For a long time, the United States has imposed lower tariffs on the goods of its trading partners than those trading partners have imposed on American goods.  The US did this because the national strategy was to foster a world of openish markets in pursuit of “peace, prosperity, and American exports around the world.”[1]  A month into office, President Donald Trump is announcing the end of the Age of America as the “benevolent hegemon.”  Now it is “pursuing its own interests first.”[2]  Trump’s actions began wreaking havoc in the international economy.  He doubled the tariff on Chinese goods, announced a looming 25 percent tariff on imported steel and aluminum, and raised the possibility of tariffs on semi-conductors, drugs (and not the fentanyl kind either), and cars. 

            Take the example of cars.  About 8 million of the 16 million new cars sold in the United States each year are manufactured abroad, chiefly in Germany, Japan, and South Korea.  Many more “foreign” cars are manufactured in American plants.  In late February 2025, President Donald Trump raised the idea of imposing a 25 percent tariff on car imports.[3]  One solution might be for foreign car-makers to increase production in their American facilities, while reducing exports to the United States.  Fine, except that a) it takes along time to build a car plant and recruit a work force, and Trump might be out of office before the plants are ready, taking his tariffs with him back to Mar-a-Lago; and b) if they cut manufacturing in their home country, they will have to lay off many workers there, as well as taking the political heat that comes with the lay-offs. 

            Then there’s steel.[4]  Many foreign countries subsidize their own steel industries at the expense of American producers.  Eighty percent of America’s steel imports come from “friendly” countries (Europe, Japan), rather than from China.[5]  Trump wants to privilege American steel-producers over those foreign competitors.  American steel-consumers—car companies for example, and their American customers—will have to bear the transitional costs. 

            The push-back came swift and hard.  Basically, “He did this in his first term and the results were BAD!”  Prices rose, American companies saw their sales fall, and car companies came under a lot of financial stress.[6]  Moreover, bullying our friends gains us nothing.  Canada—the country that invented hockey—dropped the gloves, at least rhetorically for the moment.[7]

On the other hand, some observers thought that the threat of tariffs could serve a useful purpose.  It could bring foreign trading partners to renegotiate existing trade deals.[8]  In short, Trump isn’t serious about actually imposing the tariffs. 

But what if he is serious?  And what if he insists on including the reduction of Non-Tariff Barriers (NTB) to trade?  This would include things like currency manipulation, and the taxation and regulation of American businesses abroad.  Eeeek! 

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[1] “Trump’s tariffs: A new era of protectionism,” The Week, 28 February 2025, p. 34.    

[2] See Oren Cass, quoted in “Tariffs: Does Trump know what he is doing?” The Week, 14 February 2025, p. 6. 

[3] “Trade: Tariffs may hike foreign car prices,” The Week, 28 February 2025, p. 32. 

[4] “Trum brings back steel tariffs,” The Week, 21 February 2025, p. 32. 

[5] That is, our “friends” have been harming us for decades in the service of domestic interest groups. 

[6] “Trump’s tariffs: A new era of protectionism,” The Week, 28 February 2025, p. 34. 

[7] “Canada: Proudly resisting Trump’s bullying,” The Week, 14 February 2025, p. 14. 

[8] “Tariffs: Does Trump know what he is doing?” The Week, 14 February 2025, p. 6.