What should international (trade) lawyers make of these developments? As always, when international law faces a fundamental challenge, we are caught between utopia and apology. On the one hand, it sounds trite, almost naïve, to point out the obvious illegality of the tariffs under every trade agreement that the United States has ever concluded. On the other hand, are we really prepared to join the ranks of the cynics who wearily conclude that international trade law generally and the World Trade Organization (WTO) specifically do not matter anymore? And yet, neither the tariffs nor international trade law are going anywhere anytime soon, so it is important that we think about their relationship.

In this post, I will suggest that the new tariffs represent a qualitative change from the tariffs adopted by the first Trump administration and maintained by the Biden administration. The latter were merely illegal, while the former are antithetical to the very institution of international trade law. I will then argue that other countries should bifurcate their approach to international trade law in the context of the tariffs. They need to recognize that the United States has made itself an outcast in the international trade regime and treat it as such, while continuing to respect international trade law in their relationships with each other.

What Makes These Tariffs Different

During the first Trump administration, Trump’s ambition to reverse decades of trade liberalization was reined in by his advisors. He ended up imposing tariffs on steel and aluminium imports from virtually all US trading partners as well as on a vast range of imports from China. These tariffs represented stark departures from previous practice and were found to be illegal by WTO panels, but there was still some connective tissue, however thin, between the tariffs and international trade law. The first set of tariffs, adopted under Section 232 of the Trade Expansion Act of 1962, were justified by the Trump administration on national security grounds—and there are security exceptions in WTO law, which the administration stridently argued would have provided it the discretion to adopt the tariffs if the exceptions had been properly interpreted as self-judging. The second set of tariffs, adopted under Section 301 of the Trade Act of 1974, were based on a unilateral finding by the Trump administration that China had engaged in “unreasonable or discriminatory” practices. They were impossible to justify under WTO law (the United States tried) but could at least be plausibly defended as a response to the insufficiency of WTO law in responding to China’s economic practices. These so-called Section 301 tariffs applied only to China; it thus appeared that the administration was only taking its relationship with China out of the framework of WTO law, without removing the United States from that framework entirely. And the tariffs were based on an extensive investigation that addressed long-standing concerns from stakeholders. They inaugurated a radically new normal in the US trade relationship with China, but that new normal appeared stable enough to allow companies (however grudgingly) to adapt.

The new tariffs are of a different nature. The tariffs do not hit a specific adversary, but virtually all places on earth—including uninhabited island in Antarctica (a quirk that has given rise to a wealth of penguin-themed memes). They also have no relationship whatsoever to the actual trade barriers that countries impose on US exports. And the United States’ attempt to invoke the security exception to justify the tariffs stretches the exception so far that trade obligations lose all meaning.  

But the tariffs also represent a radical break with the trade regime in that they are antithetical to the very institution of international trade law. A central purpose of a rules-based international trade regime is to provide “security and predictability” to international trade relations, as the WTO’s Dispute Settlement Understanding puts it. The Trump administration uses tariffs to do exactly the opposite: to generate insecurity. The administration is sending an unmistakable signal to companies that the only place where they are safe from tariffs is the United States. The administration is thus not simply ignoring international trade law; it is deliberately undermining the very purpose that international trade law serves. It will be hard, perhaps even impossible, for a future US administration to restore other countries’ trust in the predictability of trade relations with the United States, even if it wanted to.

What the Tariffs Mean for Other Countries and International (Trade) Lawyers

It follows that the rules of international trade law no longer provide any guidance to other countries on how the United States will conduct itself in its international trade relations. Instead, what governs US trade from now on is US domestic law, which can change at any moment. People interested in understanding US trade relations have found their WTO law expertise virtually useless and have instead been reduced to parsing the language of President Trump’s executive orders, waiting for the latest guidance from US Customs and Border Protection, and speculating about the intricacies of US constitutional and administrative law. (The one exception to the irrelevance of international law to US conduct is the United States-Mexico-Canada Agreement (USMCA), which the Trump administration, in a meek concession to economic realities, has allowed to shield some limited imports from Canada and Mexico from the tariffs otherwise imposed on those countries.).  

If the rules of international trade law no longer have traction on what the United States will do, should they nevertheless still shape the response of US trading partners? During the first Trump administration, most major US trading partners decided that the response should be no: they retaliated against the United States’ tariffs without awaiting authorization to do so from the WTO’s Dispute Settlement Body and thereby themselves acted inconsistently with their WTO obligations. This time around, countries like China and Canada have adopted the same approach: they hit back against the United States tariffs almost immediately.

From the perspective of WTO law, this is an impermissible form of vigilante justice. However, imposing immediate retaliation is eminently reasonable in light of the dynamics of trade negotiations. In trade negotiations, trade barriers represent bargaining chips, and the illegal tariffs imposed by the United States are, among other things, an illegitimate attempt to acquire additional bargaining chips. The dollar-for-dollar retaliation by the United States’s trading partners during the first Trump administration was in large part an attempt to deny the United States any bargaining advantage that it might otherwise have obtained from imposing the illegal tariffs. Given these dynamics, immediate retaliation, while it may appear to undermine international trade law further, can actually help to protect the integrity of negotiated commitments by deterring countries from using illegal means to achieve legal change.

What matters most, however, is that other countries continue to respect their WTO obligations in their relationships with each other. To be sure, the United States’s abandonment of its WTO obligations has knock-on effects for virtually all other countries. Many fear that exports destined for the United States will be diverted to their markets and may be tempted to adopt protective measures in response, but there are WTO-consistent ways of doing so, for example with safeguard measures. As stocks plummet and business sentiment deteriorates in the United States, the humble promise of international trade law—to offer security and predictability to international trading relations—appears newly attractive. The wise path for other WTO Members is to work hard among themselves to improve the highly imperfect system of international trade law that we have, be it at a bilateral, regional, plurilateral, or multilateral level. For whatever else President Trump did on April 2^nd, he did not offer a superior alternative to that system—not for the United States, and much less for the world.  

To read the full blog as it was published by EJIL:Talk (European Journal of International Law), click here.

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Every empire has used them. Every revolution has resisted them. Tariffs are the quiet trigger behind some of history’s loudest moments. They have been a cornerstone of economic policy throughout history, serving as powerful tools to protect domestic industries and steer international trade relations. Tariffs have continually evolved, shaped by the administrative innovations of ancient civilizations, the protectionist policies of colonial empires, and the modern debates surrounding globalization.

