Yves here. Brian Berletic makes a point of saying, and documenting, how in the foreign policy arena, Trump represents continuity of agenda rather than the sort of break his backers claim he represents. This post makes a similar argument about the Trump tariffs and trade program.
By Iza Camarillo, the Research Director for Public Citizen’s Global Trade Watch. Before joining Public Citizen, she worked as an international arbitration and trade attorney, specializing in investment arbitration, global supply chain compliance, and WTO disputes on unfair trade practices. Originally published at Common Dreams
On April 2, Donald Trump declared a national emergency and announced sweeping tariffs on nearly all imported goods. The headlines were dramatic — tariffs on China, allies like Canada and Mexico, and everything from cars to coffee beans. His administration framed the move as a patriotic stance for “reciprocal trade” and economic sovereignty.
Don’t be fooled. This isn’t the collapse of “free trade.” It’s the continuation of corporate globalization — just with a MAGA bumper sticker slapped on it.
Trump says he’s standing up for American workers. But he’s the same president who signed the United States-Mexico-Canada Agreement (USMCA) and called it “the fairest, most balanced, and beneficial trade agreement we have ever signed into law.” The rebranded North American Free Trade Agreement (NAFTA) deal — despite some improvements forced in by congressional Democrats and civil society organizations — contained much of the same structural rot that has enabled outsourcing, empowered monopolies, and tied the hands of governments trying to protect their people and environment.
For decades, “free trade” deals like NAFTA locked in rules written by and for multinational corporations: rules that made offshoring easier, gutted environmental protections, and prioritized investor rights over worker rights. Stagnant wages, emptied factory towns, and rising income inequality have caused widespread pain and frustration among working Americans — which Trump has weaponized again and again.
Tariffs can be part of the answer to these problems, but Trump’s ham-handed approach ain’t it. There’s no industrial strategy. No labor plan. No climate protections. Just a unilateral, top-down stunt that does nothing to dismantle the corporate architecture still rigging the global economy.
Pair this “concept of a plan” with the rest of his agenda: gutting investment in vital sectors such as biomedical research, support for basic science and clean and affordable energy technologies and products; slashing all efforts to combat child labor and other egregious labor rights violations around the world, providing tax cuts for billionaires and corporations; stripping away health care, food support and other vital services for the most vulnerable Americans, undermining Social Security, and decertifying and undermining the power of labor unions.
It’s clear working people will not be the winners here.
Who Wrote the Rules? U.S. Corporations, Not Foreign Adversaries
Trump loves to blame other countries, claiming global trade has “looted, pillaged, raped, and plundered” the U.S. economy in his “Liberation Day” speech. He claims that the U.S. has been victimized by other countries and has been “too nice” in response.
Nothing could be further from the truth — the rules of the neoliberal trade system were rigged in favor of large corporate interests in the Global North. While workers in the U.S. and around the world were the losers, Wall Street, Big Tech, Big Ag, Big Pharma, and other U.S. corporate giants have always been the winners.
For decades, U.S. corporate lobbyists have used their privileged access to closed-door trade negotiations to rig the rules to maximize their profits, not to serve working people, small businesses, or the environment.
They pushed for extreme intellectual property rules to entrench Big Pharma monopolies that keep the price of medicines sky high, with deadly consequences. They demanded open capital markets and deregulated financial flows for Wall Street while securing rules that let agribusiness giants flood foreign markets with subsidized U.S. commodities, displacing millions of farmers and leading to forced migration.
At the same time, they ensured that governments couldn’t support domestic industries, raise labor standards, or enforce environmental protections without being accused of “trade distortion.” The result was a race to the bottom for workers and communities — here and abroad — with record profits for corporate giants.
It matters a lot that Trump is identifying the wrong perpetrators of the failed global trade system because that sets the table for wrong solutions.
Once we identify multinational corporations as the architects of the current system, we’re directed toward the right solutions – not blanket, high tariffs based on mindless formulas, but a new trade policy and new trade rules that prioritize the interests of workers, consumers, and the environment.
NAFTA to USMCA: Same Corporate Model With Some Improvements (No Thanks to Trump)
Trump spent years railing against NAFTA as the “worst trade deal anybody in history has ever entered into,” tapping into the legitimate grievances of workers and communities harmed by its race to the bottom. He campaigned on a promise to eliminate it and replace it with a better agreement for workers.
However, once elected, he opted to renegotiate and rebrand the deal in the form of the USMCA, which he then insisted was “the best trade deal in history.” Now, in a dizzying reversal, he’s claiming the USMCA has been a disaster that only an aggressive wave of “retaliatory” tariffs on Canada and Mexico will fix.
In reality, while some improvements were forced into the negotiation, the USMCA largely preserved the core logic that made NAFTA so harmful in the first place. It expands corporate rights, limits democratic oversight, and undermines public protections in the name of increased trade.
The new labor provisions — often cited as proof of a “new era” in trade — were not original features of Trump’s deal. They were won through months of intense organizing and negotiation by House Democrats, labor unions, and civil society groups.
Congressional Democrats working in close alliance with the AFL-CIO drew a hard line. Backed by the relentless organizing of groups like Public Citizen, the Communications Workers of America, United Steelworkers, and a transnational coalition of Mexican and Canadian labor and civil society partners, they made it clear: they would block passage of any deal unless meaningful labor enforcement were included and damaging Big Pharma giveaways were removed.
Trump’s administration favored language that preserved corporate prerogatives and offered only symbolic nods to labor rights. Still, in the end, it acquiesced to congressional Democrats’ demands. It incorporated essential tools like the facility-specific Rapid Response Mechanism for labor enforcement and eliminated some of the most egregious giveaways to Big Pharma.
