In his quest to make America great, President Donald Trump is withdrawing the United States from global trade. American families, companies, and investors will pay a price for this, as many commentators have noted. But the repercussions don’t end there. The tariff regime is also destroying a pillar of American global power, and it will further isolate the country at a moment when others stand ready to fill the vacuum.
On Wednesday, Trump announced that America would impose a 10 percent duty on imports from virtually all countries, plus additional punitive tariffs on countries he deems bad actors on trade, including Japan and members of the European Union. Some of these duties are extremely high. Adding the new levies to those previously imposed, China’s average tariff rate is now near 70 percent. Trump described the tariffs as payback: “Foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once beautiful American dream,” he said. “Our country and its taxpayers have been ripped off for more than 50 years, but it is not going to happen anymore.”
Trump’s tariffs are the culmination of a decades-long shift in political perceptions in the United States, in which trade has gone from unalloyed good to the source of all ills. The U.S. once sought to bring down barriers and open markets globally—forging trade deals such as the North American Free Trade Agreement with Canada and Mexico, and supporting the World Trade Organization. The resulting global trading system lowered the cost of goods, which benefited the companies and consumers of wealthy countries such as the United States. It also connected poorer countries, such as China, to international supply chains, allowing them to create jobs, woo investment, and alleviate poverty. The United States became, in effect, the world’s ultimate consumer, which tied other countries to its economy and its interests.
Trade was a glue that held the American-led international order together. But economics always involves trade-offs. As supply chains stretched across the globe in search of lower costs, many factories vanished from the American heartland. Some Americans fastened on trade as the source of the inequality and constrained mobility that plagued the country’s middle and working classes; populist politicians encouraged these sentiments.
Strategically, too, trade’s promise seemed unrealized: Experts and politicians had assured Americans after the Cold War that economic exchange would transform China and Russia into peaceful partners. Within a couple of decades, these powers had clearly become authoritarian competitors instead.
The Trump team sold its tariffs program as a bid to set things straight by forcing America’s lost factories to return home. “You’re going to see the greatest resurgence of factory building and factory production in America,” U.S. Commerce Secretary Howard Lutnick said in defense of the tariffs. Trump is “changing the way people think about production in America.”
The results are unlikely to be what the administration anticipates. Some foreign companies may indeed respond to the tariffs by building factories in the U.S. to maintain their presence in a crucial market. But many others are simply too small, or too integrated into existing supply chains, to make that move. Where the millions of American workers will come from to screw together iPhones or make car parts is also a mystery, especially given the president’s opposition to large-scale immigration. Factories in the U.S. are already struggling to find workers; the manufacturing sector has hundreds of thousands of vacant openings.
Trump has long complained that some other countries tilt trade in their own favor. The White House, in explaining its tariff regime, cited practices by other countries, including currency manipulation and onerous product standards that inhibit imports, that have been real concerns. But the tariff regime may soon lay bare the inconvenient truth of comparative advantage: Certain goods are made outside of the U.S. because factories elsewhere can produce them more cheaply and efficiently. Lower costs are a big factor, but so is competence. Many manufacturers in China and elsewhere have developed skills and expertise that make them highly competitive.
The likely outcome of Trump’s policy will be high prices for what Americans make and buy, whether produced at home at greater cost than abroad or imported from overseas with a punitive tax. By one estimate, tariffs could hike the price of a top-end iPhone to $2,300. The Trump team seems to accept this. “Access to cheap goods is not the essence of the American dream,” U.S. Treasury Secretary Scott Bessent said in March. But when consumers buy fewer products at higher prices, companies produce and sell less, hire fewer workers, and growth slows. As French President Emmanuel Macron put it, Trump’s policy will make Americans “weaker and poorer.”
Americans will not be the only ones to suffer in a global trade war. Other countries will likely respond to U.S. tariffs by erecting protectionist barriers of their own. China has already announced an additional 34 percent tariff on U.S. imports. The EU is threatening to retaliate too. The global trade that was once an engine of prosperity may now reverse and become a source of economic competition.
Other countries long accepted U.S. leadership because they saw Washington as a proponent of global economic progress. The role Trump is choosing for the United States is not that. He may eventually roll back tariffs for those countries that negotiate with him, and he may even see this as a show of kingpin-like strength: Trump has already said that he’d be willing to reduce duties on China in return for a deal involving TikTok. But the erratic and arbitrary nature of the policies, and the willingness to exploit U.S. economic might to extort concessions, will undermine American standing nearly everywhere.
In fact, the administration’s tariff policy opens opportunities for Beijing, of all players, to portray itself as the more responsible global leader. In a meeting just days before Trump’s announcement, ministers from China, Japan, and South Korea issued a statement pledging to promote global trade.
That two of Washington’s closest allies would join Beijing in implicit criticism of the U.S. highlights the danger. The U.S. remains the world’s largest economy and a key market for many countries’ exports. But it is not the only game in town, either. A social-media account associated with CCTV, a Chinese state broadcaster, posted a graphic showing the extensive trade agreements that America’s partners have with one another and commented that, with the new tariffs, the U.S. is “shutting itself out of the world of free trade.” These countries will continue to expand their economic ties whatever Trump does. During his first term, after Trump withdrew the U.S. from a major trade agreement called the Trans-Pacific Partnership, participants completed the pact on their own.
Tariffs are not going to make other countries respect the United States. But they can make them move on without it.
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