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Weekend Reads
Rather than defaulting to criticism, analysts should assess President Donald Trump’s tariffs based on whether they advance the policy objectives the administration is pursuing: (1) reindustrializing the United States, (2) raising revenue, (3) increasing wages and productivity, and (4) accelerating American leadership and innovation in strategic sectors such as artificial intelligence.
In a new policy memo, John Lee looks at the structural drivers of the changes in US trade policy and why the current administration’s actions should not be dismissed without deeper consideration.
Key Insights
1. The administration believes the status quo prioritizes consumers’ short-term interests but harms society and the national interest.
The president sees that an overarching focus on consumer welfarism has a cost. Free trade is disinterested in whether other needs of the community and nation are advanced. For the current administration, cheap and reliable energy production and manufacturing remain essential to the long-term prosperity and security of all large nations and complex societies. Presumably, this is because energy is the lifeblood of almost all economic activity, while making things (not just providing services) is the foundation for industrial resilience. After all, the US was victorious during the two world wars because it could quickly transition and transform into a wartime economy to produce high amounts of armaments and other necessities.
2. The Trump administration believes there are economic and social costs for an America that has become too reliant on foreign made goods.
The rise and success of the so-called East Asian model of economic development and America’s role in enabling it best illustrate the roots of trade imbalances and Trump’s dissatisfaction with the global trading system. For decades, US firms have minimized costs and maximized productivity by sourcing capital, materials, people, and partners from virtually anywhere in the world. So America has been a central and even dominant actor in the rise of economic globalization. In this sense, Trump’s trade policies are an assault against long-standing American trade orthodoxy. Therefore, the most vocal critics of his trade policies are unsurprisingly American defenders of the previous system and not just voices from the economies facing US tariffs.
3. Trump has accurately identified the problems with China’s unequal involvement in global free trade.
Since Trump’s first term, the US has been increasingly unwilling to passively accept the economic outcomes (and strategic corollaries) of a system in which its major strategic rival is competing according to a different set of rules. Trump’s tariff regime is clearly not just directed against China, but a special focus on the China challenge in this context is enduring and understandable. Regardless of any subsequent deal or arrangement with China, the US tariffs and other measures against China will be (or ought to be) of a different nature and scale to those against other economies.
Go Deeper
John Lee argues that Chinese economic policies and practices pose a greater challenge to globalization than Trump’s tariffs.
In a Washington Post op-ed, Nadia Schadlow warns that the US needs to be able to produce its most important defense capabilities without having to ask permission from Beijing. She explained how Washington can address this vulnerability on the podcast NatSec Tech.
President Donald Trump’s trade realignment is opening the door to new forms of agreement. Mark Siegel offers eight ways Tokyo can capitalize on this to negotiate a “Japan First” trade agenda in a Hudson policy memo.
