The real Donald Trump: A free trader in protectionist clothing or vice versa?
This blog was originally published in 2018. We are republishing now because it is striking how much of its analysis and assessment of President Trump’s approach to trade and tariffs resonates today. Importantly, looking back in this way helps to give a longer run historical perspective on the Trump approach to trade policy, which may also help to shape thinking about the future, and responses to that future.
Note from the author: In 2018, I described the tug-of-war between the mercantilist and Reaganite factions of the Republican party as the key to understanding the trade policy fluctuations of Trump’s first term. This time around, the mercantilists have clearly won. The explicit tying of Trump’s “reciprocal” tariffs to U.S. bilateral trade deficits, along with a baseline ten percent tariff, indicates that trade deals alone are not the goal. Trump wants to end trade deficits, pursue import substitution in manufacturing and bring back a 19th century tax system based on customs revenue. These are disastrous goals in themselves; moreover, nothing America’s trading partners can do with their own trade policies can satisfy them. This is why the markets have melted down. Perhaps as the effects take hold in the real economy, […]
Blinded by the light: The trouble with today’s trade policy
Trade policy is more difficult today that it was three months ago, and significantly more so than five years ago. The former is due to the actions of the new US administration, but the latter is a more complicated story that has dramatically changed trade policy across the world.
Over the last 30 years or so trade policymakers have largely focused on efficiency gains – more open markets leading to better productivity and economic growth. This was more or less taken for granted, backed by considerable evidence. The distributional implications and broader concerns beyond economic growth have been seen as beyond the purview of trade policy, perhaps too easily. Once again, trade policy makers and analysts either took for granted that these issues were not so important in the trade context, or if they were, they would be dealt with by other areas of government policy.
However, in today’s world even efficiency and equity considerations fail to adequately capture the concerns of trade policy. Unforeseen events – Covid-19, the Russian invasion of Ukraine, extreme weather, and semi foreseen events such as Trump tariffs – have underpinned increasing concerns about economic security, supply chain resilience and national security, and the threats to the […]
What’s wrong with the USTR analysis of worldwide protection?
The analysis by the office of the US Trade Representative (USTR) that accompanies President Trump’s tariff announcement on 2 April is so profoundly wrong that one might (almost) feel sorry for the USTR staffers tasked with putting academic lipstick on a wayward pig.
Their central argument is that one can measure how protectionist a country’s trade policies are by the size of its trade surplus in goods with the United States.
Vietnam is judged to be highly protectionist because it exports to the USA much more than it imports. It is a relatively poor developing country with a competitive advantage in low-paying manufactures (such as clothing) which the US largely abandoned decades ago. It also has little appetite for the kinds of goods and services that the US exports. Vietnam’s trade with the US is not the result of protectionism.
The EU, which retains a strong manufacturing sector in Germany, and has a significant surplus with the US, is judged to be more protectionist than the UK, whose competitive advantage is stronger in services. The reality is that despite Brexit, there is little difference between the trade policies of the UK and the EU.
The USA runs a trade deficit because […]
Trump’s steel and aluminium tariffs: A problem for some products
You will have read many columns in the past weeks on the wild and unstable tariff-hikes announced by the Trump 2.0 administration. Yet, only a fraction of these announcements was effectively implemented. Here we look at one of them, the steel and aluminium tariffs, and try to gauge their relevance for UK exporters.
Let us start by recalling the core elements of the policy. On March 12th the US applied new and higher import tariffs on steel and aluminium products from all countries. These tariffs expand the existing “Section 232” tariff programme on steel and aluminium, first applied in 2018 by the Trump 1.0 administration, in three main ways:
- all existing exemptions and special arrangements were closed. After the application of Section 232 tariffs in 2018, several countries reached arrangements with the US to be fully or partly exempt from these taxes. The UK benefited from tariff-rate quotas on both steel and aluminium but this arrangement, together with those of several other countries (including, among others, the EU, Canada, Mexico, Japan, and Australia) was now terminated.
- tariffs on aluminium products were increased from 10% to 25%
- tariffs were expanded to cover several products containing steel and aluminium, i.e. derivatives produced in […]
The ‘new normal’: Can the UK and other democratic middle powers play a pivotal role?
We are now living in the ‘new normal’ where the US presence is absent in maintaining the international trade order. The US played a major role in building and maintaining the open and rules-based world trade order from the latter half of the 20th century to the first decade of the 21st century. During the first Trump administration (2017-2021), world trade was exposed to US protectionism involving unilateral tariffs, withdrawal from the Trans-Pacific Partnership (CPTPP) and the renegotiation of the North American Free Trade Agreement (NAFTA). The Biden administration (2021-2024) revised the US’ unilateralism by promoting international cooperation with its strategic allies in areas of US interest, such as G7 work on economic security and the Indo-Pacific Economic Framework for Prosperity (IPEF). Yet, its inward-looking approach remained basically the same as the previous Trump presidency. For example, President Biden retained most of the unilateral tariffs, especially those on Chinese imports, that were imposed during the Trump administration. The Inflation Reduction Act (20220) and CHIPS and Science Act (2022) prioritised domestic industry by providing subsidies and other financial incentives.