However, the structural rot from NAFTA remained.
While experts across the ideological spectrum lauded the drastic reduction of controversial investor privileges that allow corporations to sue governments over public interest laws through investor-state dispute settlement (ISDS), Trump preserved ISDS for fossil fuel firms operating in Mexico — a carve-out aggressively pushed by Big Oil.
Agribusiness also retained its arsenal. The ongoing U.S. trade challenge to Mexico’s restrictions on genetically modified corn — measures rooted in precautionary health standards and cultural preservation — reveal the deal’s true intent. Rather than respecting national policy space over food safety, trade rules are once again being deployed to dismantle domestic protections at the behest of corporations.
Not only did Trump fail to fix NAFTA, but he made it even worse in at least one crucial way: Big Tech secured its wishlist in the form of a digital trade chapter. These new terms undermine the ability of U.S. states, Congress, and other countries’ governments to hold Big Tech accountable for gender and racial bias in AI, rampant abuse of our privacy, and monopolistic overreach.
Performative “Protectionism” and the Authoritarian Trade Playbook
Far from dismantling the corporate trade regime, Trump’s first term revealed him as a loyal steward of it — so long as he could plaster his name on it. Despite the USMCA rebrand, he left the core NAFTA structure intact and continued to stoke public anger over working people’s struggles — not by confronting the root causes but by scapegoating other nations. And he has been increasingly employing tariff threats as his weapon of choice — not in pursuit of justice but as a blunt instrument of control.
Just weeks ago, Trump threatened new tariffs unless Mexico deployed troops to militarize the border. He pressured Colombia to accept a deportation flight of asylum seekers.
Big Tech companies are awaiting their handouts, as it is widely expected that Trump will lift tariffs on countries that agree to undo tech accountability policies.
And perversely, he is using tariffs as a cudgel to pressure other countries into signing the very liberalizing trade agreements he claims to oppose.
“Liberation Day” was more of the same from this ever-more-authoritarian White House: an emergency decree bypassing Congress, escalating instability, and concentrating power in the executive. Trump hasn’t rejected the anti-democratic nature of the neoliberal trade model — he’s replicating it with a vengeance.
All Madness, No Method
While tariffs can be a useful tool, they must be transparently employed in strategic sectors for a clear purpose following careful analysis and open debate.
Trump’s tariffs, however, are based on misleading data and flawed logic. He uses exaggerated trade deficit calculations and stays silent on how the U.S. dollar’s dominance enables America to import far more than it exports, a luxury most Global South nations — burdened with debt and structural trade deficits — cannot afford.
The methodology behind these tariffs has experts scratching their heads.
Trump claimed that the “reciprocal tariffs” were derived from a detailed assessment of each country’s tariff and non-tariff barriers (more on these in a moment). In fact, the number assigned to each country seems to be based on the difference between the total value of imports the U.S. receives from a country versus the amount we export to it.
Apparently, no regard was given to why there may be a large imbalance. For example, Lesotho, which Trump dismissed as a country “nobody has ever heard of,” was hit with the highest tariff of any country at 50%. Forget the fact that the small, landlocked country’s population of 2 million may not be able to afford Made in America products, leading to a lopsided trade balance.
The crude formula used to determine each country’s “reciprocal” tariff was described by Nobel Prize-winning economist Paul Krugman as something that appeared to be “thrown together by a junior staffer with only a couple of hours’ notice,” and “reads like something written by a student who hasn’t done the reading and is trying to bullshit their way through an exam.”
As some commentators have noted, this tariff breakdown is what you get if you ask ChatGPT to come up with a U.S. trade policy. This could very well be the first global economic policy written “of, by, and for” our robot overlords. What could possibly go wrong?
The Corporate Wishlist
Since the Trump administration clearly did not take on the, admittedly Herculean, task of reviewing the thousands of tariffs and trade barriers imposed by hundreds of countries, it simply used trade imbalances as a crude proxy. It’s a stand-in for the cost of that country’s tariffs and, importantly, its non-tariff barriers.
“Non-tariff barrier” is trade-speak for “any policy that’s not a tariff” but might restrict trade — from climate protections to minimum wage laws to consumer protections in the form of toxic food additives. While many non-tariff barriers serve vital public policies, corporations and trade negotiators often treat them as obstacles to profit.
According to the April 2 executive order, Trump can unilaterally decide to lower the tariffs imposed on a country if it takes “significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters.”
What constitutes a “significant step” isn’t defined, but it certainly looks like an open invitation for governments to slash their tariffs and reverse policies to appease Trump and his billionaire buddies.
For what exactly those policies may be, just look to the report Trump waved around at the beginning of his so-called “Liberation Day” tariff announcement speech in the Rose Garden.
That document is a 400-page list of the policies that other countries have enacted — or are even considering enacting — that U.S. corporations don’t like. It’s the National Trade Estimates Report on Foreign Trade Barriers, an annual government report that has long been criticized as an inappropriate overreach to name and shame other countries’ legitimate public interest policies. It’s also a glimpse of the policies that Trump may seek to have destroyed in exchange for tariff relief.
The policies targeted in this year’s report include climate protections, including Canada’s Clean Fuel Standard, the European Union’s Deforestation-Free Supply Chain Regulation, and Japan’s renewable energy incentives — all of which are aligned with global climate commitments.
Public health regulations aimed at protecting consumers, preserving biodiversity, and preventing long-term health risks were also attacked. Employed by dozens of countries, these include bans, testing requirements, or even labeling policies on pesticides like Roundup’s glyphosate, genetically engineered food, ractopamine in beef and pork, and heavy metals in cosmetics.
