Donald Trump’s trade wars on tariffs just might turn out OK for the United States | Opinion
Every economist worth his or her salt knows that imposing a flock of tough new global tit-for-tat tariffs will drive the world economy into recession if not depression. That’s as close as you can get to a universally-agreed fact in economics.
But tariffs are not just about economics; they are also about politics. And on politics, Donald Trump may be on a productive path for American workers. His proposal is to match U.S. tariffs on imports with the tariffs of the exporting country, so our companies play on an even field with their companies. That doesn’t seem radical.
For three-quarters of a century, the United States has led the world as the most open country to exports from other countries. The rebuilding of Europe and Japan from the destruction of World War II depended on it. The alliance of countries united to win the Cold War depended on it, and the recovery from the Great Recession benefited from it.
Maybe it is time to reconsider whether the rest of the world should continue having average tariffs twice as high as the United States along with import-damaging Value Added Taxes that combine to make it harder for American companies to compete for their share of the global economy.
Europe and Asia have long recovered from their wars. The Cold War is over. It is a different time when, for the most part, countries compete economically and socially instead of militarily (aside from Taiwan and Ukraine).
Trump’s plan to even out trade barriers is a provocation to countries used to hiding behind a fortress of tariffs and other trade barriers. Take India as an example. According to the World Bank, the average U.S. tariff is 1.5% on imported goods while India’s is 11.5%. That’s a big difference, but all Trump is saying is let’s be fair. If you charge us 11.5%, we’ll charge you 11.5%.
India can react in two ways. They can say it is not fair to do to us exactly what we do to you, a not very persuasive argument. Or they can say, let’s negotiate and get to lower tariffs we can both live with.
Given that India needs U.S. technology and markets as well as the U.S. military and influence to balance against regional nuclear rivals China and Pakistan, India might be far more likely to choose the path of conciliation and negotiation with Trump.
India is not alone in having higher trade barriers than the United States and a dependence on our help that makes them likely to negotiate.
Saudi Arabia has 5% tariffs, Brazil has 7% and the United Kingdom has 3%, all multiples of the U.S. rate. Moreover, countries with low average tariffs such as Germany and Japan have other non-tariff barriers like the VAT tax in which Japan charges imports 10% at the border and Germany 19%.
All are likely to negotiate to a greater or lesser degree because they depend on the United States and because they have just as much to lose in a trade war as the United States does.
Trump’s plans on trade get a negative reaction because the United States has had the same low-tariff policy for so long, his proposed changes are abrupt and his language is bombastic. Recently he accused anyone who disagrees with him, as The Wall Street Journal editorial page does, of being “controlled by China.”
Like a lot of what Trump says, that’s bunk, but his actual policy could turn out alright if we give him time and patience to implement it.
This story was originally published February 20, 2025 at 4:06 AM with the headline "Donald Trump’s trade wars on tariffs just might turn out OK for the United States | Opinion."