The ‘new normal’: The absence of the US in the international trade order
With Trump back as President of the US, we are […]
Brace for impact: Tougher rules ahead for third country food exports to the EU
On 19 February 2025, the European Commission unveiled its long-term strategy for farming and the agri-food sector with the publication of Vision for Agriculture and Food: Shaping Together an Attractive Farming and Agri-Food Sector for Future Generations. The document outlines the priorities and approaches that will shape EU policy initiatives to enhance the sector’s competitiveness and attractiveness—both now and through 2040. Framing its strategy within the context of recent widespread farmer protests and key policy recommendations for the future direction of the EU that came out from the Draghi report on EU competitiveness, Letta’s report on the Future of the EU Single Market, Niinistö’s report on Europe’s civil and military preparedness and readiness, as well as the Strategic Dialogue on the Future of EU Agriculture, the Commission underscores the urgent need for structural reforms. Quoting Draghi’s assertion that in a world of geopolitical and geoeconomic tensions, “dependencies are becoming vulnerabilities,” the Vision positions food security and food sovereignty as core elements of the EU’s broader strategy for security, competitiveness, and sustainability.
The Vision also reinforces the EU’s long-standing position that trade should not come at the expense of food safety, environmental protection, or animal welfare. It […]
Will Trump’s tariff policy correct an unusual imbalance?
One of the quirks of tariff regimes is that EU and UK light vehicle exports to the US face just a 2.5% tariff whereas those coming the other way face a 10% charge on a vehicle’s declared landed value[1]. It seems surprising that this difference has continued for as long as it has, but it probably won’t last much longer. President Trump has been threatening allies and enemies alike with tariffs but – as in Canada and Mexico – he has postponed them following political, or rather quasi-military concessions. It would not been entirely surprising if these threatened tariffs were not actually implemented. While with Trump it is unwise to be too definitive with predictions, in this fast-changing environment steel and aluminium-specific tariffs now appear likely.
Attention now shifts to the EU and the UK. The former has long been in the President’s sights, and the latter potentially is, too, although Trump has hinted he could give the UK better treatment than the EU. The promise of a second state visit and a ride down the Mall in a gilded cage or carriage, may have some economic benefits after all.
Significantly, before President Trump has “decided” on his tariff policy […]
How much damage could Trump’s tariffs do and what can be done?
The short answer to the first part of the question is: “a lot” – and the damage is likely to be both globally and to the US itself. A longer answer is that, in many respects, we do not really know. This is because it is unclear why these US policies are being introduced, whether they may be reversed, and what other policies may be introduced or threatened both by the US as well as by other countries. The short answer to the second part of the question is “not much”. However, a the longer answer would be: it is horribly complicated with so many unknowns, but governments and businesses need to think long term, cooperate and be proactive as opposed to reactive. This is not easy.
At present the policies being introduced against other countries largely amount to threatening to introduce or raise tariffs on goods. If we therefore focus on goods trade in 2023, the United States accounted for just under 14.5% of world imports, and just over 8% of world exports. This means that out of the total world demand for goods being exported, the US buys one-seventh of these and supplies roughly one-twelfth of world exports. Any […]
Trump’s tariffs: How much should we be concerned and why?
With President Donald Trump’s second term, the debate over the use of tariffs is making headlines. On his first day in office Trump once again raised the prospect of the strategic use of these tariffs: he threatened to impose them unless partner countries (Mexico, Canada or the EU) introduced changes in their trade policies or made concessions in other domains (China with TikTok). This approach is likely to have profound implications for both the US as well as on the global economy for three key reasons. First, it will impact the already strained multilateral trading system. Second, there are direct consequences of US tariffs on individual partner countries. Third, there is the question of how effective such actions will be for the US, and that will also depend on the extent of any retaliatory measures.
The UK-U.S. Trade Relationship
Trump has threatened to impose sweeping tariffs—ranging from 10% to 20% on all trading partners, and up to 60% on Chinese imports. These statements clearly cover a multitude of possibilities, and this generates considerable uncertainty. The UK government appears hopeful that as the US does not have a trade deficit with the UK, that the UK may not be targeted. However, this is […]
Bridging food and energy crises: A global imperative in a warming world
The interconnected challenges of food insecurity and energy vulnerability are among the defining issues of the 21st century. Both are exacerbated by factors such as climate change, economic inequalities, and geopolitical instabilities, creating substantial strain on global systems. These impacts are felt most acutely in low-income nations, where access to basic necessities like food and energy often remains precarious. As the world navigates these challenges, a key question arises: how can food and energy security be ensured without compromising one for the other?
Agriculture plays a vital role at the intersection of food production, energy consumption, and environmental sustainability. The sector accounts for almost 70% of global freshwater use and contributes over 20% of global greenhouse gas emissions.[1] Its reliance on fossil fuels—for mechanization, irrigation, transportation, and fertilizer production—has created a feedback loop that has the potential to exacerbate environmental degradation. This dependence also leaves agricultural systems vulnerable to energy price fluctuations, which could heighten the instability of food supplies.
Increasingly, agriculture is being looked to for dual responsibilities: feeding a growing global population and supporting cleaner energy transitions, such as through biofuel production. However, this dual role can place food security and energy needs in competition, as biofuel crops […]
