On Friday last week, the White House issued a press release titled “Wins Come All Day Under President Donald J. Trump.” The article listed 42 “victories” in the preceding week. The third bullet celebrated Trump’s freshly announced “reciprocal tariffs” in one sentence. As it turns out, the plan is an anatomy of a massive threat to disintegrate and remake the world’s trading rules by America’s unilateral order. Under the plan, the US would reassess and adjust every tariff on every country in the world to whatever level it deems fit, using a rulebook written only in Washington on terms that take into account non-tariff barriers and any trade practice that the US deems “unfair” (such as, per the Trump team, value-added taxes). Deborah Elms breaks down the galling complexity of such a mission, the chaos it breeds, and the extreme price we may all have to pay when the plan comes to pass. Homing in on de minimis, a waiver in US trade policy that allows the duty-free import of low-value goods, Merle Hinrich argues that it’s time to reduce and review the provision, but underlines a defense of the system and its principle in helping SMEs both American and around the world. The defense comes as Trump last week gifted Europe a nasty surprise when he and his Vice President laid bare how they would end America’s oldest alliance. As Trump announced that he would unilaterally cut a deal with Vladimir Putin to let Russia win its war on Ukraine, JD Vance attacked European leaders for trying to restrain Europe’s right-wing populists. Keith Rockwell discusses in a new podcastthe damage Trump’s trade and diplomatic war might wreak on Europe's longstanding ties with the US. Clearly, the hope is that an exit from Europe would let the US focus on China. Matt Gertken lays out what Washington might have in its China policy sights, ranging from a Phase Two trade deal to a likely futile game of Whac-a-Mole tariffs against a world that has “treated America horribly.” Plus, check out Visual Capitalist’s new graphic on the “carbon curse” theory, our latest discussion guide on unemployment in China, and register for our webinar on Trump’s trade policy.
TRUMP’S WORLD
What we know about Trump’s reciprocal tariffs – and what we don’t
Deborah Elms 18 February 2025
Last Thursday, Donald Trump took to his favorite platform to tweet in his preferred upper case: “TODAY IS THE BIG ONE: RECIPROCAL TARIFFS!!! MAKE AMERICA GREAT AGAIN!!!” The plan that followed, laid out in three White House memos, is a momentous upending of the global trading system, which the US played a huge role in creating in 1947. The new US system, likely to kick in early April, is meant to adjust every tariff on every trading partner according to five criteria that take into account any trade practice that the US deems “unfair.” As our Trade Policy Head Deborah Elms writes, the policy spells out how Washington is no longer interested in anything but resetting the world trade order unilaterally, leaving the rest of the world to decide whether to abandon economic integration or follow America’s new order.
Protect de minimis through reform and equal treatment, not through tariffs
Merle A. Hinrich 18 February 2025
The de minimis provision in US law, which allows duty-free import of low-value goods, was introduced nearly a century ago for American tourists returning home. Over the years and with the advent of e-commerce, de minimis became a boon particularly for SMEs globally and American consumers. Its benefits are now at risk from proposed tariffs, exploitation by powerful foreign retail platforms, escalating trade tensions, and contraband imports. Hinrich Foundation Chairman Merle Hinrich argues that we need to preserve this valuable tool, but reduce and review its scope, strike a balance in its implementation, and entrench it as a defense of a fundamental principle to help SMEs both American and around the world.
If the US wins a US-EU trade war, does it really win?
Keith Rockwell
AFPC-USA
Donald Trump last week announced a 25% tariff on aluminum and steel imports, an opening salvo against a swathe of countries including one of his top targets: America’s oldest ally Europe. While European leaders claim they are better prepared for Trump’s second term, the reality is they are in a far weaker position than in his first. With a major war on its eastern border, crushing energy costs, and political turmoil roiling the union’s anchor members Germany and France, stability across the continent is at risk as Trump forges ahead without the EU to cut a deal with Putin on Ukraine. Tune into this special podcast as Senior Research Fellow Keith Rockwell probes the damage Trump might wreak on the transatlantic alliance.
Will Trump’s China policy produce a Phase Two or Phase Zero?
Matt Gertken 18 February 2025
Donald Trump last week gifted Europe a nasty surprise when he announced the US would start negotiations to cut a deal with Putin on Ukraine. The strategic downside of any such deal, which only Neville Chamberlain would imagine would be anything more than tenuous, is colossal. But the Trump administration likely thinks it’ll have one upside: Give the US more capacity to focus on China. BCA Research’s Chief Strategist Matt Gertken lays out in a paper for the Hinrich Foundation what Washington might have in its China policy thinking, ranging from a Phase Two trade deal, possibilities of conflict driven by Trump’s hawkish cabinet, and a likely futile game of Whac-a-Mole tariffs against the rest of the planet that has “treated America horribly.”
The “carbon curse” theory suggests that fossil-fuel rich nations tend to have higher carbon emissions than resource poor economies as the abundance of fossil fuels leads to a heavy reliance on these resources for economic growth and energy production. Visual Capitalist and Hinrich Foundation Senior Policy Analyst Jia Hui Tee check major economies to see if this is true.
China’s unemployment conundrum and its implications for global trade
China’s unemployment crisis highlights deeper challenges in the country’s economic model. A weakening domestic economy, sluggish consumption, industrial overcapacity, excessive labor market competition, and inadequate policy intervention now pose risks to its long-term stability. These issues are also fueling trade tensions for China abroad. Read our guide based on a paper by East Asian Institute’s Chen Gang.
Donald Trump’s trade agenda lays out a range of radical global policies. The Association of Foreign Press Correspondents-USA is hosting a webinar featuring the Foundation’s Head of Trade Policy Deborah Elms, moderated by Ryohei Yasoshima, Washington bureau chief for Nikkei Asia, to unpack the strategic direction of US trade policy and its global implications.
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