Donald Trump’s second term would be a protectionist nightmare

Oct 31st 2023

His philosophy was simple: “I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so.”

his plans would more than triple the average American tariff. The direct costs would be bad enough, with the tariffs functioning as a tax on consumers and hurting most producers. Yet they would also tear at America’s ties with its allies and threaten to wreck the global trade system.

By 2021 American duties were worth 3% of the country’s total import value, double the level when Mr Trump took office. Tariffs on Chinese imports rose from 3% to 19%,

Mr Trump’s first aim was to slim the trade deficit.
But instead of shrinking, the deficit widened. Instead of buckling, China tripled its tariffs on America. Many allies retaliated, too.

The consequences were dismal. Industries that were protected by tariffs reaped benefits, enjoying greater market share and fatter profits. Most others suffered. America’s International Trade Commission (usitc), a bipartisan agency, found that industries downstream from tariff-coddled producers faced higher input prices and lower profitability. The Peterson Institute estimated that steel users in effect paid an extra $650,000 per job created in the steel industry. Studies have calculated that almost all the costs have been borne by Americans, rather than foreign producers. The usitc found a near one-to-one increase in the price of American imports in the wake of tariffs on China.
(대국이므로 이론적으로는 교역조건의 개선을 기대할 수 있겠지만, 그렇지 못했음.)

Trump did unquestionably succeed in one respect. He helped remake politics. According to a recent survey from the Chicago Council on Global Affairs, a think-tank, 66% of Americans think the government should place restrictions on imported foreign goods to protect jobs at home, up from 60% in 2018.

At the same time, Mr Biden has concocted an enormous industrial policy, fuelled by more than $1trn in subsidies for electric vehicles, offshore wind, semiconductors and the like. It is a more thoughtful and deliberate approach than Mr Trump’s, but it still looks likely to fail to bring about a manufacturing renaissance, is very expensive and, in lavishing subsidies on American factories, discriminates against other countries. It is, in short, rather Trumpist.

How much worse could things get?