
Donald Trump’s “America First” trade policy, initiated during his first administration (2017-2021), centered on introducing generalized tariffs. His goal was to protect American industries and reduce the trade deficit. He notably imposed a 25% duty on steel imports and 10% on aluminum. Tariffs on Chinese goods varied from 10% to 25%, depending on the product, and he subsequently threatened duties on imports from the European Union, Mexico, and Canada.
The current administration has revived this proposal. In February, Trump invoked the International Emergency Economic Powers Act of 1977 to address what he termed the “national emergency” of a large and persistent trade deficit. Assuming authority delegated by Congress, he proposed a new 10% increase in the general customs tariff and “a higher individual reciprocal tariff on countries with which the United States has the largest trade deficits.” China, as the largest exporter to the U.S., was a primary target.
During both the previous Trump administration and the Biden administration, U.S. duties on Chinese imports averaged 19.3%, a figure similar to China’s tariffs on U.S. exports. However, U.S. tariffs surged after February 2025, reaching 134.7% by April 12. China’s retaliatory tariffs on U.S. exports followed suit, peaking at 147.6% on the same day. This escalation pushed both nations to the brink of a trade breakdown, prompting negotiations. On May 12, a crucial meeting in Geneva between high-ranking American and Chinese officials resulted in a truce. Tariffs dropped as sharply as they had risen, settling at 51.1% for the U.S. and 32.5% for China on May 14. Negotiations are ongoing, with the aim of reducing reciprocal tariffs to 10%.
The United States has leveraged its significant purchasing power in these negotiations, as it buys three times more from China than it sells to them. However, Beijing also holds several strong cards. U.S. imports from China include manufactured goods that are not easily replaceable, such as electronic devices and components (smartphones, computers, semiconductors). Conversely, China imports machinery, vehicles (of which it is also a major producer), and agricultural products like soybeans, which are easily replaceable, for example, with imports from Brazil or other countries.
For steel and aluminum, the import duty rose to 50% on June 4th for most countries (with some exceptions). Customs duties on vehicles, specifically cars and light trucks, and automotive parts also increased to 25% for all exporting countries (again, with exceptions), up from a previous rate of 2.5%. The situation remains highly fluid. According to some studies, the average effective tariff rate on U.S. imports is now (June) 15.1%, the highest it has been since 1938. Other sources indicate that historically, before these recent increases, the average U.S. tariff rate has hovered around 2.5%–3% for the past 50 years.
The Impact of Tariff Increases
While China has been the primary target of Trump’s measures, other trade partners, such as the European Union, have also faced threats of higher tariffs on specific products, particularly in the automotive sector. According to President Trump, “friends” like the Europeans were responsible for “taking away our jobs and wealth” even more than adversaries.
The stated rationale behind Trump’s policy is to protect American industry, reduce the chronic U.S. trade deficit, and bring jobs back to the country. The use of tariffs as the main policy tool stems from the belief that taxing imports can rebalance international competition, which Trump views as “unfair.”
To assess the impact of these tariff increases, let’s consider the relatively straightforward case of steel and aluminum. The U.S. imports steel (20% of domestic consumption) and aluminum (80% of domestic consumption) from countries like Canada, which boasts low energy costs, China (for aluminum), and Mexico. The very high tariffs have raised global concerns about their economic impact, with expected ripple effects on production costs, prices, and consumption of these key metals. Steel and aluminum are vital in sectors such as construction, automotive, aerospace, and packaging (e.g., cans). The tariff hikes immediately increase costs for U.S. industries that heavily rely on steel and aluminum as raw materials, especially those whose final products have limited protection.
The current international context is highly complex, and to assess the effects of a widespread increase in tariffs, we must consider their impact on global supply chains. In today’s economy, manufacturing of a single product (e.g., a car or a smartphone) rarely occurs entirely within one country. The various stages of production, from design to assembly, including the production of individual components, are distributed across many countries to leverage their relative advantages (labor costs, technological specialization, access to raw materials, etc.). Trump’s tariffs, by imposing duties on intermediate goods and imported components, increase costs for American companies that use these components to produce finished goods. Moreover, a duty imposed on an imported product can affect the same production chain multiple times if components repeatedly cross borders during various stages of processing.
The majority (around 70%) of electronic products sold in the U.S. are imported, even though a significant portion of American production is exported. These are distinct goods that are not easily replaceable, at least in the short term, and in such segmented markets, an increase in tariffs can have unpredictable effects, exposing the country to retaliation and widespread price increases.
