Why the Trump Tariff Merry-Go-Round Won’t Stop
By Ambassador Robert Zoellick - August 13, 2025
Anyone
trying to make sense of President Trump’s tariffs is missing the point.
The conga line of trade negotiators will keep dancing because Mr. Trump
will continue to use tariffs to exert dominance, signal threats and
make deals. There won’t be a new end state. Tariff numbers will keep
fluctuating, prices for goods and investments will be unreliable, and
agreements won’t last. But the damage to America’s economy and strategic
interests will persist.
The president has cited various goals
for his disorderly deal-making. He wants to cut bilateral trade
deficits, open foreign markets, protect favored U.S. industries and
restore manufacturing. He also wants to raise revenue and in some
instances simply punish others for a perceived offense. His
administration leaps from one rationalization to another to justify the
boss’s most recent whim. But Mr. Trump won’t be pinned down. He believes
uncertainty adds to his power and wants the freedom to bully others
depending on what has his attention.
Consider the president’s
dismissive treatment of the most important trade pact from his first
term—the U.S.-Mexico-Canada Agreement, which renegotiated the North
American Free Trade Agreement. Canada and Mexico, our closest trading
and investment partners, can’t rely on Mr. Trump’s deal.
As a
former reality TV star, the president enjoys signing papers and waving
them before cameras. He likes announcing concessions and deals. He
revels in the appearance of winning and moving on to the next episode.
The rest of his government scrambles to discover the terms of the deals,
sorting through the exceptions and side bargains—before the
merry-go-round spins again. Enforcement will depend on Mr. Trump’s
attention span and his latest fancy.
During America’s first 140
years, Congress wrote bills that set tariffs on individual items. This
legislation was the big business of politics, defining parties and their
campaigns. The high point of this system (or the low point, depending
on your perspective) was the Tariff Act of 1930, or Smoot-Hawley, which
raised the average U.S. tariff to 59%, making the Great Depression even
worse.
Four years later, President Franklin D. Roosevelt
persuaded Congress to pass the Reciprocal Tariff Agreements Act, which
delegated authority to the executive to negotiate lower tariffs. Under
that act, presidents were supposed to account for the larger national
interest in opening markets, superseding Congress’s penchant to protect
local producers. FDR and his next 12 successors used extensions and
adaptations of this authority to lower barriers and establish rules to
boost the U.S. and global economies.
Then Presidents Trump and
Biden arrived, embracing protectionism and breaking with 80 years of
open trade. Mr. Trump’s overreach of delegated congressional authority
has led to a dramatic turn for America and the world.
After World
War II, the U.S. viewed economic and security policies as
complementary. When America’s allies and partners succeeded, they added
markets for U.S. producers, lowered costs for consumers and companies,
expanded growth, and enhanced America’s security. During these years,
presidents took advantage of the attractive power of the country’s
flourishing economy and society while keeping America on the competitive
edge.
By contrast, Mr. Trump relies on coercive power. He views
economics as a zero-sum contest for a fixed pie of resources and wealth
to be divided up through his deals. Ironically, the interdependence of
America’s allies enables Mr. Trump to menace them more than possible
foes. He is pummeling friends Washington will need for military,
intelligence and technological cooperation. In contrast, he has been
cautious with China, which made a plan to hit back effectively,
especially through controlling exports of vital minerals.
Mr.
Trump’s trade policies and uncertainty will impose costs over time.
Prices will increase. Washington will misallocate resources to
less-competitive sectors. Productivity will slide. Other countries will
be less willing to rely on American policies and companies. The costs
might be offset for a time by other aspects of the U.S. economy, such as
investments in artificial intelligence, data centers and energy. But
America will be dissipating economic power, resilience and
competitiveness. Brexit offers a rough analogy. The U.K.’s withdrawal
from the European Union didn’t plunge the British economy into a nose
dive, but over the years costs related to the shift have ground down the
economy.
Americans will rediscover that the rest of the world
keeps turning even if Washington tries to apply the brakes. New patterns
of trade and investment will bypass Mr. Trump’s jumble of
protectionism. China and others will seek to set the standards and build
the networks of the future.
Mr. Trump’s tariffs and chaotic
trade policy will yield a mishmash—not an international system led by a
more powerful and attractive America.