Some of his advisers have a theory about what they want. It isn’t working out.
Donald Trump’s “Liberation Day” tariff policy, in which he declared trade war on the entire world simultaneously, was a bizarre and nonsensical undertaking, seemingly shaped only by the president’s own whims.
But since that initial announcement, the policy has been modified to bear at least a little bit more of a resemblance to what Trump’s more sophisticated advisers wanted.
That is: Now, the toughest tariffs by far are on China, and they’re paired with much lower tariffs on the rest of the world while the administration seeks trade deals with various countries in hopes of forming a trade coalition against China.
Trump’s advisers hope that this policy will achieve several things at once: bring manufacturing (and manufacturing jobs) back to the US, address national security concerns about dependence on China, boost US exports, raise revenue to help address the US national debt — and maybe even pave the way toward a restructuring of the global currency system.
If all that sounds fanciful, that’s because it’s extremely fanciful.
Many of those hoped-for benefits are quite implausible and extremely difficult to achieve. Tariffs, meanwhile, bring extremely significant costs and downsides that could very easily wreck his team’s hopes of trying to achieve those lofty aims.
Furthermore, even Trump’s revised tariff policy isn’t at all well-tailored to achieve those aims — it’s still beating up allies we’d need against China, and targeting goods and industries it would make little sense to bring to the US. And his erratic implementation gets in the way even more by ruining businesses’ attempts to plan.
In practice, the only thing Trump is really doing is economic damage – by making things more expensive, chilling investment in the US, reducing confidence in the US’s stability, and casting a pall of uncertainty over everything.What Trump’s relatively more sophisticated advisers say they’re trying to do
It’s hard to find any defenses of Trump’s actual “Liberation Day” as implemented that pass the laugh test, since the policy was so obviously incoherent and the repudiation by the markets was so scathing.
But there’s been much bipartisan agreement in recent years that something has gone awry in the global trading system, and that the US needs to do something about it.
Trump has his own peculiar instincts on what exactly the problem is (he is fixated on the US’s bilateral trade deficits with other countries, believing they signify other countries are beating us).
