Trump’s New Protectionist Age

Blowing up the world trading system has consequences that the President isn’t advertising.

By

The Editorial Board

April 2, 2025 6:08 pm ET

President Trump unveiled his new “liberation day” tariffs on Wednesday, and they are another large step toward a new old era of trade protectionism. Assuming the policy sticks—and we hope it doesn’t—the effort amounts to an attempt to remake the U.S. economy and the world trading system.

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All details aren’t clear as we write this, but Mr. Trump’s tariffs look “reciprocal” in name only. First he’s hitting every nation in the world with a 10% “baseline” tariff to sell in the U.S. market. For those he calls “bad actors,” he’s adding up the country’s tariff rate on U.S. goods, plus an arbitrary estimate of the cost of its “currency manipulation” and non-tariff barriers. He then takes that total number and applies half of that in tariffs on the country’s exports to the U.S.

He’s hitting China with a 34% tariff, but our Japanese friends will pay nearly as much at 24%. The European Union gets whacked with 20%, India with 24%. We’ll assess the details further in coming days, but for today let’s consider some of the consequences already emerging in this new protectionist age:

• New economic risks and uncertainty. The overall economic impact of Mr. Trump’s tariff barrage is unknowable—not least because we don’t know how countries will react. If countries try to negotiate with the U.S. to reduce tariffs, the damage could be milder. But if the response is widespread retaliation, the result could be shrinking world trade and slower growth, recession, or worse.

There will certainly be higher costs for American consumers and businesses. Tariffs are taxes, and when you tax something you get less of it. Car prices will rise by thousands of dollars, including those made in America. Mr. Trump is making a deliberate decision to transfer wealth from consumers to businesses and workers protected from competition behind high tariff walls.

Over time this will mean the gradual erosion of U.S. competitiveness. Tariffs that blunt competition invite monopoly profits while reducing the need to innovate. This is the story of the American steel and car industries in the 1950s and 1960s before global competition exposed their deficiencies.

• Harm to American exports. One longtime U.S. trade goal has been to expand markets for American goods and services. Administrations of both parties pursued trade deals, bilateral and multilateral, to do so. Apollo Global Management says 41% of S&P 500 firms’ revenues come from abroad.

Mr. Trump’s unilateral tariffs blow up those arrangements and invite retaliation. U.S. exports will suffer directly from retaliatory tariffs. And they will suffer indirectly as other countries strike trade deals that give preferential treatment to non-U.S. firms. Think of Brazil’s soybean bonanza after Mr. Trump’s China tariffs in his first term.

• A bigger Washington swamp. Tariffs impose costs that businesses will want to avoid. They will thus be a windfall for Beltway lobbyists as companies and countries seek exemptions from this or that border tax.

Mr. Trump is saying there will be no tariff exemptions. But watch that promise vanish as politicians, including Mr. Trump, see exemptions as a way to leverage campaign contributions from business. Liberation Day is Buy Another Yacht Day for the swamp.

• The end of U.S. economic leadership. Britain played this role through World War I, but it was too weakened by war to continue. The U.S. didn’t take up the leadership mantle until after depression and World War II. U.S. leadership and the decision to spread free trade produced seven decades of mostly rising prosperity at home and abroad. The U.S. share of global GDP has been stable at about 25% for decades, even as industries rise and fall.

That era is now ending, as Mr. Trump adopts a more mercantile vision of trade and U.S. self-interest. The result is likely to be every nation for itself, as countries seek to carve up global markets based not on market efficiency but for political advantage. In the worst case, the world trading system could devolve into beggar-thy-neighbor policies as in the 1930s.

The cost in lost American influence will be considerable. Mr. Trump thinks the lure of the U.S. market and American military power are enough to bend countries to his will. But soft power also matters, and that includes being able to trust America’s word as a reliable ally and trading partner. Mr. Trump is shattering that trust as he punishes allies and blows up the USMCA that he negotiated in his first term.

• A major opportunity for China. The great irony of Mr. Trump’s tariffs is that he justifies them in part as a diplomatic tool against China. Yet in his first term Mr. Trump abandoned the Asia-Pacific trade deal that excluded China. Beijing has since struck its own deal with many of those countries.

Mr. Trump’s new tariff onslaught is giving China another opening to use its large market to court American allies. South Korea and Japan are the first targets, but Europe is on China’s list. Closer trade ties with China, amid doubts about access to the U.S. market, will make these countries less likely to join the U.S. to impose export controls on technology to China or to ban the next Huawei.

This is far from a comprehensive list, but we offer them as food for thought as Mr. Trump builds his new protectionist world. Remaking the world economy has large consequences, and they may not all add up to what Mr. Trump advertises as a new “golden age.”

(http://www.autoadmit.com/thread.php?thread_id=5704345&forum_id=2Elisa#48809965)

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WSJ editorial board hates tariffs and adores open borders. they have long been comfortable with trade policies that help elites and screw over the working class. so your observation is like, "when even the Cheney's are against you, rofl Trumpshits."

(http://www.autoadmit.com/thread.php?thread_id=5704345&forum_id=2Elisa#48810226)

so no, I think we're just HAHAFUCKED. At best this kicks off our Japan/EU style 30 years of going sideways.

(http://www.autoadmit.com/thread.php?thread_id=5704345&forum_id=2Elisa#48810224)

This changes everything Tommy.

(http://www.autoadmit.com/thread.php?thread_id=5704345&forum_id=2Elisa#48810258)

shocking: wsj disagrees with trump on anti-globalism!

(http://www.autoadmit.com/thread.php?thread_id=5704345&forum_id=2Elisa#48810293)

The pumo typed unironically

(http://www.autoadmit.com/thread.php?thread_id=5704345&forum_id=2Elisa#48810288)

Lol “the 50s and 60s were terrible. Thanks God Jews started hollowing out these industries!!”

(http://www.autoadmit.com/thread.php?thread_id=5704345&forum_id=2Elisa#48810561)

can you explain how this is good for the working class?

(http://www.autoadmit.com/thread.php?thread_id=5704345&forum_id=2Elisa#48812515)