The early usage of tariffs set the stage for their continued impact on the global economy, leading us to the present day where they are still key players in trade disputes and economic policy. As we navigate the complexities of globalization, the historical lessons tariffs offer provide valuable insights into their potential successes and failures.

The concept of tariffs dates back to ancient civilizations, where rulers imposed taxes on imported goods to protect local economies and generate revenue. In ancient Egypt, tariffs were imposed on goods transported along the Nile River to protect local products and maintain their competitiveness. Similarly, the Roman Empire implemented tariffs to regulate trade and support domestic industries, fostering economic stability within the empire. Early records reveal that these taxes were closely entwined with state-controlled trade routes, underlining the administrative sophistication of these early societies. Many times, tariffs were codified into legal structures that balanced the revenue needs of the state with the interests of merchants. This foundation secured the financial stability of ancient regimes and served as a stepping stone for more intricate fiscal policies in later eras.

Tariffs gained new importance with the rise of European colonial empires in the 15th and 16th centuries. Nations, such as Spain, Portugal, and later England and France, established colonies to secure access to valuable resources and markets. To protect their colonial interests and maximize profits, these nations implemented tariffs on imported goods from rival empires. This mercantilist approach attempted to create a favorable balance of trade by limiting imports and promoting exports. Ultimately, it contributed to the wealth and power of the colonial empires.

The exploitation of tariff policies reinforced the centralization of power in European metropoles, where revenues from controlled trade routes funded military expansions. These tariffs also facilitated economic dependency within the colonies, which curtailed local enterprise in favor of the interests of the European homeland. Consequently, the strict enforcement of these trade restrictions enriched the colonial powers, but also incited early forms of resistance among colonists, setting the stage for future challenges to imperial dominance.

By the 17th and 18th centuries, mercantilism had become the dominant economic theory across Europe. Tariffs were a central component of mercantilist policies, used to protect domestic industries from foreign competition and encourage the export of finished goods. Nations like England implemented high tariffs on imported goods to support their burgeoning manufacturing sectors, while simultaneously imposing lower tariffs on raw materials needed for production. This strategic use of tariffs helped European nations amass wealth and maintain economic dominance during this period.

For long in the United States, tariffs have been a source of economic tension. During the 19th century, tariffs were a controversial issue, with Northern industrialists advocating for high tariffs to protect their factories, while Southern agriculturalists opposed them, in fear of retaliatory actions from trading partners. The tension over tariffs contributed to the economic divide between the North and South, playing a significant role in the lead-up to the Civil War.

The risks of aggressive tariff policy became clear during the Great Depression. The Smoot-Hawley Tariff Act of 1930 raised duties on a wide range of imports to protect American jobs. Instead, it triggered a global trade war, as other nations retaliated with their own tariffs. The result was a dramatic decline in international trade, worsening the economic crisis and serving as a warning about the dangers of protectionism.

With its tariffs, the Trump Administration broke from decades of U.S. trade policy that had mostly focused on lowering barriers and encouraging global commerce after World War II. These tariffs included a 25% levy on steel and aluminum imports and additional duties on over $1 trillion worth of goods, with Chinese imports facing rates as high as 145%.

The administration has justified these measures as necessary to address trade imbalances and protect domestic industries, particularly manufacturing. However, the tariffs also triggered retaliatory actions from trading partners, including China and the European Union, leading to disruptions in global supply chains and increased costs for U.S. businesses and consumers. Everyday Americans, especially low- and middle-income families, are facing rising prices on items like electronics, clothing, and food.

Today, tariffs remain a contentious issue in global trade. While they can provide short-term relief to domestic industries by making foreign goods more expensive, they often lead to unintended consequences, like higher consumer prices and disruptions in supply chains. Tariffs have always oscillated between protectionism and liberalization, reflecting broader economic and political shifts.

The Trump tariffs echo the mercantilist policies of the 17th and 18th centuries, where nations used tariffs to protect domestic industries and achieve a favorable balance of trade. Similarly, the high tariffs of the 19th century in the United States, such as those advocated by Northern industrialists, attempted to protect emerging industries from foreign competition. Yet, as seen during the Great Depression with the Smoot-Hawley Tariff Act, protectionist policies can have unintended consequences, such as reduced international trade and economic strain. The Trump tariffs, while rooted in historical precedent, are a major proponent of the ongoing tension between economic nationalism and the interconnected realities of globalization.

In Europe, governments continue to use tariffs strategically to balance trade and respond to geopolitical tensions. For instance, in response to Russia’s invasion of Ukraine in 2022, Western nations imposed tariffs and sanctions on Russian goods, aiming to weaken its economy while supporting domestic producers. The European Union has pursued a more cooperative approach, negotiating free trade agreements that reduce tariffs and promote economic integration. The success of such agreements, like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, emphasize the benefits of lowering trade barriers to stimulate economic growth and strengthen international partnerships.

As globalization evolves, the role of tariffs in economic policy will continue to shift. The rise of digital trade, e-commerce, and complex global supply chains has made traditional tariff policies more challenging to implement. Some experts argue that governments should focus on alternative economic strategies, such as targeted subsidies, tax incentives, and trade agreements, to support domestic industries without resorting to protectionism.

Environmental concerns are also shaping new tariff policies. The European Union has introduced carbon border taxes, which function as environmental tariffs aimed at reducing carbon emissions from imported goods. These policies are a reflection of a broader shift in economic policy, where tariffs are being used to address global challenges like climate change.

The long, winding history of tariffs—from their origins in ancient trade routes to their modern role in geopolitical maneuvering—reveals not only the power of such economic instruments but also the delicate balance required to wield them wisely. While they can serve as powerful tools for protecting domestic industries and addressing trade imbalances, they also come with risks, including higher consumer costs and strained international relations. This historical perspective underscores a timeless truth: economic policy is inherently complex, and the interplay between protectionism and free trade will always demand careful calibration.

As the world navigates an increasingly interconnected global economy, the lessons of the past are more relevant than ever. Policymakers are now challenged to design tariff strategies that both defend vital domestic sectors and foster sustainable, equitable growth in an interconnected world. By integrating historical insights with forward-thinking solutions, like targeted subsidies and even carbon border adjustments, governments can aspire to craft economic policies that honor the wisdom of history while addressing the challenges of tomorrow.

To read this article as it was published on The Science Survey website, please click here. 

