America’s trade partners are not reacting well to Donald Trump’s trade policies. Because it is in their interests to oppose all barriers to trade with the United States, they are obviously going to be against US tariffs, including Trump’s 25% tariff on imported steel, 10% tariff on aluminum, and 20% tariff on cars. Due to the reality that most corporations now rely on global supply chains and hope to boost their profits with trade, most high-profile businesses are not happy with Trump’s trade policies. Wall Street has certainly not been reacting well to the ill-effects of the emerging global trade war the US President appears to be orchestrating, which is expected as stocks and reports are largely a reflection of what investors, business analysts, and business leaders perceive to be in the interests of businesses. The most important question, however, is whether or not Trump’s policies are in the interests of the American People.
Retaliatory tariffs, such as those the EU has threatened to impose against $300 billion worth of US goods in response to Trump’s car tariff, are probably bad for the US economy. Such moves will increase the cost of goods for European Union consumers, thereby likely discouraging them from purchasing US goods. On the one hand, the Trump Administration inflamed trade relations by approaching its trade policies with an accusatory stance before strong-arming US trade partners into renegotiating trade deals with the threat then implementation of tariffs. Through an anti-Trump lens, there is no question that Trump started a trade war. On the other hand, Donald Trump’s political rise is, in part, the product of a growing backlash against globalized “free trade” and international governance, thus he is enacting the policy preferences of his supporters. The Trump Administration is responding to a global trade regime that appears to be leading to the neglect of the America People’s interests.
Recognizing Europe Union imposes a 10% tariff on US cars and the US imposes a 2.5% tariff on EU cars, as well as a 25% tariff on commercial vehicles and light trucks, unfair trade appears to be in play. Eliminating these tariffs would be an embrace of “free trade,” but that is not what Trump supporters want. The President, for his part, appears to want his perceived version of “fair trade.” Although Trump has been framed as a “nationalist” and “protectionist,” which is a description he himself has propagated, the fact he is seeking to use tariffs as leverage to renegotiate trade relations demonstrates otherwise. His ill-expressed goal is to make trade work better for American workers. Unfortunately, President Trump does not appear to have a clear vision for how trade should work. He seems to oscillate between increased protectionism and increased free trade, depending on his ability to reach a political settlement with foreign leaders, but neither position actually helps US or non-US workers .
That said, Donald Trump and his supporters have not been the only people advocating for a pullback from free trade. Advocates for a recalibration of US trade relations, such as this writer, want to see trade relations geared toward the interests of average people from across the world instead of corporations and wealthy elites. A stable global economy depends on healthy national economies; therefore, national economies must be built on industries that serve the local needs of a people with locally plentiful resources that are as local as possible with excess production being used to participate in the global economy. To achieve this vision, tariffs as well as reduced trade barriers are needed for trade partners with ever-changing needs and significant economic disparities. Because tariffs create costs, any recalibration of trade relations is going to spark outrage, but geopolitics is what drives an actual trade war. Geopolitics is what is driving Trump’s trade war.
People do not like Donald Trump. Businesses and foreign leaders do not like US tariffs. They, therefore, have every interest to spread fear and impose retaliatory tariffs. Fear mongering and retaliatory measures are not, however, the true costs of Trump’s tariffs. They are the punishment for departing from the global free trade regime. They are the result of an unwillingness to work with the Trump Administration to improve trade relations for the good of all Peoples. They are also the consequence of Trump’s highly antagonistic approach to trade and “diplomacy.” Trump’s tariff are creating upheaval across the global economy, but retaliatory measures are creating even greater problems. Trump is an agitator, but he is not a problem solver. Unfortunately, his counterparts, whose impulses have been to react with retaliatory measures, are no better. A revolution in trade reform has been started. It now needs leadership, which must come from the global political and business leadership.
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