Todd Tucker discusses the April 2 tariff announcement, and what comes next.
Clik here to view.
With the Trump administration announcing globally widespread tariffs in April 2025, Good Authority editor Alexandra Guisinger reached out to Todd Tucker, director of the industrial policy and trade program at the Roosevelt Institute. Much of Todd’s recent research and testimony to the U.S. Trade Representative has focused on supply chain resilience.
Alexandra Guisinger: We’ve heard frequent news reports about the new Trump administration’s plans to initiate tariffs and more tariffs – it’s a lot to track, and harder still to unravel the potential impact. Walk us through what’s different this time. Is it the size of the tariffs? The countries targeted, and the types of goods? The uncertainty surrounding the implementation of the tariffs?
Todd Tucker: In his first term, Donald Trump frequently railed against what he saw as unfair trade practices and imbalances. However, his instincts were checked by a combination of cabinet officials who came from Wall Street and mostly opposed his trade policy, or thoughtful nationalists like Robert Lighthizer who put a premium on competently executed protective measures. The upshot was that we got a spate of country- and commodity-specific tariffs (on China, steel, and aluminum), but most countries and products were spared. And there was actually some decent new policy, such as a renegotiation of NAFTA into the USMCA that was supported by Canada, Mexico, labor unions, business groups, and wide bipartisan majorities in Congress.
What’s different in Trump 2.0 is… well, all of it. Some of his first acts were to be expected: tightening back some of the steel and aluminum tariffs that the Biden administration had loosened a bit, as well as new tariffs on China. But even though Canada and Mexico had already effectively agreed in Trump 1.0 to a 2026 renegotiation of USMCA, he targeted both with a string of on-again, off-again tariffs that has catapulted incumbent parties in both countries to enormous popularity – breaking the anti-incumbent wave we’ve seen post-covid inflation, and Making Incumbency Great Again.
The coup de grace was Wednesday’s announcement of what Trump calls “reciprocal” tariffs, which (as I argued here) are really a universal baseline tariff of 10% on most countries and most products, topped up with a one-sided, arbitrary tariff on countries – however small their economies – that have trade surpluses with the United States.
Trump has claimed tariffs will do everything from stopping fentanyl overdoses to bringing back U.S. manufacturers and other industries – and producing $100 billion or even more in new U.S. revenues while balancing the U.S. trade deficit and removing the need for income tax. Is any of this likely to happen? What do you see happening over the next year or two?
Tariffs have a role to play in strategic industrial policy – there is no question. The Biden administration used tariffs as an adjunct to U.S. clean energy industrial policy to good effect, including some tariff rates as high as 100%, which were essentially prohibitive for the goods they covered. But that was a result of years-long interagency deliberations, as well as a kick in the pants provided by acute concerns about Chinese overcapacity in sectors like electric vehicles – sectors where the U.S. government had just invested a lot of taxpayer dollars. But the current administration’s lawless and impulsive shifts in policy make it impossible for workers and business owners to plan around the changing U.S. rules – so the result could be less (not more) industrial activity.
It hasn’t helped that the administration has mixed in a lot of other considerations, leaving foreign governments unsure if they’ve met the target the U.S. expects. Is it for the U.S. to have a trade surplus with your country? Well, the United Kingdom just got hit with a 10% tariff despite that. Is it taking steps to address illegal drug flows? Well, Mexico is cracking down on the cartels and Canada was never a major contributor to the problem, but they’re being hit by tariffs as well. And if the goal is collecting more tax revenue, well, that’s at odds with Trump’s re-industrialization goals: If imports aren’t being curbed enough that importers are having to actually pay the tariff, then you’re not creating space for your domestic champions.
Foreign leaders would like to avoid U.S. tariffs, and so all else being equal would want an off-ramp to ease U.S. tensions. But it’s very hard to imagine many countries wanting to cooperate on positive-sum endeavors without a very substantial reset of relations. As we have this conversation, a bipartisan movement is afoot in Congress to rein back in some of Trump’s discretion to unilaterally set emergency tariffs. So, ironically, while many in the past saw the U.S. Constitution’s allocation of trade powers to Congress as a hindrance to signing trade agreements, more legislative control might constitute a path back to more credibility for the U.S., internationally speaking.
In the signing ceremony for his “Liberation Day” tariffs, it was notable that Trump dissed economists and celebrated what he called “my auto worker friends and my Teamster friends and all of the unions that typically voted Democrat, [who]’re not voting Democrat anymore because workers, whether union or non-union, they’re for the Republicans now.” Are we seeing a class realignment on trade policy?
I actually thought we were going to see this realignment happen in 2017, when I wrote a report that noted the inroads that Trumpians and their agenda were making among working-class voters in manufacturing states. It didn’t quite happen, because a general anti-labor and anti-administrative state animus dominated whatever policy gains might have been made at the margin. In the lead up to Trump’s second term, we again saw some elements of a conservative play for union support, whether that’s JD Vance joining a UAW picket line in 2023, Josh Hawley cosponsoring Teamsters-endorsed legislation to speed union contracts, Trump’s labor secretary pick Lori Chavez-Deremer previously backing the AFL-CIO’s PRO Act, or the premier MAGA-adjacent think tank backing forms of sectoral bargaining for workers.
But again, the faction that I think of as “economic nationalist with corporatist aspirations” has butted up against a techno-libertarian wing that wants to gut collective bargaining and labor rights protections. This is mirrored by a similar split on the left between those that want to be closely aligned with labor, and those in a growing faction of “abundance” thinkers who are skeptical of tariffs and unions – public and private. Trade and labor politics have been messy for a while (just see the reaction to the UAW’s Shawn Fain’s support of Trump’s tariffs), and I don’t see that going away anytime soon.
What’s the big picture for world trade? Is this the beginning of a global trade war?
There are some in the Trump world that have called for a Mar-A-Lago Accord, essentially a rebalancing of trade and macroeconomic accounts akin to the 1985 Plaza Accords. However, even the most optimistic and detailed account, from Stephen Miran (now Trump’s chair of the Council of Economic Advisers), concedes, “There is a path by which these policies can be implemented without material adverse consequences, but it is narrow.”
It’s hard to see how it’s not even narrower after Wednesday’s flurry of announcements. Just listen to Australian Prime Minister Anthony Albanese, who said “this is not the act of a friend.” Or Canadian Prime Minister Mark Carney, who said, “The 80-year period when the United States embraced the mantle of global economic leadership, when it forged alliances rooted in trust and mutual respect and championed the free and open exchange of goods and services, is over.” The retaliatory measures are ramping up, trade is slowing down, and factories are closing as we speak.
That said, Trump has also historically been rather sensitive to Wall Street’s reaction – surely part of the reason he waited to make his “Liberation Day” announcements until after markets closed. The next day, we wiped out $2.5 trillion from stock markets – surely a factor that will go in the “find an exit ramp from tariffs” column.
The post Good Chat: About those Trump tariffs… appeared first on Good Authority.