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, Trump [...]

By |2025-04-09T14:53:12+01:009 April 2025|Blog, International Trade, UK - Non EU|0 Comments
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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 [...]

By |2025-04-04T11:01:30+01:004 April 2025|Blog, International Trade|0 Comments
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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 [...]

By , |2025-03-21T13:32:15+00:0021 March 2025|Blog, International Trade|0 Comments
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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 [...]

By |2025-02-11T08:59:37+00:0010 February 2025|Blog, International Trade, UK - Non EU|0 Comments
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Cutting tariffs on food products: why bother?

6 May 2022 L. Alan Winters is Professor of Economics at University of Sussex Business School and Founding Director of the UK Trade Policy Observatory and Guillermo Larbalestier is Research Assistant in International Trade at the University of Sussex and Fellow of the UKTPO. The concept is simple: cut tariffs levied on food imports so the products become cheaper in the UK, right? In this blog, we look at the trade data and discuss the reasons why changing tariffs would hardly affect prices.[1] Only a small proportion of imports pay tariffs. In 2021, the UK imported £38.6 billion of food products[2] (equivalent to 7.6% of the UK’s total imports that year and about 46% of UK food consumption). Approximately 66% come from the EU and are already exempt from tariffs under the EU-UK Trade and Cooperation Agreement (TCA).[3] […]

By |2022-05-06T12:50:35+01:006 May 2022|UK - Non EU, UK- EU|1 Comment
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Tariff-free trade with the EU: not so PUR and simple

29 July 2021 Yohannes Ayele is Research Fellow in the Economics of Brexit at the University of Sussex and Fellow of the UKTPO. Since 1 January 2021, the UK’s trading relationship with its biggest and closest trading partner—the EU—has been governed by the Trade and Cooperation Agreement (TCA). Under the TCA, UK exports to the EU face zero-tariff and zero-quota. However, to claim zero tariffs, exporters must meet the rules of origin requirements and be able to provide proof of origin. Where exporters do not meet the requirements they end up paying the tariff. Even those exporters that can meet the rules of origin requirement, because of the cost of the paperwork and requirements for proof of origin needed to claim the zero tariff, they may instead choose to pay the tariff. The latter is more likely where the tariff preference margin (i.e., the difference between MFN non-zero tariff and the zero-tariff under TCA) is very low. These problems— the rules of origin requirements and costs associated to claim zero-tariff—could be particularly challenging for smaller companies. Therefore, in practice, firms may end up paying tariffs despite the zero-tariff and zero-quota deal under the TCA. […]

By |2021-07-29T09:00:00+01:0029 July 2021|UK- EU|0 Comments
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Safeguard tariff rate quotas on steel imports: The Computor says ‘no’, but the Government says ‘yes’

8 July 2021 L. Alan Winters is Professor of Economics and Founding Director of the UKTPO. Guillermo Larbalestier is Research Assistant in International Trade at the University of Sussex and Fellow of the UKTPO. On 1st June 2021, as part of its post-Brexit trade architecture, the UK Government launched the Trade Remedies Authority (TRA). On 11th June the TRA recommended the extension of only some of the quotas and tariffs on steel imports that the UK had inherited from the EU. On 30th June, one day before these measures were due to expire, the Government rejected the TRA’s recommendation and extended the policies on several categories of steel for which the TRA had recommended the revocation. It also announced a review to check whether the TRA was ‘fit for purpose’. What was going on? And does it matter? […]

By |2021-07-08T13:03:45+01:008 July 2021|UK - Non EU, UK- EU|1 Comment
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Two key things to know about Freeports

25 February 2021 Peter Holmes is a Fellow of the UKTPO. Guillermo Larbalestier is Research Assistant in International Trade at the University of Sussex. The Government’s competition for proposals to create ten Freeports across the UK came to a close earlier this month with an announcement of the successful locations expected soon. Freeports are areas within a country that are outside its customs territory. Goods coming into the country via Freeports are exempt from paying tariffs until they enter the mainland or are shipped to another country. In the UK Freeports model[1] these areas may also be subject to special regulatory, tax, or subsidy rules. Such features may make the terms Enterprise Zone, Special Economic Zone or, the more general, Free Trade Zone more appropriate. The full details of all bids have not been published but summary reports indicate wide variety of business cases. […]

By |2021-02-25T09:56:44+00:0025 February 2021|UK - Non EU, UK- EU|0 Comments
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UK-EU trade relations: A checklist of 10 key issues

20 November 2020 Michael Gasiorek is Professor of Economics at the University of Sussex and Director of the UKTPO. Discussions and evaluations on the future UK-EU relationship have been on-going since the referendum of June 2016, and we are close to another milestone – by the end of the year, we will either have a free trade agreement (FTA) with the EU or no-deal. Note this is a milestone and not the endgame. Whether or not there is an agreement there will still be considerable practicalities to resolve, and no doubt some areas will be open to future negotiation. There is a lot of talk in the press about sticking points (fisheries, state aid and level playing field provisions, dispute settlement) but how good the deal is for the UK will depend on the scope and the depth of what is agreed, and whether some areas are only notionally covered and need to be sorted out in future negotiations. […]

By |2020-11-20T17:31:49+00:0020 November 2020|UK- EU|2 Comments
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UK-Japan FTA: Tariff gain or no change?

29 October 2020 Yohannes Ayele is Research Fellow in the Economics of Brexit at the University of Sussex and Fellow of the UKTPO. Update 30 October 2020: This is a slightly revised version of the blog we released yesterday. Sorry for any confusion we may have caused. Essentially, we tripped over the fact that the first year of the UK-Japan CEPA trade liberalisation schedule lasts for only one month, in order to bring it into line with that of the EU-Japan EPA. Having left the EU and with the conclusion of the transition period at the end of 2020, the signing of new free trade agreements with countries that cover 80% of the UK trade by 2022 has been an integral part of government plans. On 23 October 2020, the UK signed its first post-Brexit free trade agreement  – with Japan, the UK-Japan Comprehensive Economic Partnership Agreement (CEPA). This blog provides an analysis of the extent of the trade liberalisation in this new deal. […]

By |2020-10-29T15:30:19+00:0029 October 2020|UK - Non EU|1 Comment
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