Delay or failure to implement the Trans-Pacific Partnership (TPP) trade deal could cost US exporters around US$94bn, according to a new report, which also suggests global headwinds are likely to continue to weigh on US growth in the near future.

The 2016 'Economic Report of the President', written by the Council of Economic Advisers, and sent by President Obama to Congress this week, outlines the importance of the TPP for the US economy, which authors predict will grow by 2.7% in 2016, 2.5% in 2017, and 2.4% in 2018.

However, the report warns of headwinds from a global slowdown that could put pressure on US exports. Both the 2016 World Bank Global Economic Prospects and the IMF report that GDP growth in low-income countries (LICs) fell to between 4.8% and 5.1% in 2015. Between one-half and two-thirds of LICs are commodity exporters. The commodity price decline is taking a toll on public finances, current account balances, and economic growth in these countries, making them more vulnerable to both domestic challenges and external shocks such as global financial turbulence.

This slower growth around the globe, however, has had spillovers to the US economy, the report explains.

"Weaker growth abroad than in the United States tends to put upward pressure on the US dollar and downward pressure on exports, both of which were observed in 2015," authors note.

"The challenging environment for US exports is an important motivation for the President's trade agenda, including the Trans-Pacific Partnership agreement. [It] underscores the importance of the President's trade agenda in opening new markets and ensuring a level playing field for US firms."

The TPP, which involves 12 nations and covers 40% of the world economy, was agreed in October last year and submitted to Congress soon after. It was signed by Ministers in New Zealand earlier this month after five years of negotiations.

TPP trade pact in "milestone" signing by 12 nations

The Council of Economic Advisers, however, believes that delay or failure to implement the trade deal risks substantial costs. Exporters, they say, may see new opportunities to expand delayed or missed, a cost which is estimated at $94bn if implementation is delayed by even just one year.

"At the same time, China, the European Union, Japan, and other economies are negotiating preferential agreements whose effect in the absence of TPP would be to create or exacerbate tariff differentials that put US exports at risk and may reduce incentives for goods-producing industries to invest in the United States," authors warn.

With 45% of the $726.5bn in US exports of goods and 25% of the $178.3bn in US exports of services going to TPP countries in 2014, no previous free trade agreement has covered such a large share of US trade. US exports to TPP countries also supported an estimated 4.2m US jobs in 2014, more than a third of the 11.7m US jobs supported by exports to the world.

The report points out that the TPP will make it easier to sell American goods and services globally, locking in zero-tariffs on 98% of goods traded. A study by Petri and Plummer (2016) from the Peterson Institute predicts a "significant" gain for the US – an additional 0.5% in real annual income, with the majority of the benefit going to labour in the form of higher wages – including an expansion of US exports by more than 9% relative to a world without the agreement.

It also predicts large gains for even the poorest among the TPP countries. Although the authors note that tariff reductions were more ambitious than many anticipated, roughly half of the economic benefits arise from reductions in non-tariff barriers.

"The United States has been a relative bright spot in the world economy, gradually approaching full employment levels of output and generating substantial portions of global demand," authors note.

"It will be crucial that the world economy not return to a model prevailing prior to the crisis where too much of the global economy relied on the US consumer. Still, forecasts are for these global headwinds to continue to weigh on US growth in the near future – which is why both strengthening the US economy to ensure it is more resilient while working with partners abroad on their growth is a key priority for the President."

Click here to view the full report.

For further insight into what the TPP might mean for textile and apparel trade, click on the following links:

How TPP will change US textile and apparel tariffs

Will the TPP pass into law?