As the amount of trade covered grows, the impact on the economy will become more apparent. We are already seeing reports of lost jobs, and as publicly listed companies feel the pain, the effects are likely to spread to the stock market. Perhaps that will be enough to sway Trump?
One way to put an end to this destructive trade policy is for Congress to step in. Congress has the Constitutional power over trade, and all of these tariffs are taken pursuant to authority Congress had delegated by statute. Congress can and should revisit the statutes, and rein in Trump’s actions on tariffs.
It should also step in to stop the agriculture subsidies. Back in the 1990s, a Republican‐led Congress passed the Freedom to Farm Act, in order to reform and reduce farm subsidies. If the Republicans want to be the party of free markets and limited government, they should act like it.
At the same time U.S. trade policy is mired in protectionism, the rest of the world is pressing forward with trade liberalization. The EU and Japan recently signed a far‐reaching trade agreement, cutting tariffs on trade in both directions, and liberalizing in other ways as well. Trump has been complaining about high EU tariffs on cars. Japanese producers will now see those tariffs phased out, but American producers will still be subject to them.
Trump could also negotiate such trade agreements, but he has chosen not to. We are now a year and a half into the Trump presidency, and no new trade negotiations have started. According to press reports about the agriculture subsidies, “[t]he plan’s third element would put resources toward finding new markets for U.S. farmers to sell their products abroad.” The best way to open new markets is to negotiate lower tariffs through trade agreements.
But instead of negotiating lower tariffs, the Trump administration has been imposing higher tariffs, which, of course, led to the retaliatory tariffs, and now to the new agriculture subsidies. Trade policy is going in the wrong direction, and the pace is picking up.