Regulations that promote competition in the digital ecosystem, laws that impose digital services taxes on Big Tech firms, place conditions for cross-border data transfers, promote fairness in the digital economy, and laws that regulate emerging technologies such as AI.
Benefits for Trump’s Buddies
Countries are not the only ones who will be supplicating to avoid the full weight of Trump’s tariffs. Despite Trump’s claims that other countries foot the bill on tariffs, it is U.S. importers who must pay this fee … unless they can convince Trump to grant them a special exemption.
It is well-documented that the opaque and chaotic tariff exclusion process created in Trump’s first term quickly overwhelmed government agencies and enabled a quid pro quo spoils system that rewarded the rich and well-connected. A revolving door of lobbyists, including former and future Trump administration officials, were able to secure lucrative tariff exceptions for their CEO clients through political pressure, informal meetings, and campaign contributions.
Through this system, Trump wielded tariffs and tariff exceptions to reward his friends and punish his enemies. CEOs that donated to Republicans had a 1 in 5 chance of having their exemption request granted versus 1 in 10 for CEOs that supported Democrats, according to a January 2025 study.
If Trump’s recent attacks on law firms, universities, and the press are any indication, he’s prepared to double down on using his second term to punish enemies and enrich himself and his friends. And his dismantling of watchdog agencies and boosting of big business ties set the stage for tariff exemptions to be even more corrupt and harmful to workers, consumers, and the U.S. and global economy.
What other displays of political loyalty might companies offer to Trump for a tariff exclusion this time around? Public endorsement of his policies? Promises to monitor employees for DEI ideologies or views critical of the administration?
We Deserve Better
Trade justice requires more than poorly designed tariffs. It demands systemic reform: binding labor rights, climate protections, resilient supply chains, and democratic accountability. Trump offers none of that.
There’s no industrial plan. No support for unions. No climate-resilience vision. Just a chaotic, performative tariff regime, which in practice will surely be wielded to reward loyalty and punish dissent.
Trump’s latest stunt had nothing to do with “liberation.” You can’t fix a rigged trade system while keeping its rules and attacking people at every turn. Trump talks a big game but serves the same corporate interests that gutted labor rights in the first place. Working people deserve a system with them at the center, not one that favors corporations.
This isn’t trade justice. It’s a con.
Anonymous donations to Trump’s cryptocurrency may get some corporations out of their predicament.
Predicament for whom?
When I heard Lutnick attempting to pummel an interviewer into submission by insisting “Let President Trump run the global economy, he’s been talking about this stuff (trade policy) for 35 years, he knows what he’s doing” the last vestiges of doubt about the administration being a cult packed with sycophants and cronies left me. If by “running government like a business” they meant the controlled flight into terrain that we are witnessing with mounting horror, then perhaps the silver lining here is that Trump is exploding a long standing libertarian myth about business being the perfect breeding ground for future public servants.
The Continental trading block created under NAFTA, and continued under the USMCA, are not the cause of the US’s current rot. Wrong target – the real villain is the extension of WTO status to China as “most favored nation” trading partner. The jobs which were supposed to go to Mexico instead went to China – the China which has zero reciprocal duties to the USA, unlike Canada and Mexico which do under the USMCA. China is eating our lunch, and the cause of this is a traitorous ruling class that sells out Americans for a nickel more profit.
I think the Trump admin’s non-imposition of tariffs for USMCA-compliant trade is good, and practical, and shows they are listening and adjusting. The imposition of tariffs on China is a good step. Maintaining the continental free-trade zone is also good. I think it should be extended to South America also. Fortress America. This is enough – why spend our treasure on other continents which are direct competitors?
It’s the fault of the Chinese. Everything wrong with the US is the fault of someone else, never the USians themselves because they are exceptional. Villain is proper term for the Hollywood shaped reality. Captain America will fix things by enslaving both American continents and sucking all the juices dry. This will be enough to keep USA going for a couple of decades. Prison Fortress America. /s
Not what I said but entertaining. Our current situation is absolutely the fault of our hostile ruling class. The Chinese boom was enabled by these profiteers at the expense of working people in North America.
What you said is different, because it lacked “/s” at the end. Anyone saying “Fortress America” non sarcastically must have made a typo, or be crazy as a coconut. The rest of the world should consider putting fortres ‘merica people in a reservation. Call it Asylum America, and build a great wall around it (the greatest wall of all walls, that Mexicans would gladly pay for), to protect the humanity from the bedlam of ‘merican exceptionalism and the brain rot it causes. Send them back all their monopoly money treasure they have been spending on other continents. In case they complain, air drop some mirrors, and keep Snake Plissken ready, just in case.
The US has been running consecutive trade deficits since the mid-70s, that is pretty clear evidence that the country started deindustrializing well before NAFTA. I remember LBJ pushing to have Mexican goods being imported more easily back when he was president in the 60s. Moving factories from the US to Mexico does not help the average American, it slows economic growth in America, economic growth is about 1/2 what it was in the 1960s; it also pushes down wages and working conditions, which have been stagnant since the late 70s. NAFTA is a win for corporations and the wealthy but not so much for the average American.
I agree with you that the deal with China was huge, that is because the Chinese didn’t settle for being cheap labor using the influx of foreign capital and export earnings to develop their economy and become more independent. Now China leads the world in numerous economic indicators and is working on ways to insulate itself from the US. That is what makes China America’s biggest threat – which is a shame because American would be so much better off if it learned how to work with China than try and boss it around.
“and the cause of this is a traitorous ruling class that sells out Americans for a nickel more profit”
If by “traitorous ruling class” do you mean Congress supposedly elected by the people or- do you mean the folks spending billions on PR by pushing the “Government is the Problem” narrative and “Greed is good” “finance is earning money the old fashioned way” and the rush to let everybody play the property game ownership thing or the massive deregulation con.
