Donald Trump's reign of tariffs
The philosopher Isaiah Berlin famously divided the world into two types of people: hedgehogs know one big thing, whereas foxes know many things. And former President Donald Trump recently reminded us that he is a hedgehog on trade policy.
In late August, Trump threatened an across-the-board 10 percent tariff on imported products to the U.S. if he is elected president again. Trump’s idea is reportedly being considered as a central plank for his 2024 campaign. It was met with a chorus of boos from free trade advocates.
But it should come as no surprise that Tariff Man — the name that Trump liked to use for himself — continues to put tariffs at the center of his trade policy.
The former president sees the dependency of our foreign trading partners on the U.S. market as a huge source of leverage in trade negotiations. Jacking up tariffs by 10 percent would certainly give America negotiating power against countries that sell more stuff to the U.S. than they buy. And for Trump, tariffs are indispensable to his single central vision.
Trump compared his proposal to a “a ring around the collar” for America. It was a garbled metaphor using a line from a laundry detergent ad campaign from the 1970s to convey his intention to protect America with a ring of tariffs. Still, it showed that on trade, Trump’s thinking remains very much in the 1970s — perhaps his reference was not by accident.
Research shows that after a person turns 30 years old, most experience a type of musical paralysis and their musical taste doesn’t change anymore. The same kind of phenomenon can be said for Trump’s views on trade — they have been unchanged for decades.
In the 1970s and 1980s, Trump became convinced that trade deficits, especially for goods, were bad and that major U.S. trading partners like Japan were fleecing America. He has not deviated from that view.
Trump even once remarked at a White House press conference that trade was “probably the biggest reason” he ran for president. During his administration, trade was the gravity of Trump’s political universe.
And whether or not you agree with his views on trade, this much is undeniable: He led the most profound reshaping of U.S. trade policy since World War II. Without his hedgehog determination, it’s doubtful he would have achieved that.
In a sign of how much Trump changed the principles of the Republican Party, which for most of the post-war era had promoted free trade, most Republicans have not criticized Trump’s 10 percent tariff threat. Trump has remade his party into one of protectionism, putting Republicans in sync with left-leaning Democrats and labor unions, which also view trade skeptically.
And that’s the new bipartisan consensus on trade. With less bravado, the Biden administration has largely mimicked Trump’s policy. Trump’s tariffs against China, for instance, remain firmly in place.
Perhaps no moment in Trump’s presidency summed up his constant preoccupation with trade better than when the South Korean movie “Parasite” won the Best Picture award in 2020, for its dark portrayal of the gap between rich and poor in South Korea. What was Trump’s response on hearing the news? “What the hell was that all about? We’ve got enough problems with South Korea with trade, on top of it they give them the best movie of the year?”
Because he sees everything through the lens of trade, he immediately thought of the U.S.’s long-running trade deficit with South Korea — evidence that South Korea was taking advantage of America.
Indeed, he had even tried to pull the U.S. out of its free trade agreement with South Korea over his unhappiness with that deficit. In his view, countries like South Korea (and China, Germany and Japan) that run large goods trade surpluses with the U.S. ought to be paying tariffs. It’s as simple as that.
Of course, an across-the-board tariff of 10 percent would rock relations with our trading partners. And tariffs are a tax that American businesses and individuals would have to shoulder. But those arguments against tariffs will not dissuade Trump from moving forward.
It is said that for a fox, making a mistake is an opportunity to learn new things. For Trump the hedgehog, there’s little chance his views on trade and tariffs will change, however.
A second Trump administration would bring about many unforeseeable consequences. But on one front, the outcome is certain: a Reign of Tariffs on allies and enemies alike.
David Boling works at Eurasia Group, a political risk consultancy, and previously served as a trade negotiator in the Obama, Trump, and Biden administrations.