President Trump And Free Trade

Posted: 6/9/2018

The whole world is wondering aghast what President Trump is up to when he threatens to imposes new or even imposes higher tariffs on the imports from major trading partners or when he attacks or dismisses trade agreements as bad deal like NAFTA (North American Free Trade Agreement) or TPP (Trans-Pacific Partnership).

From a free trader’s perspective, like I consider myself to be one, these tariffs threaten to:

1. Harm consumers and businesses in the U.S. and abroad
2. Trigger a spiral of tariff and counter tariff impositions or, worse, even a trade war the like we have not seen in decades

For a long time President Trump has puzzled me with this approach. However, I begin to see some method in this, what appears to many as, madness:

1. A diversionary tactic to e.g. get the Europeans to focus more on economic prosperity and trade instead of radical environmentalism and identity politics
2. To initiate a more honest discussion about managed trade versus free trade, the former of which actually predominated the post World War II era. Perhaps, Trump is intentionally upsetting a much beloved world order of managed trade. But one should not be fooled, some countries took advantage in their own best interest of the likes of GATT (General Agreement of Tariffs and Trade) or its successor WTO (World Trade Organisation), e.g. China.
3. To get the U.S. Congress to finally limit the powers of the president to make unilateral changes to U.S. tariffs. Long overdue perhaps

I keep my fingers crossed that my above speculation is not entirely without warrant!