Making sense of Trump’s Tariffs
San José, CA – Over the last few days, since President Trump’s latest tariffs were announced on April 2, comments have often called them “bizarre,” “weird” or similar terms. But there is a method to what might seem to be Trump’s madness.
The tariff rates announced were calculated on the basis of the U.S. trade deficit with each country, or how much more the United States imports from said country than the amount of U.S. goods it buys. This was often dismissed as “nonsense,” but it reflects President Trump’s longstanding obsession with U.S. trade deficits.
President Trump has changed position on many policies: he started off as a Democrat and won the Presidency twice as a Republican; he was pro-choice but then became the most effective anti-abortion president by stacking the Supreme Court. But for at least 40 years, Trump has been opposed to imports, especially the success of Japanese cars in the 1980s. His love for tariffs is sincere, and overdone.
While he clearly wants to roll back the clock in many arenas, his tariff thinking goes back the furthest, almost 400 years, to the era of what Marx called “primitive accumulation,” where England and other European countries saw trade surpluses, or selling more exports than buying imports, as the road to national wealth. But while countries at that time followed this “mercantilist” economic policy by emphasizing exports, Trump is more focused on reducing imports through high tariffs.
So why were his April 2 tariffs so shocking to so many people? In part, he did a classic business scam of “bait and switch” – talking about reciprocal tariff for months, and then imposing tariffs based on trade deficits. Reciprocal tariffs seemed reasonable and fair to many people. Investors and economists generally knew that other countries’ tariffs were not that high, so raising U.S. tariffs to match would only be a few percentage points more.
Trump’s affinity for mercantile thought also meshes with some of his other policies. Mercantilism went hand in hand with the first wave of European colonialism, as first Spain and Portugal, then England, France, the Netherlands and even Sweden and Denmark rushed to establish colonies in the Americas. Then the European colonial conquest spread to South and Southeast Asia. This old-style colonial mindset can also be seen in President Trump, who wants to own the Panama Canal, make Canada a 51st state, and seize Greenland.
But Trump also differs with mercantilism in important ways. First and foremost, mercantilists were generally pro-immigration, seeing immigrants as bringing labor and skills that could increase production for export. Trump, of course, is anti-immigrant (or at least hostile to the vast majority of U.S. immigrants today, who come from Asia, Africa and Latin America). This is particularly a contradiction with his holding up the 1900 America of President McKinley, who championed on heavy industry, when in fact the workers in these industries were not white Americans who came off the farm – but were Central, Southern and Eastern Europeans, who made up the vast majority of immigrants at that time.
Last but not least, mercantilists were forward-looking for their time. They welcomed the imports of raw materials if it helped produced finished goods to be exported. Mercantilists also coveted skills and technological knowledge from immigrants that would also advance production. Trump wants to tariff all imports, even if the United States simply lacks the natural resources. If anything, Trump is somewhat hostile to higher education in general and to highly skilled and educated immigrants who lead many of U.S. technology giants – unless of course, they are white like Elon Musk, who hails from South Africa.
Trump is very backward-thinking, not only in terms of centuries old economic policy but also in his fascination with century old industries like coal and internal-combustion automobiles. This reflects the different societies – Mercantilism dominated when European was on the rise and the wealth needed for capitalism was being acquired. Trump’s ideas are shaped by an empire in decline, as the United States has been since the 1970s. And rather than trying to fix the many problems that American society faces, Trump wants to go back in time to when America was on the rise.