Donald Trump’s assault on trade is escalating. First the foes were China and Mexico. Now it is the world.
The Trump transition team has mooted an import tariff of 10pc across the board, doubling down on earlier talk of a 5pc duty. This is a sobering demarche. Such thinking is of a different character to Mr Trump’s campaign rhetoric, which mostly hinted at trade sanctions to force concessions.
A catch-all tariff is a change of belief systems. It overthrows the free trade order that has been upheld and policed by Washington since the 1940s.
Congress cannot stop Mr Trump imposing his will by „executive action“ under existing US law. The historic irony is that Capitol Hill delegated powers to the White House in order to cut tariffs and reach deals, free from meddling by pork barrel interests. Few ever supposed that these same powers might be used to curb trade.
The president may impose tariffs of up to 15pc for 150 days without having to demonstrate any damage. All he has to do is utter the words “macroeconomic imbalances” or invoke „national security“ and he can more or less do what he wants.
These tariff warnings follow the appointment of a virulent Sinophobe to head the National Trade Council at the White House. Without wishing to caricature Peter Navarro, there is a relentless consistency to his work: „The Coming China Wars“, „Death by China: Confronting the Dragon“ and „Crouching Tiger: What China’s Militarism Means for the World“.
This is a man who thinks that the US is engaged in Hobbesian fight to the finish with a vicious and authoritarian China that has brought about the closure of 70,000 American factories through currency manipulation and mercantilist skulduggery.
By the magic of cognitive dissonance he also thinks the Chinese system is about to „implode„, and that the US should hurry this process along by tightening the economic noose and by launching an arms race in the Pacific – much as the Reagan Doctrine supposedly broke the back of the Soviet Union in the 1980s.