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For years, policymakers have championed “Made in America” as a silver bullet for economic growth and supply chain resilience. In fact, as part of his tariff-focused trade policy, President Donald Trump has repeatedly called for more U.S. manufacturing investment, using heightened tariffs as a way to entice greater domestic development.

But tariffs alone will not rebuild American industry, especially overnight. U.S. manufacturing has been hollowed out over decades, with many companies offshoring production in search of lower costs and fewer regulations. As a result, we have lost not only factories, but also much of the upstream supply chains, skilled workforce and financial capital that once underpinned our industrial strength.

Thus far, the current administration’s rapidly changing positions, including a recent 90-day pause on broader tariff hikes alongside an increase in duties on Chinese goods to 125%, have only added costs for U.S. manufacturers that use imported materials and components — and increased overall uncertainty for U.S. businesses and global partners.

The president’s vision to bring back American factories and reignite domestic manufacturing resonates with communities hollowed out by decades of offshoring. But rebuilding that foundation in an era defined by far-flung supply chains and repeated disruption from pandemics, geopolitical shocks and natural disasters will take more than rhetoric and tariffs.

Let’s be clear: strengthening U.S. manufacturing is essential. For critical industries, robust domestic production is a matter of national and economic security. Take semiconductors, for example. A global shortage during the pandemic brought entire U.S. industries — from auto manufacturing to consumer electronics — to a standstill. With production concentrated in East Asia, companies and consumers alike felt the impact of a system dependent on a handful of suppliers.

While recent legislation like the CHIPS and Science Act has begun to boost domestic capacity, especially among chips used for AI development, the United States still depends heavily on foreign suppliers for many essential chips.

What American manufacturers and businesses need is a clear, strategic plan that strengthens domestic production and increases supply chain resilience through investment incentives and industry-specific cooperation — including across international borders.

The role of tariffs in a complex global market

Tariffs can be valuable when used strategically. They may help level the playing field in cases of unfair competition, especially in countries that subsidize industries or distort markets. But when tariffs are applied too broadly, they can backfire, raising input costs for American producers and triggering retaliation that harms U.S. exports.

The first Trump administration’s 25% steel and aluminum tariffs offer a cautionary tale: while they spurred capacity expansion for domestic steel producers, the measures also raised costs and adversely affected downstream U.S. manufacturers that used steel inputs.

More recently, the administration’s 90-day pause on the highest reciprocal tariff hikes on April 9 was an acknowledgment that sweeping increases were signaling a host of unintended consequences in the U.S. and global economies. While tariffs on Chinese goods have increased to unprecedented levels, the decision to delay the other hikes over 10% reflects growing recognition that blunt trade tools need to be wielded with care.

Modernizing our trade enforcement approach

The U.S. needs a 21st-century trade enforcement toolkit. Many of today’s trade remedy laws were designed decades ago, before global supply chains and complex trade dynamics became the norm. These outdated mechanisms are slow, burdensome and reactive, leaving American businesses vulnerable to unfair foreign competition.

Congress is considering incremental updates, such as the bipartisan Leveling the Playing Field 2.0 Act, introduced in February. The bill would make it easier for the U.S. Commerce Department, International Trade Commission, and U.S. Customs and Border Protection to pursue repeat offenders regarding antidumping and countervailing regulations. However, more reform is needed to bring U.S. trade enforcement and policy into the 21st century.

Strengthen, diversify, compete

It’s not enough to just defend American manufacturing. It’s time to go on offense. That means thinking beyond tariffs and articulating a forward-looking trade strategy that expands markets and offers new ways for U.S. businesses to compete. Tariffs are just one piece of the puzzle. We also need to open new markets and build supply chains that are stronger, smarter and more reliable — and can withstand and recover quickly from disruptions.

One way to do that is by striking targeted deals with trusted allies. Instead of sweeping trade agreements, the U.S. should focus on sector-specific deals where deeper coordination can actually move the needle and benefit Americans and American businesses. These kinds of partnerships can help us reduce our dependence on risky suppliers in adversarial countries, while also strengthening ties with allies and giving American companies a real competitive edge.

Rather than shifting tariff policy week to week, the U.S. needs to lead with clarity and purpose. The world is watching to see whether we will step forward with a plan that truly positions American workers and industries to thrive.

It is time to move past slogans and into strategy. “Made in America” is a starting point. It shouldn’t be the finish line.

To read the full article as it was published on the Manufacturing Dive website, click here.

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On April 2, as he imposed exorbitant tariffs that triggered a stock market collapse, Donald Trump said this: “For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike. American steelworkers, autoworkers, farmers, and skilled craftsmen—they really suffered gravely. They watched in anguish as foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once beautiful American dream.”

Trump’s tariffs, which are more about indiscriminate bullying than trade policy, set off reams of simplistic commentary praising the glory days of free trade. Yet we would do well to remember our history, or we could end up cherishing the kind of corporate globalization whose backlash paved the way for Trump in the first place.

The commentary has compared the recent stock market free fall to the abrupt market crash in the early days of the pandemic. But that’s the wrong comparison. The right comparison is to the last time that the stock market and the economy collapsed due to perverse policies. That would be the collapse of 2008, when the market lost 54 percent of its value.

Those policies included the deliberate wreckage of financial regulation so that insiders could get richer, as well as hyper-globalization. The architect of those policies was Robert Rubin with an assist from his deputy Larry Summers, and it’s instructive to compare Rubin with Trump.

As grifters, Donald Trump and Robert Rubin are two variations on the same theme. Rubin reaped immense personal benefits from financial deregulation and corporate globalization. Moving from Goldman Sachs to the White House to the Treasury and then to Citigroup, he epitomized the self-interested revolving door between Washington and Wall Street. Rubin did it with great politesse, always cloaking his maneuvers as public-mindedness. Trump is more coarse and more crude; the personal grifting is shameless and transparent.

Both versions corrupt democracy. We shouldn’t have to choose between these two forms of the private use of public office. Let’s see which produces more collateral damage for the economy.

CONTRARY TO BOTH TRUMP and the “bring back globalization” chorus, we have never had free trade. Here’s what actually occurred during the past 80 years.

Toward the end of World War II, the Roosevelt administration laid plans for a trading system unlike any the world had ever seen. Call it Globalization 2.0.

Unlike the earlier brand of globalization dating to the 19th century, it would be far from laissez-faire. The system would be spared the deflationary pull of the gold standard and private currency speculation. The idea was to enable the whole world to have something like the American New Deal, biased toward growth and broad prosperity, a blend of managed capitalism and social democracy.

