By New York Post (Opinion) | Created at 2025-04-03 21:39:04 | Updated at 2025-04-04 16:58:53
19 hours ago
President Trump ushered in a new era of US trade policy Tuesday — a national course correction after decades of unfair trade practices harmed American industries and exposed the wider economy to unsustainable trade deficits.
Advocates for the failed “free trade” paradigm will cast short-term price increases, stock market fluctuations and supply chain disruptions as catastrophic, but they ignore the immense costs of their recent strategy.
We must make a radical change to salvage America’s wealth, economic security and middle class, preventing a true catastrophe down the road.
For the millions of US workers and families who have lost their jobs and communities to globalization, the catastrophe has already happened. Cheap foreign goods do not make up for those losses.
Since signing on to NAFTA and the World Trade Organization agreements, the US trade deficit skyrocketed from $28 billion in 1991 to $918 billion in 2024. This means the United States consumes almost a trillion dollars more per year than it produces.
The US didn’t just lose T-shirt and toy manufacturers. Trade in advanced technology manufacturing also flipped from a $38 billion US surplus in 1991 to a $300 billion deficit last year, severely undermining our economic security and allowing China to dominate world production of the core technologies of modern life.
Five years after COVID-19, it is long past time for the United States to address its supply chain vulnerabilities.
The current trade system advantages countries that suppress wages, creating a worldwide race to the bottom. This has meant 40 years of stagnant US wages, a shrinking middle class and declining job quality.
Now, instead of chasing profits overseas at the expense of American workers, businesses have fresh incentive to build, train and invest here, using American labor and resources.
Trump’s new tariffs include a 10% global baseline that will help correct our trade deficit, and higher reciprocal rates to give the US leverage in negotiations with trading partners.
The tariff rates are calculated to close the US trade deficit over time, trading partner by trading partner.
Essentially, the administration is dividing each nation’s trade surplus by its overall trade volume with the United States to come up with a tariff rate, then cutting these rates in half to help lessen the immediate impact.
The rates could be lowered for nations that achieve a greater trade balance with the US, and raised for those that choose to retaliate.
This measure of reciprocity offers an efficient way to respond to the full range of distortions that cause persistent US trade deficits — not just foreign tariffs, but also currency manipulation, subsidies, investment controls, discriminatory taxes and regulations, intellectual property theft, wage suppression and others.
Finally, Trump’s 10% global tariff minimum will help minimize tariff evasion and lower the overall national trade deficit.
Trump also eliminated the de minimis exemption for China, a dangerous loophole that has allowed Beijing to export millions of packages into the US tariff-free and with minimal screening, exposing our market to counterfeit goods and fentanyl.
The new reciprocal tariffs also exempt goods compliant with the United States-Mexico-Canada Agreement negotiated in Trump’s first term — offering a window into the administration’s plans for future trade negotiations with our closest neighbors.
With discussions to renew the USMCA set to begin this year, Trump may be aiming to form an even tighter trade alliance based on the principle of balance, likely conditioned on keeping Chinese and other non-market goods out of North America.
In total, the new tariffs could raise over $700 billion a year, helping to offset the costs of Trump’s proposed tax cut extensions, future investments and other priorities. They will also strengthen his hand as he bargains with other nations to lower their tariffs and other trade barriers.
The principal benefits of the policy, however, will be to rebalance US trade, reshore industry and support quality middle-class jobs. Already the president’s trade posture has spurred the world’s top companies to pledge trillions in new investments in expanded US production capacity.
The American people understand the need for a new approach to trade. A 2024 survey by American Compass found that 47% of American adults said the nation has “suffered” from globalization, while only 33% said it has benefited — and respondents by a 10-to-1 margin said “we need a stronger manufacturing sector.”
A trade strategy aimed at achieving balance is essential to that goal.
For years, the United States has pursued a broken trade policy that benefited other nations over American producers, workers and families.
If we want to build a stronger, wealthier and more resilient nation, we must embrace a new trade paradigm centered on balance and reciprocity.
Mark DiPlacido is a policy advisor at American Compass.