“real villain is the extension of WTO status to China” that would make the ‘real villan’ congress?
True enough – you have put your finger on one of many links in the supply chain of economic and political immiseration.
I do think we are on the cliff edge of one hell of an economic depression with it’s future collateral impact on governaces around the world for years to come
It brings back the valid question about the world – to what end state or minimum conditions for humanity is a baseline – for instance – inalienable rights?
Sorry to tag on to your line of thought – but I think some suggestions about what legislation might have some legs – does not matter what team is identified because that is such a nebulous label – like woke and liberal and conservative and terrorist and free trade.
One thought I have is maybe – get the enormous corrupting influence of money out of politics.
To get the corrupting influence of money out of politics, one would first have to impeach and remove all the Supreme Shyster Justices who voted in Citizens United Not Timid to sanctify putting unlimited corruping money into politics to begin with.
When all the Shyster Justices have been impeached from off the Supreme Shyster Court, and replaced with antiShyster Justices, then it won’t be the Supreme Shyster Court anymore. And it will be free to re-hear Citizens United Not Timid and strike it down.
“Shyster Justices”, how dare you these are the nine appointed life peers in our very own mini-house of lords.
While we’re at it, can we get rid of the Shysters who voted for private corporations to seize private homeowners’ land in Kelo?
The outsourcing of American jobs to China is simply a matter of economics. Consumers do not want a $3500 “proudly made in the USA” iPhone.
Nor do we normal people need or want one with or without China. The price march of smartphones into the stratosphere is neither something I or most workers understand or need. The capabilities of smartphones topped out at an acceptable level at least seven or eight years ago.
Apple’s margins are so insane that they could likely eat the entire tariff, not raise prices a cent and still make a profit.
And that’s not even getting started on their app store profits.
Ah, but our houses now come with closets, not a piece of furniture called a “wardrobe”. We also have more than 1 pair of shoes. We also have fruit out of season, and mangos that aren’t grown here in any quantity. And so on.
In the interim, as our incomes rose the US like Europe, Japan and (yes, look up the data) China have become service economies. The transition away from manufacturing echoes the earlier transition away from agriculture. Do you want to give up healthcare so that we can have a hundred thousand or more Americans sitting at sewing machines so that we can buy Made in America clothing? The cost of that will push many households back to where everything they wear can be fit in a “wardrobe.”
Americans do not have healthcare to give up. More Americans sitting at sewing machines sounds much worse than slave labor sitting at sewing machines overseas. You either wear Nike or you make them. /s
Certainly healthcare coverage and finance in the US are byzantine, rife with gaps and holes, and vastly inefficient. But we do employ a lot of people in hospitals, nursing homes, medical supplies and pharmacies and so on. More than in manufacturing. So if we are to reshore, something has to give.
As an aside, historically “sweatshops” reflected the need for high humidity when working with textiles. In the New York garment district, that meant few windows or other ventilation. I’ve visited a garment factory and a shoe factory in southern China, the garment factory was actually light and airy, sufficient ambient humidity in that region to avoid static electricity.
Those of us who, since NAFTA, evaluated the findings of Public Citizen’s Global Trade Watch,
have found answers to multiple “mysteries,” from mass displacement of Central America farmers
whose livelihood is wiped out by subsidized GM US corn flooding their markets,
to displacement of their small business by US chains that also kill off small business
in our towns. Can this glimpse of the massive “con” gain traction in time to have an effect,
despite mainstream media losing track of where the public’s interests lie? Indy media
have an important role.
This is a good piece for us to forward widely!
Thanks, Yves, for sharing it.
NAFTA about 30ish years ago brought about much instant revulsion. There was so much wrong with it, publicized in part by that Ross Perot warning about the giant sucking sound of jobs leaving and communities devastated. The early days of GMO corn awareness warned about what was ahead, too.
Looking hard for saving graces in the interim, at least the heavily-promoted TPP and TTIP got the notoriety and defeat they deserved. Vigilance against the lobbyists, paid-for Congress and back room manipulations lives on. Transparency needs and sunlight disinfectant don’t go out of style.
It’s not NAFTA that’s the problem – it’s China being granted tariff-free entry for its goods to the USA. The giant sucking sound was of jobs being shipped to China by businesses acting rationally in an environment created by traitors. DO you doubt Bill Clinton would sell you out for a nickel? I mean, he has, and will again if we let him and his evil ilk.
Nah, it’s all Putin’s fault.
Horseshit. The problem is US corporate and oligarchic leadership that took advantage of the temporary environmental and wage arbitrage available in China (and other regions), while US political leadership encouraged this due to the corruption initiated by those same US corporate and oligarchic leaders. This was all done with a short term view for their own enrichment. The Chinese went along because this bettered China and the Chinese people. Most favored nation is not what did this- it was rich US elites that simply took advantage of this situation. Note that the Chinese elites could be taking this same path utilizing other regional arbitrage situations, but they are not. This was all driven by the cultural rot in the US that was incentivized by our own capitalist system, and the groundwork was laid for this in 1787 when the Articles of Confederation were thrown out by what was effectively a successful coup operated by the rich assholes in the US. Your problem is not China, nor is it an agreement with China. Your problem is rich assholes in the US. All of our problems were caused by rich assholes in the US. Period. End of Story.
There is a solution to this, but most people are simply not ready to hear it or act on it…..yet.
I’m not sure we disagree about responsibility for this mess. Of course it’s the corporate bought congressional complex that is destroying American workers by hiring cheaper foreigners. Mostly now in foreign countries but also imported massively to lower wages . We have a hostile elite that feels no responsibility for the citizens, who they consider inferior.
