Trump's big, not so beautiful, trade wall

Globalization helped make the US the most prosperous nation in history. But lots of Americans didn't feel that way, and accordingly voted to "liberate" themselves from it last November. Donald Trump is now delivering for them — and the consequences will reverberate across the globe.

- Ian Bremmer

On April 2, Trump announced sweeping "reciprocal" tariffs ranging from 10% to 50% on almost every US trading partner (plus a few uninhabited territories). Even countries with goods surpluses with the US were slapped with a 10% across-the-board levy.

"Liberation Day," as Trump called it, heralded not the end of US-led globalization which had been adrift for many years already, but America's definitive turn against globalization. The US's effective tariff has gone from being one of the world's lowest to by far the highest of any major economy. This is a level higher even than the infamous 1930 Smoot-Hawley tariffs, widely credited with starting a global trade war and deepening the Great Depression.

Trump has long described the new tariffs as "reciprocal." But the formula the administration ended up using to compute these doesn't look at the tariff rates and non-trade barriers other countries impose on US goods at all. Instead, the calculation assumes that bilateral goods trade deficits are "unfair," treating America's deficit with every country as "the sum of all cheating" and seeking to eliminate it instead of actual trade barriers.

There's no linear correlation between a country's protectionism and its bilateral trade balances. Trade surpluses and deficits can stem from all sorts of factors unrelated to trade policy — population size, wealth, saving rates, and resource endowments to idiosyncratic preferences for certain products over others. As such, deficits are not inherently bad or unsustainable.