ANNE O. KRUEGER
US President Donald Trump claims that his chaotic trade policies will bring back manufacturing jobs, boost government revenue, and strengthen national security. In reality, they are far more likely to stifle investment and trade, hurt exports, and breed cronyism and corruption.WASHINGTON, DC – While US President Donald Trump pursued a range of protectionist policies during his first term, the economic chaos and uncertainty he has unleashed since returning to the White House and launching his global trade war make those earlier efforts look mild by comparison.
Railing against countries that run trade surpluses with the United States, Trump has vowed to impose “reciprocal tariffs” until all of America’s trade deficits are eliminated. Yet he has imposed sweeping tariffs even on countries with which the US runs a trade surplus, such as Australia.The Trump administration has cited a wide range of reasons for its tariff hikes beyond reducing bilateral trade deficits, including national security, job creation, and raising government revenue. Trump and his advisers claim that other countries will be forced to negotiate and ultimately lower their own tariffs on US goods. But the recent deal between the US and the United Kingdom, which imposes a 10% levy on most British exports, shows that even Trump’s “reduced” tariffs remain historically high.
The unpredictability of Trump’s trade policies poses a grave threat to the global economy. Trump’s tariff announcements have been followed by numerous delays and revisions, and his deadlines for finalizing new trade deals have come and gone, only to be extended again. This erratic trade policy, combined with his apparent reluctance to follow through on his threats, has given rise to the nickname “TACO,” or “Trump Always Chickens Out.”Sign up for our weekly newsletter, PS EconomicsEvery Thursday in PS Economics, we offer a concise selection of essential reading on the most important issues related to economics and finance.
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