Elite that feels no responsibility for the citizens, who they consider inferior, aka slaveowners (de facto, and also de jure in case of incarcerated). I say, give them wigs, and funny pants, and call them sons of the founding fathers.
Re: Perot and the giant sucking sound,
I saw a cartoon in 1993 that really cracked me up.
I found a link to it with a big watermark across it, but the only version I could find.
https://www.cartoonstock.com/cartoon?searchID=CC23918
Caption:
“I don’t know what the hell happened – one minute I’m at work in Flint, Michigan, then there’s a giant sucking sound and suddenly here I am in Mexico.”
Wrong target, as I noted above. The Mexican farmers displaced by NAFTA were supposed to gain manufacturing jobs. However, these jobs largely went to China due to the extension of “most favored nation” status to China under WTO rules. Chinese manufacturing was massively supported by the USA at the expense of North American manufacturing – by a traitorous ruling class with a traitorous ideology.
In other words, both NAFTA/USMCA and China’s WTO status.
Placing blame on just one or the other is a waste of time.
Nope. I assert it’s mostly China, which was allowed to hijack nafta. I worked through the imposition of nafta and there was massive adjustment but also increased prosperity even in manufacturing. North America should be one economic block. Prosper your neighbor, not your communist enemy should be the byword but for the traitors who run the show.
Communist enemy and the traitors who run the show commonly known as capitalists have united. All the “-ists” are up to get you.
This article has some useful analysis but drowned out by PMC pearl-clutching and a willful refusal to acknowledge both history and political reality:
– the exploitative and antidemocratic WTO architecture that Bill Clinton set in motion has been a bipartisan effort for thirty years
– technocratic recommendations by credentialed experts in thrall to dead economists and neoliberalism were a key part in creating this antidemocratic framework
– more of the same but by trade economists with the “right” views is not the solution. You can either have the global imposition of universal values or you can have national self determination by elected governments in their people’s interest. At least two of the free movement of capital and goods and labour have to be curtailed to build a high wage, high welfare state but where are the trade economists arguing for this?
– Trump/the USA is exercising naked power as the consumer of last resort: the US is growing strongly because it has cheap energy and it is using these terms of trade to loot its EU vassal economies, relocate the “Free World’s” industrial activity to the USA and run a “high pressure” economy at home to support the late-stage Empire in its competition with China. With other developed economies in recession, access to the US market is the trade equivalent of the Fed’s swap lines for the the EU and BRICS.
– The tariffs on US “allies” will assist this circling of the wagons. Tariffs on BRICS countries will shift value from US consumers and BRICS producers to the US government and reduce the trade deficit (and second order effects may result in industrial investment in the US and longterm improved terms of trade or a consumer recession and a trade deficit balanced the hard way, who knows?).
– However, any improvement in the deficit will be a “bonus”: the deficit is structural, is driven by US military spending and is the underpinning of the dollar’s extraordinary privilege (hence might be a malus to reduce it).
– Really the tariffs are about short-term power, not trade policy or deficits or US customs revenues. It is cargo boat rather than gun boat diplomacy. As the writer notes, nothing about the US approach to trade seems to be changing (“free trade for me but not for thee”) but fails to draw the conclusion that the tariffs don’t have to be elegant reformations of WTO designed by the most pointy-headed and woke trade economists money can buy because their purpose is to bring the rest of the world to heel. And they will work in the short term. They will enable the USA to obtain what we might call “non-tariff benefits” ;-) being primarily the further cowing of its allies and some additional fawning by “neutral” countries (the biggest being Brazil, India, Indonesia etc). Its peer competitors (China and countries deepest in her orbit) may retaliate or resist but a lot of China-friendly countries will be sure to be US friendly too now.
This is all going to be chaotic and disruptive and horribly Pareto suboptimal but perhaps it will turn out to be the first step in breaking society free from its bewitchment outlined by Mark Fisher in the Vampire’s Castle: that it is easier to imagine the heat death of the Universe than the end of Capitalism.
Or maybe even it is the second step: was the Global Financial Crisis and the loss of popular faith in the movement of capital the first step and this Global Trade Crisis will occasion the loss of popular faith in “free trade”? Will the next step be a resurgence of labour in the developed world, as the division of the world into less connected economic spheres removes the pool of labour from the Global South (or alternative leads to closer economic ties with Africa, Latin America and South Asia as East and SE Asia cleave to China)?
“the exploitative and antidemocratic WTO architecture that Bill Clinton set in motion has been a bipartisan effort for thirty years”
You mean the same Bill who famously said, “I feel your pain”?
Revenant, this is an important and information-rich comment. Thank you.
Thank you and well said.
At an event in the City yesterday evening, I learnt that the European Commission increasingly feels the WTO is no longer fit for purpose. The Commision’s External Action Service is engaging Japan and South Korea, but not China.
Hear Hear, Revenant!
As someone operating in the rarefied world of venture capital (as I believe you’ve said in a previous comment sometime back) i’m surprised you’d even consider it a possibility that Trump’s unleashing of his brand of anarcho-capitalism on an unsuspecting world will result in a resurgence of labour in the so-called developed world. The return of jobs to the US will be at best transitory, a bridge to the age of “fully automated, no human in the loop” manufacturing. The tech oligarchs see this as a high alpha opportunity and are nailing their wallets to it while moving methodically to tear down the byzantine layers of regulation that will compel them to factor in human labour into their calculus for reindustrializing America. Colour me skeptical about this policy trajectory towards neofeudalism resulting in anything remotely beneficial to ordinary working Americans.
The problem with the rarified air of VC is our oxygen deprivation brain damage as investors :-)
I am a robotics sceptic. US and UK companies don’t like capex unless it is subsidised. Too much risk as debt, dilutes returns as equity. If it floats or flies, rent it: cf. Schlumberger and Halliburton in the oil industry, which hates capex.
