Mar 20, 2019

Assessing President Trump’s Trade Priorities

Daniel Griswold Senior Research Fellow

President Trump has delivered on his promise to shake up Washington, arguably nowhere more so than in the policy space of international trade. President Trump’s trade agenda has challenged more than seven decades of bipartisan policy commitment to seeking lower trade barriers at home and abroad through negotiated agreements.

While President Trump pays lip service to pursuing free trade and eliminating tariffs, his trade policies so far have been marked by higher U.S. duties on a range of products, from washing machines to steel. Under Section 301 of the Trade Act of 1974, the administration has imposed duties on $250 billion of imports from China, with those duties set to escalate in 2019 absent an agreement with China. And under Section 232 of the Trade Expansion Act of 1962, the president is threatening to impose a 25 percent duty on imported automobiles in the name of national security.

The Trump administration has renegotiated existing trade agreements with Canada, Mexico, and South Korea, but its modifications are as likely to restrict trade as expand it. One of the president’s first actions after assuming office was to withdraw the United States from the pending Trans-Pacific Partnership, which would have eliminated almost all duties with 11 trading partners around the Pacific Rim, including Japan.

President Trump has expressed skepticism about the benefits of trade for more than 30 years. In frequent statements, he asserts that the United States is “losing” hundreds of billions of dollars a year because of the annual deficit in merchandise trade. According to the recent book by Bob Woodward on the Trump presidency, the president told his staff, “Trade is bad” (Woodward 2018: 208). In March 2018, the president tweeted, “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win” (Franck 2018).

This article will briefly state the case why, contrary to the president’s assertions, it has been in America’s economic interest to pursue free trade in the postwar era. It will then examine in more detail three main pillars of the Trump trade agenda — reducing the U.S. trade deficit, restricting steel imports, and confronting China with escalating tariffs. And it will conclude with a brief plan to return the United States to the previous path of seeking lower trade barriers through cooperative agreements...

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