These tariff-induced cost increases are not necessarily absorbed by exporting countries, as Trump has claimed. Instead, they often fall on American manufacturers and, ultimately, American consumers. If an American company has to pay more for components because of tariffs, its final product will be more expensive and therefore less competitive both domestically and internationally. Ultimately, higher tariffs end up representing a kind of “self-taxation” for the American economy, disproportionately affecting less affluent classes, making domestic industries less competitive, accelerating inflation, and reducing household purchasing power. A complete shift to domestic production is highly unlikely and certainly won’t happen during the current electoral term.
The hoped-for return of manufacturing that is now located abroad ignores this complexity. For instance, following tariffs on its products that are manufactured in China and imported into the U.S., Apple intends to increase iPhone production in India to diversify supply chains and reduce dependence on China. In May, Trump asked Apple to bring production back home, and the outcome remains uncertain. The company would face high costs, have to find new reliable suppliers, and potentially lose the efficiency and specialization offered by global supply chains. Many successful American companies are deeply integrated into global chains. They use components and production processes from around the world to offer innovative products at competitive prices. Imposing tariffs on their intermediate purchases damages their ability to compete. If a European or Asian company can access global components without the tariffs an American company has to pay, the latter will find itself at a disadvantage.
Implications for the Global Trade Order
Perhaps the most serious aspect of Trump’s aggressive trade policy is that it poses a significant threat to the post-war global trade order, which is based on multilateral agreements and institutions such as the World Trade Organization (WTO). This organization was created on January 1, 1995 with the aim of facilitating international trade, reducing trade barriers, and resolving trade disputes between nations. The WTO replaced the GATT (General Agreement on Tariffs and Trade), which had been the main international trade agreement since 1947. Its creation resulted from negotiations between many member countries, led by the United States, and is founded on the principle that free trade is an absolute good and that protectionism is an evil to be eradicated.
Trump’s trade policy, which relies on tariffs as a tool for blackmail and threats without a thoughtful long-term vision, operates within this negotiating context. The imposition of tariffs against adversaries like China, but also against historical allies such as the European Union, Canada, and Mexico, has replaced multilateral dialogue with economic threats and blackmail as the primary negotiating tools.
From this perspective, Trump’s trade policy reveals considerable hypocrisy. The WTO has consistently urged developing countries to open their markets, reduce import tariffs, and dismantle subsidies to domestic industry. The “infant industry” theory, often put forward by these countries – based on the idea that a state should temporarily protect an industrial sector until it is strong enough to stand on its own in the market – has always been opposed as an excuse for inefficient protectionism. The exceptions provided by the WTO (the so-called “special and differential treatment”) have been considered insufficient or have been pressured to be reduced to insignificance. The message conveyed by the WTO has been clear: “become competitive or perish.”
When traditional American industries (such as steel or aluminum) lost competitiveness, not because they were “infant” but because they were technologically outdated and produced goods that were more expensive than those offered on the international market, the U.S. turned the tables. Instead of accepting the free-market rules they had promoted for decades, they resorted to large-scale tariffs, justifying them on grounds of “national security” – an exception provided by WTO rules, but used here in a completely specious manner. This is not about regretting liberalism; it may be that in a multipolar world where China, Russia, and the United States clash, other avenues of negotiation must be pursued. However, current U.S. behavior is not only a violation of international norms, but a direct attack on the very legitimacy of the international organization because it sends a devastating message: when the rules no longer suit the most powerful member of the organization, who was also the main architect of the system, they can be ignored.
This destroys the perception of the WTO as an impartial arbiter, which leads us to the most serious act of delegitimization: the systematic blocking of the appointment of judges to the Appellate Body of the WTO by the Trump administration. This body is, in effect, the “supreme court” of world trade, whose judgments are meant to be binding. Without a functioning court, the organization’s rules become mere suggestions and lose their binding character. Not only does this delegitimize the WTO, but it also accelerates the transition from a rules-based global order (imperfect and often unfair, but still a frame of reference) to an order based on pure force and the negotiating power of individual states. In this new scenario, it is likely that other powers (China, the EU, India) will also feel justified in using unilateral instruments, leading to a more fragmented and conflictual world.
