“So Much Winning”: Unpacking Trump’s Misguided Trade Policy

Photo via Chip Somodevilla/Getty Images

***

On April 2nd, 2025, United States President Donald J. Trump gathered reporters in the Rose Garden for what he described as “Liberation Day”: an announcement of sweeping tariffs on almost all of the U.S.’s trade partners. The actions, described as “reciprocal tariffs,” were based on wildly misleading calculations. They called for a blanket ten percent tariff on around 90 countries, including much higher tariffs on several countries, most notably China.

The fact that the meeting was held after markets closed on April 2nd may have been strategic, as the week following Trump’s announcement saw a continuation of the worst start for the stock market of any presidency in the modern era. The Standard and Poor’s (S&P) 500 index has lost 15 percent of its value since Trump’s inauguration, with two-thirds of the losses arriving since “Liberation Day.” 

Not only have stocks taken a hit, but consumer sentiment is tumbling, and tariffs are slated to cost households over $4,000 in the coming year. Trump even acknowledged his actions could cause a recession, prompting fears from the Federal Reserve of  “stagflation,” an economic phenomenon with high unemployment and high inflation.

The U.S. and China have engaged in a series of retaliatory tariffs since Trump’s announcement, with U.S. tariffs on Chinese goods reaching 145 percent, and Chinese tariffs on American goods reaching 125 percent. Attempting to manage the economic fallout, on April 9th, Trump announced he would pause all new tariffs on every country except China for 90 days.

Trump’s announcement also brought unprecedented political fallout. Traditional U.S. trading partners have been left flat-footed and sent scrambling to convince the administration to renegotiate a deal with them. One of the most inexplicable reactions the Trump Administration has had to foreign countries has been to the European Union (E.U.), which offered to lift all their tariffs on the U.S. if Trump lifted his tariffs on the E.U., to which Trump rejected, demanding the E.U. pay $350 billion to remedy what he sees as an unfair trade deficit.  

It makes little sense as to why Trump would reject the deal, as he has repeatedly claimed the E.U. was created to “screw the United States.” The E.U. removing all its barriers to trade with the U.S. would vastly improve the ability of U.S. companies to sell their goods in Europe.

The “moving of goalposts” by the Trump Administration in the aftermath of the tariff implementation has been a common tactic, both when countries seemingly meet the U.S.’s demands to have the tariffs lifted, and when questioned on what the purpose of the tariffs is in the first place.

Trump has long been a staunch critic of foreign countries’ trade practices towards the U.S., arguing that policies such as the U.S.’s trade deficit with China and the E.U., Canada’s conditional high tariff on U.S. dairy products, and the E.U. being a net exporter of cars to the U.S. show they are being taken advantage of. Even if Trump’s goal was to remove all “unfair” trade barriers with other countries, it directly contradicts his other stated goal of reshoring American manufacturing.

Incentivizing companies to bring manufacturing jobs back to the U.S. has been another primary reason Trump has implemented blanket tariffs. He argues that placing additional costs on U.S. companies to import goods will cause them to invest more in the U.S. For companies to even consider re-investing in the U.S., they need to be convinced the tariffs will not be lifted, either when Trump convinces trade partners to agree to more favorable trade deals or by a subsequent presidential administration. By using these tariffs to negotiate with other countries instead of as a permanent fixture in the U.S. economy, companies have far less incentive to move manufacturing to avoid paying them if they could be lifted shortly.

Trump has also lauded former U.S. President William McKinley, known as the “tariff king,” claiming that the tariffs he implemented “made our country very rich.”  If Trump plans to use tariffs as a permanent revenue source for the government, it also does not make sense why he is attempting to get countries to revise trade deals to remove them.

This also assumes this strategy would bring manufacturing jobs back in the first place, which is not guaranteed. Former U.S. President Joseph Biden oversaw a domestic manufacturing spending boom, mainly due to legislation such as the CHIPS Act and the Bipartisan Infrastructure Law. By the end of Biden’s term, over 235 billion was invested in domestic manufacturing construction annually. Still, since Trump took office, auto manufacturers in Detroit have begun to cut back due to Trump’s tariffs. Jeep’s parent company, Stellantis, laid off 900 workers, and Gabriel Ehrich, a University of Michigan economist, predicted that Michigan could lose over 2,000 jobs in auto manufacturing and industries serving auto workers. 

One of the primary contradictions of the “Make America Great Again” movement is their abandonment of traditional Republican free trade orthodoxy, with their continued adherence to fiscal conservatism that prevents any notion of increased government spending and subsidies to reshore manufacturing. There is nowhere close to a consensus that tariffs alone are an effective mechanism to bring manufacturing back to the U.S. Trump’s previous trade war from 2018-19 exacted significant costs from U.S. consumers and exporters while failing to bring back manufacturing jobs.

This was exemplified in U.S. Secretary of the Treasury Scott Bessent’s response to concerns about the economic hardships his administration’s tariffs could impose on Americans, stating, “access to cheap goods is not the essence of the American dream.” While it is reasonable to say that citizens should be entitled to economic security beyond inexpensive consumer goods, the Trump Administration has shown no interest in supporting policies that could provide more financial security. At the same time, they flaunt taking away access to affordable necessities. Policies such as plans to expand healthcare, raise wages, and improve housing, education, or childcare affordability are noticeably absent from Trump’s agenda, instead showing callous indifference to Americans’ concerns about the cost of living.

The election of Donald Trump, someone who enacts retribution on his perceived enemies and fails to rule out becoming a de facto dictator, would be much less likely in a society with widespread public trust in institutions. Americans’ confidence in institutions is cratering, and a large part can be attributed to the damage done by the decline of the middle class. Two significant factors in that decline are the outsourcing of manufacturing jobs and the decline in union membership.

Image via EPI

Trump’s trade war is the action of a nation in decline. It will make the U.S. poorer, more isolated from its allies, and less competitive in the 21st century. But for all the flaws in Trump’s approach to trade, he understands one thing: that many Americans feel betrayed by economic elites, they feel their leaders do not represent them, and a large segment of the population believes he raises economic concerns that no one else does.  

Given this, it would be a mistake for Democrats to double down on the free trade agreements and eschew rebuilding domestic manufacturing and union labor in response to Trump’s tariff fallout. Democrats’ aversion to pro-worker populism leaves the U.S. susceptible to authoritarianism and allows Donald Trump to paint himself as a hero of the working class, falsely.

***

This article was edited by Isabel Adkins.