For goods of any complexity, the labour element is modest and strategic, such as in fiddly final assembly and pick and place, which is very hard to automate and only pencils out for the most expensive goods like cars. The best and most flexible robot is a cheap non-US human and failing that a relatively cheap US human!
And for advanced goods, production is already automated (semiconductors, pharma) and the labour value is highly paid PMC jobs. Remember that the current wave of job losses are much higher up the value chain: in the 80’s it was the tool and die makers and the machine tool industry, today it is jobs in software and electronics, pharma research, aerospace engineering etc that are moving to China.
I don’t imagine the US will reopen the textile and lumber mills of Lambert’s youth and employ thousands on shifts. A lot of this “China Price” production will move to the Philippines or Nigeria or Bangladesh or other emerging economies in the US sphere of influence. But the vision of preserving hegemony only works if the US can keep technology and capital leakage into China’s sphere to a minimum and can tackle its internal rent seeking so that it can improve infrastructure and productivity.
This last point is the hardest to imagine. Fortune 500 companies will throw up subsidised factories and rehire workers on cost plus government contracts or tariff protected profit margins but they will not give up pricing power and rent extraction over the US consumer (especially the FIRE sector and healthcare) without a fight. China will have an inbuilt advantage (if it doesn’t have an internal rent-seeking problem of its own…).
Also, I am not saying this reflationary strategy is going to succeed but this is what I think the Powell Memo 2.0 says. Control and reinforce the Western Hemisphere and reflate its economy by looting Europe and dividing it from Russia and “containing” China.
The only people with good cards to play are the currently unaligned South, who may be able to get goodies from Uncle Sam and Uncle Xi if they are nimble….
As the Scottish poet Robert Burns once wrote . . . ” the best laid plans of mice and men gang aft aglay.”
I simply cannot buy the AI driven techno fever dream our current oligarchic leadership is salivating over. So-called AI has already hit it’s limit, or nearly so. The dream to automate all human labor is a pipe dream. As far as I am concerned, everything that can be easily automated has already been automated. All they are doing now is tinkering around the edges. I have been involved in the trades and engineering, be it industrial or civil for close to 40 years, and although there are many things that automated machines can do, they have farily rigid limits. They require very predictable conditions to operate properly. They are marvels of modern science and engineering, but if in many cases, if so much as humidity or barometric pressure changes somewhere in the manufacturing or fabrication supply chain, automated machinery requires human intervention. In most cases, human operators are always going to be cheaper because they can respond intuitively/pragmatically/logically to constantly changing conditions and subtle changes to materials that even the most sophisticated machines cannot- experienced human equipment/machine operators will almost always produce better, more reliable products. Human labor will never, ever be eliminated from manufacturing, service, or construction to much greater degree than has already occurred, at least if we want anything to work. Most of the claimed automation gains I have seen in recent years are simply mechanical turks that hide the source of the labor from the human eyes on the finished product end of the supply chain (or outright and deceptively shift it to the person with those same eyes). I also see no evidence that “AI” is ever going to be taken seriously because our corrupted society cannot produce reliable, factual information at any scale that can be used for a proper training set. You would need to change our global society into a Star Trek level utopia before AI, as it is currently operated, can ever be a reliable reality, and I do not see that happening.
People like Thiel and Musk might get the feudalism they desire (for a time), but I simply cannot see it being automated.
I agree with your general point that we are at the top of the Gartner hype cycle with respect to AI and what we are being told about its potential to deliver mindblowing advances in all manner of industries and applications. Much of it is about generating investor FOMO and drawing capital and talent into the sector while fearmongering to politicians that attempts to regulate its development will mean that “China wins the race blah blah blah”. I also agree that AI automated manufacturing will have a tough time replacing, never mind replicating human led manufacturing when considering the dimensions of cost, throughput and quality of finished product. Robots can optimize throughput and reduce cost, but crappification is now so baked into modern products that companies will just have to create robots that are just good enough to churn out low quality, crappy stuff (while bulking up on marketing budgets to dazzle and befuddle consumers into buying their crappy wares). Technically, such robots would need decent enough computer vision AI and actuator control software with minimal inference compute required because of the repetitive, regimented nature of assembly line process automation. IMHO these types of robots will be coming to a factory near you in the near future, the oligarchs will make sure of it.
I was reviewing business plans for such robots in 2018.
For example, here is a company making lower cost robots (by cost engineering key components of the six degree of freedom articulated movement) so that SME applications of robots are plausible.
https://inovorobotics.com
There’s an angel fund in the UK focused on these opportunities.
https://inovorobotics.com
This is all good deeptech fun for early stage investors but will it scale? In a high-pressure economy (restricted to Western hemisphere labour pool), labour may be expensive but capital may be more expensive, so I am doubtful.
Plus consumers will be in short supply too therefore I believe industry will rediscover Fordism and want to pay workers enough to be consumers of their own product.
However, this requires productivity gains to pull off and as I said above, this is where the hope of US restructuring breaks down: I don’t believe that the USA can euthanase its rentiers to make this retreat into a domestic high pressure economy work and maintain its hegemony.
It will plateau at some ugly lesser equilibrium where internal wages are suppressed (fascism?) and/or consumption is repressed (Sovietism?) and its hegemony evaporates but the 0.1% organise a Mafia bust-out of the premises and take their 747’s full of rentier gold to Singapore or Dubai.
No, it was not a bipartisan effort. At least in the House of Representatives it was not bipartisan. There were enough Demparty holdouts against it in Congress that it did not get bipartisan enough to pass.