The system’s rules, defined at the Bretton Woods Conference of July 1944, included a lot of public capital later enhanced by the Marshall Plan, fixed exchange rates, and controls on private speculation. Thanks to these rules, the British Labour government elected in July 1945 could build the world’s most expansive welfare state, despite the fact that Britain came out of the war with a debt-to-GDP ratio of about 240 percent. Had it not been for the Bretton Woods rules, deflationary demands of private capital markets would have crushed the pound and destroyed Labour’s program.

“The U.S. was the architect and leader of both the trading system and the alliance system—a geo-economic and geopolitical Pax Americana.”

The catastrophe of the interwar period, when leaders tried to reimpose something like the pre-1914 system, with finance in the driver’s seat and austerity enforced to reassure creditors, led to depression and fascism, just as J.M. Keynes had warned. That lesson was very much on the minds of the planners at Bretton Woods, whose leaders included Keynes himself.

Postwar globalization began unraveling in the inflationary 1970s. Nixon devalued the dollar and ended fixed exchange rates. Reagan and Thatcher then moved to undo regulated capitalism. The center-left leaders that followed them, notably Bill Clinton and Tony Blair, followed suit and doubled down on a corporate model of globalization.

Here’s the key point to keep in mind. Neither FDR’s Globalization 2.0, nor the neoliberal Globalization 3.0 that followed, was free trade. Each was managed trade, but they were managed to serve very different interests.

In both models, the system’s American sponsors indulged a great deal of outright mercantilism on the part of nations like Japan, South Korea, and later China. In the case of Japan and South Korea, turning a blind eye to protectionism was useful as a perquisite of Cold War alliance. Until the 1970s, the U.S. had such a huge economic advantage that accepting some mercantilism to help close allies prosper was no big deal.

Later, there were fortunes to be made on Wall Street doing deals with China, which was no ally but a terrific pool of very cheap labor for outsourcing by industry. So China, about as far from a free-trader as you could get, was admitted to the World Trade Organization in good standing. Mercantilism worked for Chinese development and for American capitalists. The only victim was U.S. domestic employment.

Globalization 3.0 offered something else. After the Trade Act of 1974, trade agreements could address “non-tariff trade barriers,” which inevitably would alter national policies around environmental protection, workplace safety, patent protections, procurement laws, digital rules, and a host of other policies. Lobbyists could now obtain things they could not pass through legislation in trade agreements, turning them largely into corporate favor factories. This was not free trade, but trade tilted toward the interests of large pools of private capital.

The rules of the WTO, heavily influenced by U.S. finance, were not free trade either. American financial companies engineered a new concept, previously unknown in trade law, called “trade in services.” The WTO rules, which took effect in 1994, required each nation to have light regulation of banks, and to open their markets to U.S.-based insurance companies and other “financial services” including tech.

The U.S. today runs a huge trade deficit with the rest of the world in manufacturing—about $1.2 trillion—but a surplus of $278 billion in services, notably profits from banking and investment banking. Guess which piece of this deal eviscerated the American heartland? Guess which one enriched Wall Street?

HAVE “AMERICAN STEELWORKERS, autoworkers, farmers, and skilled craftsmen,” among many others, “suffered gravely”? Absolutely. But Trump is wrong when he says that “foreign leaders have stolen our jobs.” It was American corporate executives, Wall Street financiers, and American political leaders of both parties who did the deed. Trump can thank those leaders for putting their profits ahead of their country, because the popular backlash put him in office.

Both brands of postwar globalization came bundled with American hegemony. The U.S. was the architect and leader of both the trading system and the alliance system—a geo-economic and geopolitical Pax Americana. Trump seems quite willing to throw that over, too. But in favor of what?

Trump seems to think that ad hoc dealmaking, for his own personal benefit and for some version of a self-sufficient America, will be the successor system. But there are just too many variables, even for a consummate dealmaker like Trump. Is Russia friend or foe? How do we trade off economics against geopolitics? Do we trash Taiwan economically because of its industrial policies, or help Taiwan fend off China? What to do when Europe makes a defensive economic alliance with China? And in the meantime, the sheer uncertainty will keep crashing the economy.

But as perverse as Trump’s program is, it resonates with the reality of many working people. During his Rose Garden speech, Trump called up an autoworker identified only as Brian.

“I grew up just north of Detroit, Michigan, in Macomb County,” Brian began. Macomb is the iconic blue-collar county, studied for decades by our colleague Stan Greenberg as the home of the “Reagan Democrats,” a key swing constituency in the 1980s. “My entire life, I have watched plant after plant after plant in Detroit and in the metro Detroit area close,” Brian said. “And Donald Trump’s policies are going to bring product back … there’s going to be new investment … and the UAW members, and I brought 20 of them … sitting right over here, we support Donald Trump’s policies on tariffs 100 percent.”

Brian’s speech shows that blue-collar workers respond to policies that claim to support their interests. But Trump’s tariffs will not bring much auto production back to the U.S. Ever since NAFTA, U.S. auto companies have treated all of North America as “national.” They rely on transnational supply chains that will not be domesticated anytime soon, least of all in a climate of extreme economic uncertainty.

Trump’s ignorance about how trade actually works is rivaled only by the sheer ignorance of a great deal of mainstream commentary. Tom Friedman wrote for The New York Times that “previous presidents understood that if the world grew steadily richer and more peaceful, and if the United States just continued to get the same slice of global G.D.P.—about 25 percent—it would still prosper handsomely because the total pie would grow steadily.” Note that Friedman glosses over who in the United States prospered.

Here’s Eduardo Porter in The Washington Post: “Nixing globalization will, in fact, stymie the main forces undergirding the innovation that has fueled the nation’s remarkable run of prosperity: its ability to draw investment capital and top talent from around the world—which has propelled productivity growth way ahead of its peer nations.” Is Porter remotely aware that there were two very different brands of globalization? And we had a “remarkable run of prosperity” for whom? Not for working people who shifted their allegiance to Trump.

Our former Prospect writing fellow, the eminent University of Chicago historian Tara Zahra, got it mostly right in an extended piece for The New York Times. Different versions of globalization had winners and losers. But you have to know the history to locate the current debates in any context. Most writers in the mainstream press are either ignorant of the history, or just begin with the simple premise that free trade is good and that what we had before Trump was free trade.

