President Trump took office to start his second term at 11:00 am, January 20, 2025. A key plank in his electoral platform was to introduce tariffs to incentivise industry to locate to the United States to create jobs and rebuild the American industrial base. (BTW - Obama invented with word "incentivize".)
Trump's Tariff Terror was unleashed on the world on April 1, 2025. Here is President Trump on Liberation Day...
(NB. the 70% here is on the high side and is "for effect". Trump actually imposed a basic tariff of 10%, not 70%, on April 2, 2025. Still, this looks pretty good.)
President Trump has variously imposed, stopped, reimposed and then stopped again tariffs against many of countries as negotiations proceeded to address his central claim that the entire world had been taking advantage of the United States. Because of this, it is hard to track what he has actually done vis a vis tariffs since January 20, 2025. Nonetheless, here is a good summary of what tariffs he has actually imposed since then.
January–April 2025:
- Feb 1: Imposed 25% tariffs on imports from Canada and Mexico, and 10% on Chinese goods, citing national emergencies like fentanyl trafficking.
- April 2: Announced a universal 10% tariff on all imports, with higher “reciprocal” rates for countries with trade deficits.
- April 3–5: Sectoral tariffs hit foreign-made cars (25%), steel, aluminum, and copper (25%) heavily impacting Canada and Mexico.
July–August 2025:
- Trump threatened and then implemented 35% tariffs on Canadian goods, citing lack of cooperation on drug enforcement and trade retaliation.
- Tariffs on dozens of countries—including the EU, Japan, South Korea, Taiwan, and Vietnam—were raised to 15–20% starting August 7.
- India was hit with a 50% tariff due to its continued purchase of Russian oil, prompting a pause in U.S.-India arms deals.
mewetree: New Poli-Sci Terminology!
So how are President Trump's tariffs going to make us great again?
Explaining this requires a quick review of economic history.
The world has moved from free trade, to isolation and tariffs, back to free trade again regularly since the British repealed the Corn Laws in 1846. The concept of free trade - that countries should concentrate on whatever economic activity in which they excel, and trade with other countries that similarly concentrate on what they excel, meaning the world will benefit from the best that every country has to offer thereby "lifting all boats", became international economic orthodoxy very quickly thereafter. Soon after the British opened their door to free trade, everyone was on the bandwagon. By 1854, for example, Canada and the United States had concluded a Reciprocity Treaty that ran to 1866.
Free trade promised great things for everyone, everywhere! Then politics got in the way.
The historical epochs with free trade have relied to a very great extent on trust. In short, countries have to trust that their trading partners aren't trying to gain an unfair competitive advantage in order to continue to leave their markets open to foreign goods, services, agricultural products and raw materials. When trust has dissipated, owing either to legitimate allegations of cheating, or to other political developments that resulted in one country canceling its free trade arrangement with another to punish that country - the United States cancelled the Reciprocity Treaty with Canada in 1866 owing to British support of the Confederacy in the Civil War - then the world has returned to tariffs and isolation.
The ultimate achievement in the history of free trade was the phenomenon of Globalization that was established after the end of the Cold War. One main beneficiary of this, without question, was China. In the span of a little over a generation, the Chinese moved from Third World status, to become the second strongest economy in the world. In so doing, they likely cheated, with this cheating being a large reason why trust in free trade started to dissipate starting at least a decade ago. The specific allegations are that China cheated through subsidies, forced technology transfers, the wide-spread theft of intellectual property, and a regulatory system that favoured domestic over foreign firms.
Another huge beneficiary was Mexico, which, through a free trade agreement with the United States and Canada, has grown its manufacturing base from essentially nothing to the point where it produces 25% of all automobiles in North America, and it supplies 40% of the entire American automobile market. Like China, Mexico faces allegations that it cheats, in the case of Mexico by artificially keeping industrial wages so low that the United States and Canada cannot compete.
Regardless of the fact that Donald Trump is President of the United States, the world was going to move back to tariffs and isolation because the dissipation of trust is now a world-wide phenomena.
Trump is a symptom, not a cause, of retreat from the world-wide consensus that free trade is a good thing.
And what a symptom he is! President Trump's almost war-like assault on free trade through the invocation of unprecedented tariffs against just about every country on Earth has had the effect of pushing the entire planet very quickly into the next epoch in our collective economic history, which will be a time of isolation and tariff barriers, accompanied as it always is by economic stagnation, recession, and for some countries, depression.
We should thank Trump for this!
Here's why...
The move from free trade, to isolation and tariffs, then back to free trade is cyclical and normal.
The move from isolation to free trade stems from economic stagnation and the realization that with free trade everyone will do better. The move from free trade to isolation and tariffs stems from years living comfortably with the benefits of free trade - to the point that we forget what it was like to be poor and to struggle - coupled with the end of trust usually occasioned by one country or the other cheating the system. We have been seeing this second movement for over a decade.
The move from free trade to isolation and tariffs would normally take some time as it requires the neutering of trade systems that were meant to last for decades, if not forever. If politics had continued as normal without President Trump arriving on the scene, it could have taken perhaps another decade to get to the point where we have arrived at our foreordained future of economic stagnation from isolation and autarchy.
But Trump has pushed all of this forward at a record pace. The speed with which he has applied tariffs and overthrown the world-wide trade order means we will get to economic stagnation much faster this time - expect a world-wide recession within 12 months. This is arguably a good thing as it also means we will likely see a cyclical movement back to a free trade consensus much faster than we would have without Trump's Tariff Terror.
And so, Trump can be seen as a fortuitous catalyst for rapid cyclical economic change. In the end, Trump will make Trade Great Again.
Thanks Donald.
