"Free trade, RIP," wrote Irwin Stelzer in The Sunday Times. Donald Trump's threat to impose 25% tariffs on all goods from Mexico and Canada while also hiking levies on products from China has been widely viewed as the opening salvo in a global trade war – and the death knell for the free-market "Washington Consensus".
What did the commentators say? Trump's second coming does not signal a definitive break with the "economic orthodoxy that had dominated American policy-making for nearly half a century", said The Atlantic. Rather, it is just the latest step in a near decade-long process that includes his first-term protectionist agenda, which was quietly continued – and in some cases expanded – by Joe Biden's administration, as well as the Covid-19 pandemic, and the emergence of increasingly independent global trading blocs.
Imposing tariffs on foreign goods as part of a pledge to push back against economist globalisation was "central to Trump's initial appeal to left-behind, post-industrial areas across the US", said Harrison Griffiths, from the free-market Institute of Economic Affairs, in City A.M. But it makes little sense economically. A study of the effects of Trump's first-term tariffs on Chinese products shows they cost each American household an average of $831 per year, as well as a reduction in investment, real wages and long-term GDP.
The effect of crippling tariffs on Canada and Mexico, two of America's biggest trading partners, will "hurt American consumers most of all", said The Economist.
Trump hopes to use tariffs to "increase government revenues without overtly raising taxes", said Stelzer, a business adviser. The aim would be "to shift the burden of taxation from income and wealth to consumption, a long-held goal of conservatives but too regressive to propose".
What next? How much Trump truly believes that an end to free trade is in America's – and his – best interest is difficult to determine. It may be tempting to "breathe a sigh of relief that these tariffs are a theatrical way to gain leverage", said The Economist.
But others point to a broader turn towards protectionism. While the approach of the US and EU, for example, may differ, said Politico, "what we observe among developed nations is a gradual but perceptible shift away from uncontrolled free trade, and a move toward the imposition of more controls and obstacles". |