IF YOU WANT A SYMPATHETIC ASSESSMENT of what Trump thinks he is trying to do, Robert Lighthizer, Trump’s top trade official in his first administration, can offer one. Lighthizer, who knows the details of trade far better than Trump, has long been a supporter of a higher universal tariff—maybe a base of 10 percent like Trump’s, though not as high as some of the individual tariffs that Trump imposed.

Lighthizer’s point is that for a variety of reasons, the U.S. has a trade deficit with the rest of the world of over a trillion dollars. The reasons include the mercantilism of other nations and an overvalued dollar. Raise tariffs, Lighthizer explains, and that will reduce imports. Reduce imports and domestic production will start to make up the difference.

In principle, that’s not crazy. But the adjustment will not happen overnight, especially when Trump’s policies are so chaotic that potential domestic producers can’t plan and won’t commit. In the meantime, the sheer chaos can crash the economy, overwhelming the potential benefits.

It’s definitely possible to increase the domestic share of manufacturing. But that takes careful planning, and years if not decades. The guy who was on track to do just that was named Joe Biden. But Trump, out of personal animus toward Biden, is tearing up everything Biden created. An explosion of manufacturing construction is being rolled back as plants are canceled, and Trump is defunding programs that once boosted U.S. manufacturing.

In addition, Lighthizer’s own work in Trump’s first term belies the idea of a universal tariff as a cure-all. As Trump’s trade chief, Lighthizer did not use universal higher tariffs. Instead, he enlisted Trump to raise tariffs on China, the world’s prime mercantilist offender, and only after extensive investigation and negotiation. Biden, resisting the importunings of globalist Democrats, retained Trump’s tariffs. The U.S. trade deficit in goods with China declined from a peak of $419 billion in 2018 to $295 billion in 2024.

There are now two opposite perils. One is that Trump will stay the course, and further crash the economy. The other is that the alternative to Trump will be seen as simple-minded “free trade,” something that never existed except in textbooks.

Tragically, under Biden we were on a path back to the kind of global economy that allowed plenty of trade and plenty of room for national economic policies, and the U.S. had begun a renaissance of domestic manufacturing. But that takes time, patience, deep knowledge, and real patriotism—the antithesis of Trumpism.

To read the full article as it was posted by The American Prospect, click here.

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For decades, under the biased rules of the World Trade Organisation, the US has faced systematically higher tariffs from its major trading partners and far more punitive non-tariff barriers.

The result is a national emergency that threatens our economic prosperity and national security.

At the heart of this crisis is a trade deficit in goods that has ballooned to more than $US1 trillion ($1.6 trillion) annually. The economic models of free trade, which predict that chronic trade imbalances will always be eliminated through price adjustments via exchange rates, are dead wrong.

The US cumulative trade deficits in goods from 1976 – the year chronic deficits began – to 2024 have transferred over $US20 trillion of American wealth into foreign hands.

That’s more than 60 per cent of US GDP in 2024. Foreign interests have taken over vast swaths of US farmland, housing, tech companies and even parts of our food supply.

A central driver of this one-sided trade is the WTO’s “most favoured nation” (MFN) rule, which requires member countries to apply the lowest tariff they offer to any one nation to all WTO members. America’s trading partners can maintain high, uniform tariffs across the board – with no incentive to negotiate fairer terms with the US.

Loss of manufacturing jobs

Since 1979, the year that manufacturing jobs peaked in America and the Tokyo round of the General Agreement on Tariffs and Trade ushered in major MFN-driven tariff reductions, the US has lost 6.8 million manufacturing jobs.

Since China joined the WTO in 2001, real median weekly earnings in the US have largely stagnated – rising little more than 10 per cent over the entire period.

Today, the average US MFN tariff is just 3.3 per cent. China’s is double that at 7.5 per cent. Thailand and Vietnam hover near 10 per cent, and India stands at a staggering 17 per cent.

The imbalance extends to automobiles: the EU charges four times the US car tariff at 10 per cent for sedan cars; China’s base import tariff for passenger vehicles is 25 per cent.

Non-tariff barriers are even worse

Even worse than this is the barrage of non-tariff weapons foreign nations use to strangle American exports, unfairly boost their shipments to the US, and wall off their markets.

These tools include currency manipulation, value added tax distortions, dumping, export subsidies, state-owned enterprises, IP theft, discriminatory product standards, quotas, bans, opaque licensing regimes, burdensome customs procedures, data localisation mandates and, increasingly, the use of “lawfare” in places such as the EU to target America’s largest tech firms.

On top of that, many foreign competitors operate from sweatshops and pollution havens that morally and environmentally stain the global landscape from Asia and Africa to Latin America.

While the WTO technically allows challenges, its dispute resolution system is functionally broken – and the consequences have been catastrophic.

The US has brought several high-profile agricultural trade disputes to the WTO – targeting foreign bans on poultry, hormone-treated beef and genetically modified crops.

In nearly every case, the US prevailed. But the victories did not matter. The EU’s ban on hormone-treated US beef was challenged in 1996 and ruled illegal in 1998. Despite this, the EU has not lifted it.

A trade system where we face higher tariffs, steeper non-tariff barriers and no viable path to resolution is nothing more than an “honour system” in a world with no honour among cheaters. That’s why America must – and now is – defending itself.

Trump’s reciprocal tariff doctrine does exactly what the WTO has failed to do: it holds foreign countries accountable.

The US will now match the substantially higher tariffs and crushing non-tariff barriers imposed on us by other nations. This is about fairness, and no one can argue with that.

This is not a negotiation. For the US, it is a national emergency triggered by trade deficits caused by a rigged system.

President Trump is always willing to listen. But to those world leaders who, after decades of cheating, are suddenly offering to lower tariffs – know this: that’s just the beginning.

We will want to hear from countries including Cambodia, Mexico and Vietnam that you will stop allowing China to evade US tariffs by trans-shipping exports through your countries. The far bigger threat lies in the web of non-tariff barriers that continue to choke American industries. And that, too, must end.

All America wants is fairness. President Trump is simply charging you what you are charging us. What is fairer than that?

The writer is Donald Trump’s senior counsellor for trade and manufacturing.

To read the full opinion as published by Financial Review, please click here.

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Mexico and Canada were excluded from yesterday’s announcements, but are still subject to tariffs on most imports to the U.S., with the new 25% tariff on U.S. auto imports set to affect North American supply chains.

AQ asked analysts to share their reactions and perspectives.

Sergio Luna

Luna is an economist from UNAM with an M.Sc and Ph.D. in economics from the University of London. He’s Grupo Financiero Mifel’s chief economist.

