That’s entirely possible, said Alexander Capri, visiting senior fellow at National University of Singapore. Still, it’s nearly impossible for companies to completely ignore the U.S., he added.
To leapfrog American tariffs, some Pacific-based corporations that can’t afford to be excluded from the U.S. market may move manufacturing stateside, which would harmonize with the White House’s wishes, Capri explained.
Many have warned that Trump’s decision to exit the TPP places the U.S. at a competitive disadvantage in trading with TPP members, particularly in agriculture.
“For example, under CPTPP, Australian beef exporters will now pay only a 9 percent tariff on their sales in Japan, while their U.S. competitors will continue to face a basic tariff rate of 38 percent,” the Center for Strategic and International Studies said in a note.
The “fear of losing out through trade diversion may give others an incentive to join the pact,” Roland Rajah, director of the international economy program at Australian think tank Lowy Institute, said in a note last month.
Still, it’s too early to assess what impact the new pact will have in upholding the agenda of open markets, international cooperation and a rules-based system, he cautioned.