Trump Trade. It’s the new economic issue that we can’t stop talking about.
President Donald J. Trump, singlehandedly, is attempting to reset the complete global order of trade relationships between the United States and every other country.
Why?
Because President Trump believes that, as the largest (by far) consumer market on the planet, the United States is sacrificing its domestic manufacturing base on the altar of free trade.
We get the lowest prices globally, but we literally lose millions of manufacturing jobs.
Is he right? Will his solutions help us or hurt us? First, history.
Like so many 21st century problems and global relationships, it all goes back to World War II. When that horrible war finally ended (in 1945), the United States was the only industrial power with its manufacturing base intact.
England and Germany were totally decimated.
France and Italy were crippled.
Japan was literally nuked.
Following World War II, the Marshall Plan was created to jumpstart Western European economies. Multilateral trade treaties were passed knowing that the rebuilding economies would have access to the United States' thriving and growing
consumer market.
And, at the same time, the United States would not enjoy equal reciprocity to the redeveloping European economies.
The American economy enjoyed low prices for imported products.
The other global traders enjoyed their market protection. Indeed, in 1992 President George H. W. Bush (Bush 41) signed NAFTA, a north American tariff-free trade agreement.
The race was on!
Huge numbers of American businesses went searching for the lowest wage rates globally to manufacture their product. (Nike comes to mind). Ross Perot’s "that giant sucking sound" described American jobs leaving the United States and, even, North America, in search of cheap labor. (Think Vietnam and China).
President Trump's 2016 election was a political earthquake.
The free trade losers, Wisconsin, Michigan, and Pennsylvania tore down their Democratic "blue wall" in favor of Trump’s forgotten Americans.
The Midwest manufacturing Goliath had been reduced to a "rust belt" and "flyover country."
Free Trade turned out to be not so free.
Unfortunately, President Trump's first term was consumed by immigration, the Mideast and Impeachments. Trade never quite made the top of the list.
The subsequent Biden administration did even less to bring back manufacturing.
The political lines were clear. Trump, the blue-collar president, was back with a vengeance in 2024. Indeed, a number of large national industrial unions endorsed President Trump.
A few months into his second term, President Trump took on the world.
He announced new tariff negotiations for the whole world.
His leverage? Continued access to America’s great consumer market.
Very few global economies could succeed without American buyers.
For that opportunity, every country would pay.
No exceptions.
The amount of the tariff would depend on the accessibility of their markets to our manufacturers. The brass ring (lowest tariffs) went to those countries whose combined pledges included significant investment in the United States and seriously reduced trade protectionist policies at home.
Toyotas in Detroit will be joined by Chevy's in Tokyo, London, Paris, Berlin and countless other great cities. What the world will lose from higher prices will be more than offset by the new high-paying jobs throughout our country.
Will it work?
It's too soon to tell, by far.
The president has announced trillions in planned investment here.
After all, Toyotas made and sold in America are tariff-free.
Toyotas made in Mexico and sold in America? Tariff-heavy.
What differentiates tariff rates by country has to do with non-cash policies, i.e., market access, patent protection, permit acquisitions. We don’t have to answer the "success" question now.
These tariff negotiations will go on for a few years, at least.
I can foresee a Tariff office as part of all future administrations.
Countries that get a dose of the new economic reality will come back to the negotiating table on friendlier terms.
Right, India?
So, what can we learn the from the eighty years of post-World War II trade? We can learn the Sid Dinerstein "Rule of Welfare," "Once on welfare, the recipient will never say 'Thank You!' And never give up the benefits without a huge fight."
Eighty years of favorable trade and no "Thank You."
Eighty years of protected industries and no call for a level field.
Or fairness. Or mutually beneficial trade policies.
Sid Dinerstein is a former chairman of the Palm Beach County Republican Party. Read Sid Dinerstein's Reports — More Here.
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