There’s a big sigh of relief south of the border. With “reciprocal tariffs” meaning a hefty 34% for China, 20% for the EU, and a 10% baseline tariff, keeping Mexico and Canada at “just” 25% tariffs on import content not covered by the USMCA has everyone in Mexico talking about the benefits of trade diversion (although no one uses that word). The foreign exchange market seems to concur, as it ended “Liberation Day” with the Mexican peso as the third-best performer vs. the U.S. dollar.

My back of the envelope calculation is that the weighted tariff for motor vehicles crossing from Mexico to the U.S. will rise from 0.6% to 6%. Agro-industrial exports (already more prominent than oil & mining exports at 9.4% of the total) should be little affected since, apparently, we go back to the definition of regional – rather than U.S. – content rules for USMCA qualification. In the case of electronic goods, calculations are more complicated but since only about 37% of their export value is local content, the tariff increase should be higher. Still, it should compare favorably with that applied to ASEAN countries, for instance.

However, by comparing Mexico to other countries after “Liberation Day” we seem to forget that Mexico is worse off vis-à-vis our initial position. Moreover, we also ignore that the U.S.’s unilateral imposition of tariffs on Mexico and Canada goes against USMCA rules. As far as I know, no Mexican official has discussed the possibility of filing a complaint under USMCA conflict resolution mechanisms. De facto, a regional rule-based system has been substituted with transactional, unilateral decision-making. If USMCA is dead, can we at least have a proper eulogy?

Sometimes, the forest matters as much as the tree. Mexico is a very open economy (its trade-to-GDP ratio is 73%), heavily reliant on global value chains that are geared to the U.S., the destination of 80% of Mexican exports. Irrespective of our relative position in terms of tariffs, any measure that affects the trade system’s current operation, as well as the health of the U.S. economy, will have an impact on Mexico. In that regard, the indirect effects of tariffs on U.S. activity and inflation imply an additional challenge for Mexico’s macroeconomic prospects.

Antonio Ortiz-Mena

CEO of AOM Advisors, Adjunct Professor of International Economic Relations at Georgetown University’s Walsh School of Foreign Service and Chair of the Mexican Foreign Trade Council (COMCE)‘s USMCA Committee.

The U.S. has implemented tariffs on a wide range of imports from its trade partners, with some exceptions for goods that comply with the USMCA agreement. These tariffs aim to strengthen the U.S.’s position in the global economy, protect American workers, and promote domestic production of certain goods. Additionally, the tariffs are intended to reduce the U.S. trade deficit and generate revenue that could help offset the expected loss in tax revenue due to anticipated domestic tax cuts. Given the complexity and scale of these measures, it will take months—or even years—before their full impact becomes clear. However, several potential outcomes can be anticipated.

One possibility is that the U.S.’s trade partners will respond by reducing some tariffs and non-tariff barriers that currently restrict U.S. exports. In turn, the U.S. may then reduce its own tariffs, leading to more open and reciprocal trade. While this scenario remains plausible, another potential outcome is that some countries might challenge the legitimacy of unilateral tariff increases, either at the World Trade Organization (WTO) or through regional trade agreements. In response, these countries might impose higher tariffs on U.S. exports, especially impacting the U.S. agricultural and services sectors. Such retaliatory measures could undermine the U.S.’s goal of reducing its trade deficit.

Another concern arises if the U.S. intends to rely on significant tariff revenues to support its domestic economic policies. It remains unclear how this would be achievable if the U.S. simultaneously seeks to encourage import substitution—producing goods domestically that it had previously imported.

For many countries in the Americas, particularly those with China as their primary trade partner, there could be a growing push to diversify trade relationships away from the U.S. While the USMCA remains largely unaffected for Mexico and Canada, uncertainty looms, particularly in the automobile sector, where supply chains could face disruptions.

The tariff increases implemented on April 2 represent the largest since the 1930 Smoot-Hawley Tariff Act, which is often cited as exacerbating the economic downturn following the 1929 stock market crash. Since the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947, countries have generally sought to avoid imposing large unilateral tariff increases, as such actions tend to provoke retaliatory measures that can harm all parties involved. While it is hoped that the U.S.’s envisioned scenario will unfold, the risk of escalation—something GATT was designed to prevent—remains a very real concern.

Luíza Pinese

Pinese is an economist focused on balance of payments analysis for the macroeconomics team at XP Investimentos in São Paulo.

President Trump’s tariff decision was based on the overall trade deficits the United States runs with each trading partner, rather than the effective tariff imposed on specific products. Given that Brazil maintains a roughly balanced trade position with the U.S., it was assigned just the baseline 10% additional tariff. That was a better-than-expected outcome. The market reaction in Brazil has been quite positive, reflecting a sense of relief and that Brazil could be a relative “winner” in the global trade war (more below). That said, Brazilian exports to the United States are expected to decline in absolute terms, as some products may be replaced by U.S.-made alternatives.

From a macroeconomic perspective, the direct effect is likely to be limited. Exports account for some 18% of Brazil’s GDP, and sales to the U.S. represent about 12% of total exports—thus, 2.2% of GDP. However, on the microeconomic level, the consequences may be more significant, especially in sectors where the U.S. is a dominant buyer, such as iron and steel, aircraft, and ethanol.

In our initial assessment, Brazil may even benefit indirectly from a broader trade war scenario (since countries may retaliate against the U.S. measure). Being subject only to the minimum additional tariff rate reduces the risk of trade diversion away from Brazilian products. China and the European Union face considerably higher tariffs, which could, over time, open space for Brazilian exporters to gain market share. Globally, however, the impact may prove more pronounced than initially anticipated. Brazil is not immune to these broader dynamics: changes in economic activity in the U.S., China, and the European Union could reverberate through global markets, affecting commodity prices and investor sentiment.

China and the European Union have vowed retaliation. The same could happen in Brazil. Officials expressed regret over the decision and affirmed their intention to work with the private sector to defend the interests of domestic producers. The Congress has already approved a bill known as the “Economic Reciprocity Law,” which authorizes Brazil’s Foreign Trade Chamber to adopt the use of retaliatory tariffs and non-tariff barriers. At the same time, the government has expressed a willingness to deepen dialogue with the U.S. in hopes of reversing or softening the announced measures.

Back in 2018, although Trump imposed 25% tariffs on steel and 10% on aluminum, Brazil was able to negotiate an exemption and was included in a quota-based system.

