Some people think it’s a category mistake even to address Donald Trump’s trade policy as an actual thing rather than a mess of prejudices and contradictions, and that for other governments to employ logic and game theory in engaging with it is like trying to play chess with an angry rhino. They may have a point. It’s not a thing of clarity and beauty. Still, if the Republican candidate does get elected, his policy positions will at least delineate the landscape for his administration’s internal battles.
At the moment Trump is promising at least five sometimes contradictory or outright impossible policies: raising tariffs against all trading partners to 10 or 20 per cent, increasing tariffs on Chinese imports to 60 per cent or higher, replacing the federal income tax with tariff revenue (which literally cannot be done), passing a “reciprocal trade act” that will put tariffs on trading partners equivalent to theirs on the US and, sometimes, depreciating the dollar. The varied aims of this array of weapons include, but are not limited to, closing trade deficits, weakening China relative to the US, forcing general tariff reductions and boosting median incomes in the US.
Trump has a reputation for being an unrepentant protectionist, but trade policy in his first term was characterised by a continual tension between ideas and people. Different characters were openly in conflict, ranging from out-and-out tariff warriors such as Peter Navarro, director of the shortlived White House National Trade Council, to avowed free-traders like Larry Kudlow, head of the National Economic Council. As I wrote on Monday, the EU, through lobbying Kudlow, in 2018 managed to escape threatened car tariffs aggressively pushed by Navarro by offering (baseless) promises of commodities purchases plus a (doomed) zero-tariff deal on industrial goods.