Trump's tariff strategy

 I&I:

“April 2nd, 2025, will go down as one of the most important days in modern American history.” —  White House Press Secretary Karoline Leavitt.

We have no doubt that Leavitt’s prediction will come true. Whether it’s remembered for being a success or as Smoot-Hawley 2.0 remains to be seen.

“It is going to work,” Leavitt said. “And the president has a brilliant team of advisers who have been studying these issues for decades.”

That’s a bit of an odd boast, given that the economists who have been studying tariffs and trade policy for decades had long ago decided that tariffs are a sledgehammer approach that rarely work as intended, that they are a wildly expensive way to create jobs, don’t spur economic growth, protect uncompetitive U.S. firms, and are an ineffective diplomatic tool.

National Review recently published an article tracing papers from the Heritage Foundation going back to the early 1980s arguing for the benefits of free trade. The article is meant as a criticism of Heritage President Kevin Roberts’ recent defense of Trump’s tariff strategy.

But a separate article in National Review also admits that other countries routinely impose far higher tariffs on U.S. goods than our country levies on their exports into American markets. “In some places, our companies are paying a significantly higher rate to sell our goods there than they pay to sell their goods here. That does seem at least a little unfair, doesn’t it?” writes never-Trumper Jim Geraghty.

Geraghty also admits that some countries were lowering their trade barriers in anticipation of Trump’s reciprocal tariffs: “The European Union is identifying concessions it’s willing to make to Donald Trump’s administration to secure the partial removal of the U.S. tariffs that have already started hitting the bloc’s exports and that are set to increase after April 2.”

But what is Trump’s ultimate goal? On the one hand, he says he wants only to level the playing field between industrial nations. That’s what all those free trade agreements that conservatives long championed were supposed to do, but have not succeeded, according to Trump.

“Trading partners have repeatedly blocked multilateral and plurilateral solutions, including in the context of new rounds of tariff negotiations and efforts to discipline non-tariff barriers,” Trump writes in his executive order. “At the same time, with the U.S. economy disproportionately open to imports, U.S. trading partners have had few incentives to provide reciprocal treatment to U.S. exports in the context of bilateral trade negotiations.”

If Trump’s approach works better than all those trade deals at bringing down other nations’ tariffs, who can complain? Certainly not free traders.

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Access to the US economy is worth far more than access to other countries. This could be enough to restore some discipline to trade policies in other countries.  We need to get to a point where there is mutual benefit to free trade.

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