Clinton deceitfully ran against “Bush’s” NAFTA in his first election. Then he doublecrossed his voters by working his hardest to whip and force NAFTA through Congress. There is a book about that. Till Clinton, only the bicoastal New Yuppie Scumocrats supported the Republicans in supporting Forcey Free-Trade.
https://www.ucpress.edu/books/the-selling-of-free-trade/paper.
And when Clinton achieved that, he achieved the transformation of the House of Representatives into Majority Republiparty and Minority Demparty.
In short, neoliberal economics is the biggest threat. Still.
But I also think that economic ideology has been absorbed by officials and CEOs all over the world. They go to all the same schools and the same vacation spots. All want the same cheap labor. Many are going to fiendishly rub their hands together while they get to point the finger at Trump.
I await the “increase shareholder value” CEOs who decide that NOW is the time to buy back their stock.
With all the prior emphasis on corporations finding the lowest cost labor, lowest cost tax havens, lowest cost raw materials, one could suggest that they would be seeing an opportunity to buy their own stock back at a lower price.
But they never seem to buy their stock back at a low price.
Trump has given the CEOs a great “increase shareholder value” opportunity.
Let’s see if they respond to lower stock prices in any way other than repricing the strike price lower on options they have.
interestingly, not even a cursory look at 90 years of bipartisan imperial presidency. It’s just assumed to be the way the Republic is supposed to be.
It’s ok if my side uses expansive presidential powers and expansive judicial review, because my side will always win elections!
Possibly I’m not paying proper attention or not looking in the right
places, but I am genuinely mystified over why, in all the Musk –
Trump – economy discussions, I have not seen anywhere either
of the names Smoot and/or Hawley.
Why?
They are all over the place.
Well, I could look around a little more. Might be just a bit more difficult
though keeping in mind that Rand Paul thinks it’s “Hot Smooley”.
Anyway, I’d like to find one. I bet it tastes really good.
Trump is raising short-term finance at the expense of everything else. The tariffs are a purchase tax, the cuts to grants, research and other programs reduce expenditure and so does the wide-spread job cutting. The expensive war aid to Ukraine has mainly halted and there are rumbles about the EU having to fund NATO going forward.
This is consistent with a CEO doing anything and everything to try and prevent a company from going belly-up in the next few months, regardless of what will happen once the immediate danger is passed in terms of worker, customer and supplier relations.
If Trump can see a crash coming – or perhaps more accurately, if Trump believes that a crash is coming – then his actions have a certain logic. Including that the onset of a crash must be hidden to avoid panic and thus all actions are cloaked in all sorts of smoke and mirrors such as reciprocal taxes, a humanitarian wish for peace in Ukraine, getting rid of fraud and waste etc etc.
The US is sovereign in its own currency so Trump doesn’t fear a hard-stop. The problem is that those that dollar payments are going to the wrong rice bowls, to the US’s peer competitors and to the PMC / Deep State.
Tariffs and NATO contributions and Russophobia and expensive US LNG on poor unarmed energt-importing Europe will prevent Europe and Russia competing as the World Island.
Tariffs on China will force the other peer competitor to contribute to the US budget.
Cuts in PMC domestic spending will bring the Deep State under control.
Any improvement in US finances can be used for war on China or tax cuts
You may be right Revenant – but right or wrong I certainly admire your faith!
Europe will eventually make peace with Russia (they are currently bickering over who will represent them in talks with Moscow) and if they see sense (admittedly a big if) they will buy energy from Russia – pipeline or LNG – because it will be cheaper and more reliable than US gas, and in greater quantity.
A strong treaty with Russia will also reduce the perceived need for highly expensive weapons that will never defeat a Russian invasion in the first place.
Tariffs on China (or any other country) do not force that country to contribute to the US budget – tariffs tax the US consumer to do that. And this is a 2 way street – China is now coordinating responses with S Korea and Japan.
I agree with you that an EU/Russian combo is probably not much of a World Island competitor. But Russia-China? More territory than US, more people than US, more technologically advanced, better military (Russia on its own has beaten NATO by out-production and superior generalship), and far superior political leadership.
To be clear, I would love Europe to ally with Russia and China!
I am just explaining what I think Trump’s theory is (or the theory of the people advising him).
I also don’t think it will work to reflate US economic and thus military hegemony because it requires internal productivity growth and the US rentier sectors will.stand in the way (FIRE, healthcare, defence).
I do think it will beggar Europe though and divide her from Russia, with the full connivance of Europe’s quisling Eurocrat class, which is why I am looking to leave Europe….
Even if the gas taps are turned on again, the USA will have made a peace with Russia that gives each party a sphere of influence in Europe and the Arctic and inserts the US downstream of Russia into European energy supply, giving the US power of the price of EU energy. He who controls the Spice….
I still believe all of this will become moot when climate change alters the very existence of life on the planet. Beginning this summer. Something big changed last December and indicators have since only gotten worse. Deny, deny, deny, deny, until your house burns down, or washes away. Not a black swan because people have been screaming into the void about this for years.
Yes. Very important comment. This from The Guardian:
https://www.theguardian.com/environment/2025/apr/03/climate-crisis-on-track-to-destroy-capitalism-warns-allianz-insurer
We look away until we can’t, until it’s too late.
Allianz in U.S. is insuring plenty of chemical companies and smokestack risks for environmental liability coverage, but perhaps the German parent is in the dark on it.
A friend of this site (and of mine) theorizes that these tariffs are a Shock Doctrine play to create a crisis that will enable doing-away with virtually all income and inheritance taxes and to replace them with a brutally regressive VAT regime of consumption taxes.
