In his quest to make America great again, President Donald Trump is withdrawing the United States from global trade agreements. As numerous commentators have pointed out, American families, companies, and investors will face significant consequences from this decision. However, the repercussions extend beyond the domestic arena. The tariff regime is dismantling a pillar of American global power, further isolating the country at a time when other nations are poised to fill the void.
On Wednesday, Trump announced a 10 percent duty on imports from nearly all countries, alongside additional punitive tariffs on nations he deems trade offenders, including Japan and members of the European Union. Some of these tariffs are alarmingly high, pushing China’s average tariff rate to nearly 70 percent when combined with previous levies. Trump described these tariffs as a form of retribution: “Foreign cheaters have plundered our factories, and foreign scavengers have dismantled our once thriving American dream,” he asserted. “Our country and its taxpayers have been exploited for more than 50 years, but that ends now.”
Trump’s tariffs represent the culmination of a decades-long shift in political attitudes in the U.S., where trade has transitioned from being viewed as an unqualified benefit to being blamed for various economic challenges. The U.S. previously aimed to reduce barriers and liberalize global markets, forging trade agreements like the North American Free Trade Agreement with Canada and Mexico while supporting the World Trade Organization. This global trading system not only reduced costs for goods, benefiting consumers and businesses in affluent countries like the U.S., but also connected poorer nations, such as China, to international supply chains, fostering job creation, attracting investment, and alleviating poverty. Consequently, the United States became the world’s predominant consumer, tying other countries to its economic interests.
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Trade has historically served as a cohesive force for the American-led international order. Yet, economics inherently involves trade-offs. As supply chains expanded globally in search of lower costs, many factories in the American heartland disappeared. Some Americans began to view trade as the root cause of the inequality and limited mobility afflicting the country’s middle and working classes, sentiments that populist politicians have capitalized on.
Strategically, the anticipated benefits of trade seemed unfulfilled. Experts and politicians had assured Americans that economic interactions post-Cold War would transform China and Russia into peaceful allies. Instead, within a few decades, these nations emerged as authoritarian competitors.
The Trump administration framed its tariff strategy as an effort to rectify the situation by compelling American factories to return home. “Expect to see a remarkable resurgence in factory construction and production in America,” U.S. Commerce Secretary Howard Lutnick stated in defense of the tariffs. Trump is “transforming the perception of production in America.”
However, the outcomes are unlikely to align with the administration’s expectations. While some foreign companies may indeed respond to the tariffs by establishing factories in the U.S. to maintain access to a critical market, many others are either too small or too integrated into existing supply chains to make that transition. The question of where millions of American workers will come from to assemble iPhones or manufacture car parts remains unclear, particularly given the president’s stance against large-scale immigration. American factories are already grappling with labor shortages, with hundreds of thousands of vacancies in the manufacturing sector.
Trump has consistently criticized other countries for manipulating trade to their advantage. In defending its tariff approach, the White House cited practices by other nations, such as currency manipulation and stringent product standards that hinder imports, which have been genuine concerns. However, the tariff regime may soon expose the inconvenient reality of comparative advantage: Many goods are produced outside the U.S. because foreign factories can manufacture them more economically and efficiently. While lower costs are a significant factor, so is expertise. Many manufacturers in China and elsewhere have cultivated skills and knowledge that make them highly competitive.
The likely consequence of Trump’s policy will be elevated prices for American-made and imported goods alike, whether produced domestically at a higher cost or subjected to punitive tariffs from overseas. One estimate suggests that tariffs could inflate the cost of a top-tier iPhone to $2,300. The Trump administration appears to accept this reality. “Access to affordable goods is not the cornerstone of the American dream,” U.S. Treasury Secretary Scott Bessent declared in March. However, when consumers purchase fewer products at inflated prices, companies produce and sell less, resulting in fewer job opportunities, and economic growth slows. As French President Emmanuel Macron noted, Trump’s policy will lead to Americans becoming “weaker and poorer.”
Americans will not be the only casualties in a global trade war. Other nations are likely to retaliate against U.S. tariffs by erecting their own protectionist barriers. China has already announced a 34 percent tariff on U.S. imports. The EU is also preparing to respond. The global trade that once served as a catalyst for prosperity may now regress into a battleground of economic competition.
Other countries previously accepted U.S. leadership because they viewed Washington as a champion of global economic progress. However, the role Trump is opting for the United States does not align with that perception. He may eventually reduce tariffs for nations that negotiate with him, potentially perceiving this as a display of strength: Trump has already indicated he would consider lowering duties on China in exchange for a deal involving TikTok. Yet, the erratic and capricious nature of these policies, combined with the readiness to leverage U.S. economic power for concessions, will diminish American credibility globally.
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This approach may inadvertently allow Beijing, among others, to position itself as a more responsible global leader. In a meeting just days before Trump’s tariff announcement, ministers from China, Japan, and South Korea issued a joint statement pledging to enhance global trade.
The implicit criticism of the U.S. from two of Washington’s closest allies underscores the potential pitfalls. Although the U.S. remains the world’s largest economy and a vital market for many nations’ exports, it is not the sole player in the global economy. A social media account associated with CCTV, a Chinese state broadcaster, recently highlighted the extensive trade agreements between America’s partners, suggesting that with the new tariffs, the U.S. is “isolating itself from the world of free trade.” These countries will continue to strengthen their economic ties irrespective of Trump’s actions. Following Trump’s withdrawal from the Trans-Pacific Partnership, participants successfully finalized the agreement independently.
Ultimately, tariffs are unlikely to compel other nations to respect the United States; instead, they may encourage them to proceed without American involvement.
