The ever-bombastic Donald Trump has boasted repeatedly of his trade victories, while White House news releases trumpet his “historic trade wins”. The Wall Street Journal echoed Trump’s triumphalism with a headline saying, “Trump is Winning His Trade War”, and last week the New York Times used the exact same words in a headline. That must have been music to the president’s ears.
Forgive me for being a spoilsport, but I don’t see where the victory is or how Trump is winning. I keep reading how Trump’s trade war and tariff machinations have pushed up inflation, slashed US job gains, slowed economic growth and caused the manufacturing sector to sputter.
The rate of job growth plunged by over 70% in the three months after Trump unveiled his 2 April “liberation day” tariffs that filled corporate executives with uncertainty and dread. Trump is palpably impatient for the Federal Reserve to cut interest rates, but the higher prices resulting from his tariffs are likely to delay the rate cuts he desperately wants. So can someone please tell me where is the victory here?
Trump further proclaims that his tariffs are wondrous because, he says, they will generate trillions of dollars in revenue for the US Treasury. But those revenues will come out of the hides of tens of millions of American consumers who will pay Trump’s taxes on imports. The Yale Budget Lab estimates that the price increases caused by Trump’s tariffs will cost the typical US household $2,400 in 2025. As a result of the tariffs, the budget lab says, apparel prices will soar 37% and shoe prices 39%. What Trump boasts as a win is a loss for millions of typical Americans.
Some economists are warning that Trump’s tariffs will bring back stagflation, a dangerous combination of rising prices and slowing growth last seen in the 1970s. Pointing to signs of stagflation, BMO Economics wrote: “Economic activity and job growth are sputtering under the weight of higher tariffs, increasing inflation and rising economic policy and trade uncertainty.” Doesn’t look as if Trump’s trade war is winning there.
Trump recently said on CNBC’s Squawk Box that “people love the tariffs”, but evidently the people he’s talking about aren’t the American people. A recent Fox News poll of registered voters found that Americans overwhelmingly disapprove of Trump’s tariff policies by 62% to 36%. Ben May, a forecaster at Oxford Economics, said his tariffs will hurt US families because “they are obviously raising prices … and squeezing household incomes”.
Many days it seems that Trump tries to dominate the news cycle with some tariff announcement or other: 50% on Brazil, double India’s tariffs to 50%, impose a 100% tariff on semiconductors. (Even some Maga folks probably think he uses tariff announcements to distract from the Jeffrey Epstein scandal.) This week the White House dismayed the world by announcing that Trump would impose tariffs, ranging from 15% to 50%, on 90 countries effective Thursday. As a result of Trump’s tariff craze, the average effective tariff rate on imports into the US will be 18%, up from 2.3% last year – the highest level since the infamous Smoot-Hawley tariffs of 1930 worsened the Great Depression.
Remember when Trump’s trade adviser Peter Navarro predicted last April that the administration would negotiate 90 deals in 90 days. That didn’t come close to happening. But Trump did pressure the EU, Japan and South Korea into reluctantly accepting trade deals that call for tariffs of 15% – a compromise down from the 25% and 30% levels Trump had been demanding. Even though the EU, Japan and South Korea have long been among America’s closest allies, Trump used nasty threats to get them to accept those tariffs, which will hurt those countries’ manufacturers, while also hurting US consumers.
Here’s one way to look at Trump’s strong-arm tactics: when a bully demands that a person do something that that person doesn’t want to do and that something will hurt not just that person, but also the bully’s family – and probably the bully, too, long-term – how is that winning, rather than bull-headed destructiveness? Some headline writers might lazily conclude that Trump is winning his trade war (a war of headstrong destructiveness), but in that war, everyone and everything, except Trump’s limitless ego and a handful of US industries, are losers.
There are many other reasons Trump’s trade deals shouldn’t be viewed as victories. Trump’s main motivation for tariffs is arguably to increase manufacturing in the US, but factory activity has actually declined in recent months, according to the Institute for Supply Management. Harley-Davidson says it has reduced production because of tariff-induced uncertainty and higher expenses. Ford, which assembles more cars in the US than any other automaker, complains that Trump’s tariff mess caused its profits to fall by $800m in the second quarter. Trumps’s mishmash of tariffs, including steep import taxes on steel, aluminum and auto parts, have made Ford’s production more problematic and expensive.
Trump’s trade war has pushed relations with many countries to their worst point in decades. Acting more like a mob boss than a dealmaker, Trump has told various nations that if they promise to cough up several hundred billion dollars in investment in the US, he’ll make nice and lower their tariff rate. Or else. One economist called this “a global shakedown”. Many officials in Europe, Asia, Latin America and Canada are no doubt seething. Trump seems to treat Washington’s trading partners as punching bags – that’s not a winning strategy for the US or the world.
Another motivation behind Trump’s tariffs is his desire to erase the huge US trade deficit. That deficit has certainly been a problem, helping lead to myriad factory closings and job losses across blue-collar America. But even with its record trade deficits, the US has, by many measures, the world’s richest, most successful economy.
Trump boasts that his tariffs are already bringing back some manufacturing – and there’s no denying that there are several examples, Last Wednesday, Apple vowed to invest $100bn in advanced manufacturing in the US, and GM plans to increase production of its Chevrolet Silverado and GMC Sierra trucks in Indiana while trimming output in Canada.
Nonetheless, there’s a huge question mark as to whether Trump’s tariffs will inspire a major manufacturing rebound in the US. Many experts say the 15% tariffs imposed on the EU, Japan and other places are too low to persuade companies to move production to the US. For corporations to build a new $500m factory in the US, they will want solid assurances of what economic conditions will be four and five years from now. But does anyone actually think that the mercurial Mr Trump won’t issue new tariff threats or order tariff changes within four or five weeks?
Perhaps the newspaper headline should be, “Trump Has Already Lost a Pivotal Part of His Trade War.” All the months of Trump’s on-again, off-again, up-and-down tariffs may mean he has so spooked and alienated corporate planners that he will never achieve his goal of bringing back far more factories, notwithstanding other countries’ often-vague pledges of billions in investments.
Even beyond that, in this age of AI, algorithms and a thriving service economy, it seems that Trump’s trade war – with the tremendous pain and disruption it is causing – might have made far more sense to help the economy of 50 or 75 years ago than the AI and information economy of today.
Steven Greenhouse is a journalist and author, focusing on labour and the workplace, as well as economic and legal issues