To read this article as it was posted by Americas Quarterly, click here. 

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Their practical action was particularly helpful to our cause because they built large trucks, which are the main source of revenue for our common employer. Israel was fired soon afterward, and he went on to help build the National Independent Union for Workers in the Automotive Industry (SINTTIA), ousting an employer-friendly union in Silao. SINTTIA has just won 10 percent raises for Mexican GM workers.

As talk of tariffs grows to a fever pitch, we should all take a page from Israel’s book if we want to build a more powerful, connected, and assertive labor movement. Time and time again, he has acted in solidarity with his fellow workers, regardless of which side of a border they live on.

I had a chance to meet Israel in person in 2023 and thank him for his bravery. The circumstances that brought us together were telling: he had traveled to Michigan to support our Stand-Up Strike, and we met outside the corporate headquarters of an auto parts company called VU. A dozen United Auto Workers (UAW) members and community allies had gathered to protest the layoffs and blacklisting of 400 workers who made armrests in Piedras Negras, Coahuila.

The workers at VU had defeated management’s yellow union and organized with an independent union, the Mexican Workers’ League. Our small solidarity action wasn’t enough to stop the retaliation, but it offered a glimpse of what’s possible with closer coordination and deeper ties between U.S. and Mexican auto workers.

SPIRALING TRADE WAR

Cross-border solidarity strikes at the heart of one of the mechanisms that enable the corporate class to dominate: its global reach. Giant corporations help write international trade laws. When they cross borders, they are (in investor logic) diversifying—pitting one set of workers against another.

When one part of their operation is on strike, they continue in another: that’s why they wanted overtime from the workers in Silao when we were on strike here. Divide and conquer is the name of the game.

The strategy to fight these corporate giants must be global too. But that’s in jeopardy with President Donald Trump’s on-again, off-again 25 percent tariffs. (There may be some partial carve-outs for Mexico and Canada, to be worked out after the tariffs take effect today. Over the weekend, Trump said tariffs would affect “all countries.”)

As a preview of the spiraling trade war Trump is stoking, China, Japan, and South Korea said they will respond jointly to the U.S. tariffs. Workers must now brace for uncertainty and fallout, fueling fears of inflation and layoffs which are tailor-made to break down international solidarity.

The tariffs are part of Trump’s America First agenda, supposedly meant to boost U.S. manufacturing—and the UAW has thrown its support behind Trump on the issue.

RESULTS NOT GUARANTEED

My union’s hope—after the U.S. lost 682,000 jobs because of NAFTA—is that punitive tariffs will incentivize domestic production and build the U.S. manufacturing base. “With these tariffs, thousands of good-paying blue collar auto jobs could be brought back to working-class communities across the United States within a matter of months,” said UAW President Shawn Fain in a statement.

Fain later clarified on CBS’s “Face the Nation” that building a new plant could take years, but he said tariffs could be a “motivator” to bulk jobs back up where companies have eliminated shifts, like at the Volkswagen plant in Tennessee, where the union is negotiating a first contract. At Stellantis, Fain said, the company could bring 2,000 jobs that were lost when it shifted production of the Ram truck to Mexico.

In bargaining there’s a truism that if the company doesn’t give it to you in writing, then don’t believe it. These tariffs promise exactly zero new factories will be built, but a couple things are certain: vehicle prices will go up, perhaps by as much as $6,400, because auto companies will pass on any tariff costs to car buyers; and production will be disrupted due to decreased sales and logistical wrangling, which likely means layoffs. Michigan could be hit hardest.

To do something as major as build a factory, companies need a safe bet. They need a consistent policy that provides long-term incentives to justify such a move. Trump has already shown that his policies are anything but consistent. An impulsive man’s fleeting whim is hardly justification to build an entire plant, with all the logistics, supply chains, and investments that come with it.

And even if a company decided to build a new factory in the U.S., it would take years to complete—whereas other nations could have imposed retaliatory tariffs by the time you read this!

When Trump was asked about the impact of tariffs on prices, he said, “I couldn’t care less, because if the prices on foreign cars go up, they’re going to buy American cars.” Reality check: GM and Ford also build vehicles in Mexico and Canada, as well as relying on parts flowing across borders for vehicles assembled here. Peter Navarro, a senior trade adviser to the president, says the American people should simply “trust in Trump.”

Another drawback is the potential for corruption as companies vie for favor; a pay-to-play transactionalism is a defining feature of the Trump administration.

Want a carve-out in tariffs so you can make your product more cheaply than your competitor? Maybe a generous contribution will get the president’s attention. It obviously worked for Tesla owner Elon Musk. Even better, maybe you could have a tariff levied on your competition!

As Trump dismantles Biden’s investment in the electric vehicle transition, Musk has made big gains from Trump eliminating consumer tax credits that benefited Tesla rivals, including GM’s and Ford’s joint ventures. This threatens jobs that the UAW has just organized or is in the process of organizing, at battery plants in Kentucky, Ohio, and Tennessee.

A BETTER WAY

Every worker in the industrial Midwest can see that “free trade” has been a disaster for us. Town after town, whole sections of our states are hollowed-out husks of their former selves. Deaths of despair are commonplace where prosperity once flourished.

I can completely understand the desire to protect our industries and our communities. But I can also understand that our neighbors to the north and south have that same desire.

My proposal would be to tax or tariff only those vehicles and parts (both domestic and foreign) that are produced in facilities that violate workers’ rights. This approach would defend the good union jobs that are the backbone of our families and communities, and build solidarity with our union brothers and sisters overseas. It would also offer an incentive for nonunion companies to finally respect the rights of their employees to collectively bargain.

This kind of explicitly pro-worker tariff policy clearly isn’t in the cards under this administration, but it’s something to consider as a future political goal now that the taboo around tariffs has been broken. Coupled with a strong international solidarity movement between the U.S., Mexico, and Canada, it would give us more power and leverage than ever. Just as large corporations are global, our solidarity has to span borders to match their sphere of control over production and our lives.

It wasn’t that long ago that auto workers in Canada and the U.S. were members of the same union. Is it inconceivable that we could add Mexico to a North American workers union as well? Imagine what we could accomplish together! Let’s remember our friend from Mexico and his spirit of brotherhood, and build solidarity beyond its current narrow parameters.

To read this viewpoint as it was published on the Labor Notes website, please click here. 

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President Donald Trump unveiled a series of tariffs on Wednesday afternoon during his “Make America Wealthy Again” event in the White House Rose Garden.

