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The details of what President Donald Trump has called “Liberation Day” are sketchy, but the impetus is clear. Trump has signaled for weeks he wants to impose sizable tariffs on many imports to the United States.
At a White House event Wednesday, Trump may announce a universal tariff on most imports or a sweeping series of “reciprocal” duties matching the tariffs of other countries. Trump and his allies see such measures as necessary to redress perceived imbalances in global trade and also drum up new sources of revenue as the administration radically overhauls the workings of federal government.
Critics, though, contend that Trump’s protectionism will amount to a de facto tax on U.S. consumers, and may drive the country into recession even as prices remain high, creating a crisis of “stagflation” not seen in decades. It may provoke retaliatory tariffs from other nations, including U.S. partners and allies. For the trade skeptics in Trump’s orbit, the tensions could spur a revival of U.S. industry and manufacturing, as foreign businesses relocate their operations on U.S. soil.
But the consensus among economists is damning. “Trump doesn’t seem to understand basic international economics. A lot of the arguments he makes, Adam Smith was refuting two and a half centuries ago in ‘Wealth of Nations,’” Greg Mankiw, an economics professor at Harvard University, told my colleagues. “I have not seen a more wrongheaded policy come out of a White House in decades.”
Officials elsewhere fear an unraveling of globalization, supply chain chaosand tanking markets amid the uncertainty. On Tuesday, European Commission President Ursula von der Leyen said her continental bloc was prepared to fire back with their own tariffs on U.S. goods and services, even though the endeavor left colleagues “utterly disheartened.”
“Europe has not started this confrontation,” she said. “We do not necessarily want to retaliate, but if it is necessary we have a strong plan to retaliate and we will use it.”
On this episode, the crew breaks down President Trump's new economic policy, including tariffs. Will Trump's new policies mean higher prices for Americans? (Video: The Washington Post)
The signs of rupture are everywhere. A recent opinion poll in France showed that a majority of the French public would support boycotts of U.S. goods in reaction to the Trump administration’s bullying of Europe. Another poll in Germany in March earlier this month found that only 16 percent of Germans trusted the United States as an ally.
Last week, Canada’s new prime minister Mark Carney declared that the intertwined, “old relationship” his country had with the United States was “over” and explained why he chose Britain and France as the first foreign stops of his premiership. “It’s clear the U.S. is no longer a reliable partner,” he said. “It is possible that with comprehensive negotiations, we could reestablish an element of confidence, but there will be no going backwards.”
There’s a chance that the tariff plan may yield a milder outcome, with Trump scaling back some of his threats and hatching deals over tariffs in specific sectors and between specific countries. “White House officials have scoffed at economists’ warnings, arguing that similar downbeat forecasts proved wrong when Trump imposed more modest tariffs during his first term,” my colleagues noted.
But much about the initial months of Trump’s second term represents a radical departure from the first, and the administration’s constant broadsides toward Europe — via speeches, social media posts and even threats of annexation — has convinced many Europeans that the transatlantic alliance is about to fall apart. “Trump is waging economic and political war on U.S. allies and dependants,” observed Financial Times columnist Martin Wolf. “But the resulting collapse in trust of the countries that used to share its values will end up very costly for the U.S., too.”
In Beijing, analysts sense an opportunity. Wang Yiwei, director of the School of International Studies at the Renmin University of China, told Spanish daily El País that the Trump administration’s actions caused “transatlantic relations to be historically undermined” and could lead to a softening in Europe’s stance toward China.
The Biden administration spent months trying to persuade the Europeans to more closely align their approach toward Beijing with Washington. What Western geopolitical solidarity was forged under Biden is now quickly evaporating.
“Some say that the 2024 U.S. elections were not a transfer of power as much as a true regime change for the Europeans,” Wang said to the Spanish newspaper.
Da Wei, a professor at Tsinghua University in Beijing, recently suggested to NPR that Trump was undermining a critical element of American power by alienating the country’s traditional partners and casting doubt over the reliability of Washington. “The alliances of the U.S. we believe [are] an important source, probably one of the most important sources of the U.S. strength,” he said.
In the eyes of the U.S.'s closest Asian partners in Japan and South Korea, China remains a competitor and putative threat on multiple fronts. But Trump’s latest tariff moves — including stiff levies on foreign cars — saw the three countries hold a strategic economic dialogue for the first time in five years this past weekend, with Chinese state media reporting afterward that Tokyo, Seoul and Beijing might even jointly coordinate their response to Trump’s tariff plan. (Japanese and South Korean officials have distanced themselves from this suggestion.)
The White House appears unperturbed by the rest of the world’s angst — indeed, it seems to enjoy being the proverbial cat among the pigeons. While Trump may upend global trade, his administration at home is drastically slashing government, warring with civil society and universities, and flirting with a series of extra-constitutional maneuvers to get its way.
To scholars in China, the radicalism of the moment is curiously familiar. “What is happening in the U.S. is still far from the Cultural Revolution. It’s maybe 1 or 2 percent,” Da told NPR. “But you can sense that smell. The populist sentiments … Common sense is good. So those sophisticated thoughts are something bad.”
Michael Froman, president of the Council on Foreign Relations and a former top trade official in the Obama administration, argued that the Trump era is accelerating a world order more shaped in China’s image, with the United States pursuing a form of “Chinese policy with American characteristics.”
“The United States is now operating largely in accordance with Beijing’s standards, with a new economic model characterized by protectionism, constraints on foreign investment, subsidies, and industrial policy — essentially nationalist state capitalism,” Froman wrote in Foreign Affairs. “In the war over who gets to define the rules of the road, the battle is over, at least for now. And China won.”