No turning back: America's forever trade wars
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Illustration: Lindsey Bailey/Axios
High tariffs could outlast President Trump in a way that gradually delinks America's economy from the rest of the world for good.
Why it matters: The new risk for U.S. businesses and consumers is that Trump-era protectionism is no fleeting pain point.
- Tariffs in some form might persist for the next four years and become the new normal in future administrations.
State of play: If recent history is any guide, at least some of the levies left at the end of Trump's term could stick.
- "We have never had any trade deescalation with China from Trump's first-term trade war. Politicians don't see a public appetite for it," says Joseph Politano, an economist at Apricitas Economics, among those flagging Trump tariff permanency as a risk.
- "I worry future presidential hopefuls see tariffs as a big expansion of executive power — the ability to economically reward and punish businesses at will — and will be loathe to give it up."
Flashback: Trump kept tariffs on billions of dollars worth of Chinese imports, even after the two nations notched a trade deal in 2020.
- President Biden maintained those Trump 1.0 tariffs, as well as the 25% levy on steel and aluminum (though with some exemptions).
- The Biden administration also ratcheted up trade tensions with China, raising rates on previously hit goods and adding new tariffs on others.
- Trump is piling onto those Biden-era tariffs with the most aggressive trade policy in nearly a century.
The big picture: Even those who oppose Trump's tariffs raise concerns about over-reliance on other nations for goods, a lasting effect from the pandemic.
- "It's likely that 10% is the new baseline and it's hard to imagine Trump's successor coming in — no matter who that is — and immediately cutting tariffs back down to where they were before," Josh Lipsky, who chairs international economics at the Atlantic Council, tells Axios.
- "Now that the U.S. is using tariffs in a way we haven't in decades, we may find there are some parallels to the use of the sanctions, far easier to put on than take off," Lipsky, a former advisor at the International Monetary Fund, says.
What they're saying: Trump suggested to "Meet the Press" on Sunday that at least some tariffs may have to stay in place throughout his term. As it stands, the tariffs are the "stick" necessary to push businesses to invest domestically.
- "If somebody thought (tariffs) were going to come off the table, why would they build in the United States?" Trump said.
What to watch: Trump said tariffs on Chinese goods will ultimately have to come down, though that would stop short of removing the levies altogether.
- "At some point, I'm going to lower them because otherwise, you could never do business with them. And they want to do business very much," Trump said.
The other side: "I don't think that President Trump believes they're a long-term solution," says Gordon Sondland, who served as U.S. ambassador to Europe during Trump's first term, referring to tariffs.
- "He thinks the fair thing to do is to have the tariffs be reciprocal. If they all of a sudden drop their tariffs to zero, Trump will drop our tariffs to zero," Sondland adds.
