Tariffs On Steroids

Leverage is a precious commodity in trade negotiations and Trump's may be losing value

- By MARK LINSCOTT

WE ALL SHOULD HAVE SEEN IT coming. Candidate Donald Trump was clear on the campaign trail, and when Robert Lighthizer, the first-term US Trade Representative, was nowhere to be seen in the new administration, and the likes of Peter Navarro reemerged, recently exchanging prison grey for suit and tie, the writing was on the wall. Tariffs on steroids would be central to a Trump 2.0 administration's economic and strategic policies.

More specifically, the new Trump trade policy is a bullying one, and it has been effective as such. Its main features have been identifying pain points for most trading partners, exploiting these to the maximum, including a large dose of unpredictability, and ultimately following through in applying tariffs. Average tariffs now appear to exceed levels from the 1930s when the global economy tanked after a period of increased trade and economic growth. Trump's trade policy has effectively dismantled the founding principle of “most-favoured nation” treatment in the post-World War II system by penalising countries with bespoke tariff rates and leveraging tariffs to squeeze them into making market access concessions that only a few years ago were unthinkable. Even a bloc of the world's richest nations—the European Union—knuckled under, agreeing to eliminate all tariffs on US exports of industrial goods.