The generation of Americans educated in the quarter century since “No Child Left Behind” are too innumerate and too illiterate to understand how that is a return to feudalism for the billionaires and to serfdom for them. Think Maggie on Meth. Everything is going according to plan…
Maggie on meth, you might be right on that. I have heard rumors that the DT is on Adderal, which is brand-name pharma meth. Whether the old emperor is drug-addled or has mental illness, dude has some serious issues. Even now, I see wishful thinking and hopeful speculation from very well-informed folks. The alternative may be too disturbing.
Let’s see; a 78-year old morbidly obese man who “never sleeps” and who can rant for hours in front of an audience. How does he do it?
https://www.rollingstone.com/politics/politics-features/trump-white-house-drugs-speed-xanax-1234979503/
Oh, and he hates paying income and estate taxes. Never let a good crisis go to waste; better yet, why not create one? Trump is not dumb and he’s not crazy. My friend’s theory is that he’s intentionally creating an emergency that will result in a stampede to “save” the economy in a way that benefits him personally along with his billionaire cronies.
I agree with all that, he’s not “crazy” but he sure looks like he has some mental health disorders and cognitive decline. AND he’s jacked up on drugs. The emperor is an aging, semi-senile psychopath.
Not to put too much credence in Wikipedia, but:
https://en.wikipedia.org/wiki/Age_and_health_concerns_about_Donald_Trump
All of this cannot be dismissed as partisan bias.
Like senile Genocide Joe, we are not supposed to notice that our fearless leader has some serious mental issues.
How does the line go in the Megadeath song:
“Mad as a Hatter, and strung out just the same…”
I forgot to mention that Elmo the Oligarch is on Ketamine, but it’s perfectly legal since it’s prescribed by a doctor. Drug-addled and mentally ill. I’m not sure about the rest of the DT2 crew, but their behavior is a bit strange, but as I always say, a psychologist is needed.
This is a great article. Thank you Yves. I wondered how Trump would profit. I thought the goal was to buy stocks on the cheap. This article provides much better and immediate reasons for personal gain.
I do agree that the Congress has abdicated its role and power.
One topic I haven’t seen much on is the tax structures that provide incentives to offshore production. I don’t see much talk of that. Congress would have to overhaul the existing legislation, and I don’t see any of that happening, but I may have missed something
On the surface it looks like contradictory forces of tax incentives/subsidies and tariffs.
Thank you for this overview coverage (ty Yves for your continuous, persistent work). We have a lot of programs to watch. I am waiting for the big game: US-Iran Sumo wrestling. Currently playing the Yemen tragedy with its Palestine, Syria, Lebanon elements. Dear reader, we are safe in our environments – for now. I am shutting up for now…
https://www.youtube.com/watch?v=r0qNqfijB00
while his interlocutor, John Iadarola makes it
“hoot smalley, or whatever”.
The Dems sold everyone out just to keep their seats. What must be done? Blow the roof off the …
If anyone is actually curious about the methodology behind Trump’s tariff regime here is an explainer: https://substack.com/home/post/p-160606963
Perhaps if we read Ian Davis’ ” The Dark-MAGA Gov-Corp Technate – Part 2″ on Whitney Webb’s Unlimited Hangout website, we might garner enough concern to move a bit faster in our prescience of what’s on the menu. It’s a more in depth journey into the subject of Thom Hartmann’s “Dark Enlightenment: the Tech Oligarch Ideology Driving DOGE’s Destruction,” on this site 3/25/25. Yve’s hypothesis is on the money IMO. Yasha Levine, author of Surveillance Valley, and Catherine Austin Fitt’s, for that matter, if each from a slightly different angle, have the same pattern recognition. But it’s not just the rape of Russia. This period was preceded by the infamous M&A extravaganza of the 1980s and an epic environmental battle with Dick Cheney, rep of Wyoming’s at-large congressional district 1979-1989, leading the charge for the “Wise Use Lobby”, to be followed later by his secretive Energy Task Force arrangements….Enron, and, well, the rest is history…. upside down?. In any case the lights are blinking.
PS if you don’t have time to read the whole aforementioned article, just go to the section headed American Gov-Corp Technates. Trump is purportedly gung ho. One can already smell the blossom of a multi decades very long vine.
We currently have 4.2% unemployment, the lowest since the 1960s (with the exception of the period leading up to COVID). Even in the 1960s, unemployment bottomed out around 3.5%, in an era when only 40% of women worked, versus 57% today. See the FRED database for data on unemployment and female labor force participation.
So you want to bring manufacturing back? What sector of the economy are you going to cut out? Healthcare is 40% bigger than all of manufacturing. What part of that is unnecessary?
To continue, by far the biggest component of government is public school teachers, followed by people who maintain infrastructure and provide other local and state-level services (police, fire). Staffing classrooms is already hard.
Should we shut down what little daycare we have? But then young families, who of course aren’t very far along in their careers so have low incomes, will have to have someone stay at home because a low-wage job can’t cover the cost. That’s a great way to undermine the long-term prospects of the next generation.
I think even calling these tariffs to re-industrialize America strains credulity. It’s one part Trump power play to get his vig as countries come to “negotiate a great deal”, and another part perhaps an excuse to extend or even increase tax cuts for the rich. It will even result in some re-shoring, but it does not seem to be an outcome that has been prioritized.
Biden’s approach to re-shoring was much more focused and “traditional” (it even included tariffs which did not disrupt everyone’s life, and the world economy). Given how long it takes to go through the process, I would not be surprised if the jobs numbers being reported included Americans being hired as part of that effort.
Both efforts can be classified as way too little, way too late to even begin to effectively compete with the technology and massive scale of economy coming from the far East. Trump’s efforts have the advantages of his far reaching definition of reality – he can stop and claim success at any time for any reason.