The new U.S. administration shows a complete lack of interest in cooperative approaches to global challenges and indicates distrust in conflict resolution through negotiation. Examples include the withdrawal from the Paris Climate Agreement, the Iran nuclear deal (JCPOA), and the cutting of funds to institutions such as the World Health Organization (WHO).
Trump devalued traditional diplomacy by cutting the State Department’s budget and closing agencies such as USAID (the international development agency), which deprived the United States of key channels for exercising the cultural and humanitarian influence expected of a leading country. During Trump’s first term (2017-2021), signs of U.S. disengagement were evident. In recent years, China has strengthened its image as a responsible actor and defender of the global trading system, gaining support and influence. Following the U.S. withdrawal from the Iranian Nuclear Agreement, Beijing became an even more crucial economic and diplomatic interlocutor. This pattern extends to the World Health Organization (WHO), where Beijing has increased its financial contributions, publicly and forcefully defended the organization’s work, and presented itself as a global leader in the health response to the pandemic. On the topic of climate, Trump has famously advocated for “drill, baby, drill” and signed the withdrawal from the Paris Agreement on his first day in the White House. Meanwhile, Beijing has achieved global leadership in the spread of renewable energy, investing billions in green energy projects worldwide, including in developing countries.
Similar considerations apply to European states, with reduced investment in the Atlantic Alliance and demands for Europeans to take on greater responsibility for their own security and defense. While there haven’t been clear, definitive statements on NATO’s future, these shifts are noticeable.
Implications for the International Order
The Trump administration has, moreover, overseen a pointed abandonment of soft power at the international level, which can be defined as a state’s ability to persuade and attract others through its culture, political values, and the legitimacy of its policies, in favor of coercion (hard power).
Trump’s foreign policy, also summed up in the slogan “America First”, has marked a clear break from the strategies of previous administrations. Despite their differences, past administrations consistently sought a balance between hard and soft power. However, Trump’s approach has favored economic hard power tools and nationalist rhetoric. This behavior is typical of “sovereigntist states” which prioritize the absolute primacy of national sovereignty, whatever the cost.
International relations, from a sovereigntist perspective, are reduced to a transactional game between nation-states. Negotiations occur directly between states (“deal-making”), while supranational institutions are viewed as bureaucratic and inefficient, weakening the states that are considered the true “masters” of the world stage. The reliability of an ally is not based on shared values, but on its immediate usefulness to the national interest of the sovereign state. This often explains the confrontational approach, even with traditional allies.
In an anarchic world (without a central authority) where each state only pursues its own interests and security, mistrust becomes the norm and conflict an ever-present possibility. The international institutions created after World War II were specifically designed to mitigate this anarchy by fostering dialogue, establishing shared rules, and creating dispute resolution mechanisms (such as the International Court of Justice or the WTO dispute resolution system). Adopting a purely “sovereigntist” approach can only have destabilizing consequences. If rules are no longer respected, relationships become unpredictable and dominated by the law of the strongest. When diplomatic dialogue and institutional mediation fail or are delegitimized, force – be it military or economic – becomes the first and last resort for resolving disputes. A peaceful horizon does not await us.
I believe these events offer signs of the disintegration of the American “empire” that emerged after the failure of autarchy and isolationism in the 1930s. Despite Trump’s imperial impulses – such as wanting to annex Greenland and calling for Canada to become the 51st state – he is engaged in a form of “savage decolonization”. Similar to the British Labour governments after 1945, he aims to protect domestic production and the working class by sheltering the country with tariffs, while simultaneously reducing U.S. commitments abroad. However, the net result will be damaging both economically and geopolitically. International investors are beginning to pull away from U.S. government bond auctions, interest rates are rising, and the Federal Reserve is on alert.
Americans will soon realize that the United States cannot simply return to the 1950s, let alone the early 20th century, when it enjoyed robust economic growth and market expansion. The development of new technologies such as the automobile, radio, and mass production allowed the United States to increase its production capacity and offer products at competitive prices. Demand for goods and services was high, and production and exports increased daily. In recent months, Trump has repeatedly promised to make the United States the “manufacturing powerhouse” it once was, to avoid being permanently overtaken by its Asian competitors. In reality, with his attack on “globalism”, his chances of success are as slim as George Osborne’s, the post-Brexit chancellor who proposed a nostalgic vision of Britain’s imperial role. The clock cannot be turned back.
Cover Image: Igor Omilaev on Unsplash.com.
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