Trump said. “A potential disaster for our country. Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back onto American shores.”

“What’s going to happen? Right now, we’re like, ‘Okay, so my business is going to be having problems because of that?’ We all have questions. We don’t know what’s coming, but we’re kind of nervous about it,” Cervantes said.

With significant deep water ports, cargo transport system and warehousing capacity, New Jersey’s a major player in international trade. Thirty-eight percent of goods exported from Jersey went to TPP countries last year — more than $8 billion worth of computer software, chemicals, pharmaceuticals and scrap metals. If trade agreements gets reconfigured because the U.S. refuses to ratify the TPP, experts say China may step into the breech.

“It could really increase their influence in trade with the affected nations and the U.S. would probably lag behind,” said Dean of the Bloustein School at Rutgers University, James Hughes.

What’s at stake? Last year, more than 15 percent of Chinese exports to the U.S. went through New Jersey — which exported $1.5 billion in goods back to China. And little guys could get hit down the line if the U.S. imposes new tariffs and sparks a trade war.

“That would reverberate through the New Jersey economy since that whole sector of the economy would be negatively impacted by that,” said Hughes.

Arturo Osorio, a professor at Rutgers, said, “The conveyor belt of economy of goods and services in the U.S. will have a domino effect in the local economy. A small supermarket that carries a lot of products from abroad will be in places where those products may become more expensive or not available at all.”

Cervantes battled back after his restaurant got hit hard by Superstorm Sandy.

“We’re still dealing with that,” Cervantes said. “As you can see the town is being fixed. Now, we are talking about something different. A different type of hurricane. Something that we don’t understand how we are doing to deal with it.”

Even if the president-elect drops out of the TPP on Inauguration Day, Jersey wouldn’t feel an immediate impact, according to experts. But if a trade war erupts, it’s small businesses like Chilangos that worry about ending up on the front lines.