As Donald Trump’s sweeping new tariffs roil markets and politics worldwide, his administration is well aware of the mounting criticism of the underlying policy, the tariff calculation methodology, and the way it was handed down. They’re also utterly unfazed. At least that was the takeaway from my conversation today with a senior source closely involved in the process.

Trumpians believe they’re dealing with a world-historic “crisis” of US trade deficits, as the source put it, which have “built up to the highest point in human history”. The result is that a country which manufactured thousands of US Navy ships during the Second World War commissioned just three last year. It also manufactures only a third of the ammunition rounds it needs to build to guarantee national security.

That emphasis on trade surpluses also explains their use in the formula applied to friends and foes alike to derive a tariff rate for each trading partner. Surpluses racked up by other nations, in the administration’s thinking, are a manifestation of non-reciprocity in their trade relations with America — as well as the source of the deindustrialisation which has devastated the US heartland, resulting in manufacturing job losses and related pathologies such as the opioid crisis.

Critics of the new regime, the Trumpians argue, believe that deficits don’t matter. “And if you’re a multinational corporation,” said my source, “of course deficits don’t matter. You don’t care where you make money. But if you’re a worker in Indiana, deficits matter. It’s about whether you have a good job.”

Team Trump also claims that, under free-trade theory, trade deficits are an aberration that should correct themselves with the passage of time. But there has been no self-correction. It therefore follows that there is a “structural problem” in the world trade system, according to the administration source. The methodology might be rough, but “none of [the critics] have proposed an alternative method.”

But shouldn’t big moves, altering not just trade flows but the entire pattern of the world trade system, be driven by Congress rather than presidential decrees? The Trumpians believe that Congress would never do the job, their evidence being the fact that it didn’t do so for many years, declining to raise America’s most-favoured-nation duties or target the worst offenders. That failure has necessitated rapid, emergency action from the presidency. “We can’t wait until there is a big war with somebody to find out that we should re-industrialise,” the source claimed.

That last part is doubtful, however. Congress did approve the renegotiated Nafta agreement, which was re-christened the USMCA during the first Trump administration. What’s more, Congress could set out a formal, predictable, and systematic path for trade partners that want to escape the tariffs and strike up new arrangements. As it is, almost everything depends on presidential whim: the tariffs, Trump’s allies argue, will be lifted or adjusted when the trade deficits are eliminated. In short: buckle up.

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Sohrab Ahmari is the US editor of UnHerd and the author, most recently, of Tyranny, Inc: How Private Power Crushed American Liberty — and What To Do About It

SohrabAhmari

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