Using his International Emergency Economic Powers Act authority, he announced the U.S. will impose a 10% tariff on more than 50 countries that will take effect April 5, 2025, at 12:01 a.m. EDT.

President Trump will also impose an individualized reciprocal higher tariff on the countries with which the U.S. has the largest trade deficits to take effect April 9, 2025, at 12:01 a.m. EDT. All other countries will continue to be subject to the original 10% tariff baseline.

During the announcement, President Trump held up a chart showing specific countries in line for what he described as reciprocal tariffs.

“ We will charge them approximately half of what they are — and have been — charging us,” he said. “So, the tariffs will not be a full reciprocal. I could have done that, I guess, but it would have been tough for a lot of countries.”

A partial list of the countries and tariff percentages to be imposed include:

• China – 34%
• European Union – 20%
• Vietnam – 46%
• Taiwan – 32%
• Japan – 24%
• India – 26%
• South Korea – 25%
• Thailand – 36%
• Switzerland – 31%
• Indonesia – 32%

Farmers Caught In The Crossfire

Glen Newcomer wants to be positive in the face of President Trump’s move to introduce a new round of tariffs on U.S. trading partners. But the northwest Ohio corn and soybean farmer says he’s concerned any looming trade wars could create more losers than winners in the agricultural industry, a sentiment shared in a recent AgWeb poll that found more than half of farmers don’t support Trump’s use of tariffs.

On the winning side of things, Newcomer thinks this moment might be a short-term opportunity for farmers in the market for equipment to go ahead and make their purchases.

“There are a lot of dealerships with inventory on their lots right now that was shipped and is sitting there, so that equipment is going to have a lower sticker price than equipment that’s going to be tariffed or have components that are tariffed,” says Newcomer, who farms near Bryan, Ohio. His advice to other farmers: “Get a look at the inventory and see if there’s anything there you need because the new equipment will continue to cost more.”

While that’s a possible silver lining, it’s about the only positive Newcomer can muster up.

“The expectation that farmers will get compensated, as they did in the past, for this trade difference – with all of the emphasis on reducing spending – I don’t know if that’s going to materialize,” Newcomer says.

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The US is not a big trader. Just a fourth of its economy comes from international exchanges, far behind other OECD countries, in which trade averages closer to two-thirds of total economic output. And unlike in most other nations, trade’s importance in the US economy has been falling in recent years.

Still, the US sells some $3 trillion a year worth of goods and services to the world, supporting roughly 10 million US jobs. It is a major commodity exporter, selling nearly $700 billion in oil, gas and coal as well as grains, soybeans, meat and more every year. It also sells more than a trillion dollars annually in high-end services abroad, including software, advertising, movies and airline flights that ferry tens of millions of global travelers.

International sales present big growth opportunities for US-based companies and workers. While US economic growth has recently outpaced other high-income countries and even many emerging economies, the US customer base is just 4% of the globe’s population. And the next billion newly minted middle class will live elsewhere — mostly in Asia. Whether growing food, building planes or creating online games, companies that cater only to the domestic market have a limited runway for future growth.

Moreover, export-oriented jobs, particularly those in manufacturing, tend to pay more. According to the US International Trade Commission, workers in export industries earn 16% more than their domestically-oriented counterparts. And export-oriented operations tend to create more job opportunities than domestically focused industries.

Despite the outsized economic benefits of exports, the US has been losing global market share: Its share of international sales in 2023 was less than 9%, down from 12% in 2000. Domestic costs and barriers are partly to blame. Despite a bounty of energy, for instance, prices are still high compared with industrial rivals China, Vietnam and Mexico. Wages, even when factoring in the higher productivity of US workers, outpace those of many competitors, as do US corporate tax rates. And for many industries, including mining, refining and chemical manufacturing, regulatory and other hurdles make it harder to set up shop.

Exporters also get little help from the US government, at least when compared with many other nations. Government loans and financing are often difficult to come by. Other forms of public support are spread piecemeal across more than a dozen agencies, a landscape that’s harder for companies, especially smaller ones, to navigate.

The US pullback from trade agreements is also leaving its exporters at a growing disadvantage. Many countries, including China, have signed a plethora of new free-trade agreements, including the Regional Comprehensive Economic Partnership, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the African Continental Free Trade Agreement, the Pacific Agreement on Closer Economic Relations Plus, the Australia-United Kingdom Free Trade Agreement, and the EU-Vietnam Free Trade Agreement. Negotiations are continuing apace between the EU and India, South America, and Mexico. As these agreements come into force, exports between the partner nations will become relatively cheaper than with those nations, like the US, that remain outside the club.

Meanwhile competition, fair or not, has been undercutting US sales into once lucrative markets. Mexico remains one of the biggest destinations for US exports, buying some $370 billion in goods and services every year. Yet US makers have lost market share in footwear, clothing, sports equipment, cellphones, electronics, cables, motors, cars and more over the last twenty years.

To be competitive, US exporters of electronic parts, machinery, automobiles, pharmaceuticals and other goods need affordable inputs from abroad. No country today makes every piece, part or ingredient that goes into their products. Already more expensive steel and aluminum mean US-made engines, aircraft and household appliances will likely cost more than their Japanese, Chinese and German counterparts. The broader tariffs envisioned in President Donald Trump’s “Liberation Day” will cause more US-based sectors to lose more ground.

If that wasn’t bad enough, tariffs tend to beget retaliatory tariffs, further shrinking markets for aspiring US-based exporters. China has levied taxes on US energy, autos, tractors and many agricultural products. Europe has threatened mid-April retaliatory tariffs on steel, aluminum, whiskey, motorcycles and more. Canada and Mexico have largely held off so far, but they too will tax US goods if delayed tariffs go into effect.

The US maintains strong commercial advantages. Its trusted legal system, intellectual property protections, human talent, bounty of financing and thriving consumer market attract companies and investors from around the world. Indeed, the US has long been the biggest beneficiary of foreign direct investment.

But tariffs threaten these flows too. Yes, some companies will invest in the US to gain market access today. But they won’t be able to use US operations as a profitable base for global consumers or to reach the fastest-growing commercial markets. US companies will become less likely providers of raw materials, capital goods and intermediary inputs for other nations’ manufacturers. US makers will get cut out of global supply chains. And US consumers and workers at home will be left to subsist on a much smaller economic pie. 

To read this article as it was published by the Council on Foreign Relations click here. 

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