Trump's Tariffs: Ending Globalization

The Trump administration is reintroducing a number of 40-year-old, Reagan-era economic and military policies, but is particularly preoccupied with the imposition of tariffs for all of the country's imports. Trump, in his inaugural address, placed significant emphasis on what the imposition of tariffs would represent, in his view: "Instead of taxing our citizens to enrich other countries we will tariff and tax foreign countries to enrich our citizens." The same theme was echoed by his Commerce Secretary Howard Lutnick, who indicated in a CNBC television interview that "[tariffs] are going to reduce the deficit and balance the budget." If tariffs are considered a continuous source of revenue, they cannot be expected to be negotiated down--however, given President Trump's on-off-on and again off decisions to impose or retract tariffs, one cannot make confident predictions. Beginning with aluminum and steel imported from China, Japan, and Europe, and continuing with automobiles and other products, the administration has announced the imposition of different tariffs depending on each country's trade-surplus position with the US, ranging from 4 percent (Turkey) to a high of 46 percent (Vietnam), with 34 percent imposed on Chinese imports, and about 25 percent on imports from South Korea and Japan. The tariffs were announced on "Liberation Day," as the administration called it, to celebrate America's economic independence, national sovereignty, and the revival of patriotic self-reliance. At the time of writing, however, most tariffs on US trading partners have received 90-days suspensions, replaced only by a flat 10 percent duty as some imports of electronics were also temporarily exempted. The notable exception is China, which has immediately retaliated with more reciprocal duties and restricted access to rare minerals imports.