Never mind that this rationale ignores the many benefits that the US has reaped from trade, not just cheaper goods and expanded consumer purchasing power, but also the foreign capital inflows that subsidise US interest rates and, in turn, help create financial wealth. Trump is fixated on the “carnage” of seemingly chronic trade deficits, especially the alleged hollowing out of America’s once-great manufacturing sector.
There is an inherent flaw in US President Donald Trump’s trade policy. While it is all but impossible to know where Trump will settle on most issues — from taxes to immigration — two key objectives of his trade strategy are now coming into focus: setting a global minimum tariff, and imposing a special penalty on China. The flaw lies in the combination.
For argument’s sake, consider the possibility that a blanket 10% tariff on all US trading partners is America’s new norm. Trump has loudly proclaimed that such a baseline is minimal compensation for the “rip-off” the US has long suffered from other countries’ unfair trading practices.
