How Trump’s trade policy spiraled out of control 

In the wake of the Supreme Court’s ruling overturning President Trump’s reciprocal tariffs, many scholars are weighing its significance. The most common interpretation is that the decision was about the separation of powers, in which Article 1 of the Constitution grants taxing and tariff powers to Congress.

What should not be lost amid this, however, is how Trump’s trade policy has fallen short of achieving its goals. Thus, even though U.S. imports from China declined significantly last year, the overall U.S. trade deficit finished 2025 at a record high. American manufacturers also cut an estimated 108,000 jobs during Trump’s first year according to a Joint Economic Committee Minority report.

Meanwhile, public opinion polls show that Trump’s approval ratings have plummeted in part due to concerns households have about many products becoming unaffordable. 

This has not stopped Trump from doubling down, however. He indicated that he would impose new tariffs without going through Congress, although the statutes do not grant him as much flexibility as before. 

So, why is Trump doing this? 

Dartmouth Professor Douglas Irwin, an expert on U.S trade policy, contends that the tariffs Trump announced in his second term are “unique.” Irwin’s premise is that we are now entering a new era, where Trump is seeking retribution for America’s trading partners taking advantage of the U.S.   

Trump’s views on trade date back to the 1980s when Japan amassed large trade surpluses. President Ronald Reagan applied diplomatic pressure to reduce the imbalances, including implementing tariffs and quotas on exports of cars, steel and semiconductors. However, the U.S. trade deficit persisted, and Trump criticized Reagan for not being tough enough on Japan. 

When Trump became president in 2017, China had supplanted Japan as having the largest trade surplus, and Trump was determined to take strong action against it. After implementing tariffs on products such as steel, aluminum and solar panels, he followed up with a series of tariff hikes on Chinese goods that tallied $370 billion. 

Trump eventually reached a truce with China in mid-2019 whereby it would purchase $200 billion additional goods from the U.S. However, China did not adhere to it. Consequently, Trump said he would raise tariffs on China to 60 percent while also applying 10 percent tariffs to other trading partners of the U.S. during the 2024 election campaign. 

One reason for broadening the number of countries was that China skirted U.S. tariffs by establishing manufacturing hubs in Mexico and Vietnam and routed exports through Asian countries. Therefore, Trump wanted to build a shield, so that China could no longer circumvent U.S. tariffs. He also sought to boost tariffs sufficiently high that foreign producers would relocate production to the U.S. 

In his April 2 “Liberation Day” remarks, Trump announced the biggest and most widespread tariff hikes since the 1930s. It culminated in a steep selloff of U.S. financial markets and the dollar after the U.S. and China engaged in a tit-for-tat escalation of tariffs. This forced Trump to postpone implementing the tariffs for 90 days and to reach another truce with China. 

Trump was ultimately able to reach agreements with Japan and the European Union in August that provided some clarity on what he was seeking. Japan’s reciprocal tariff rate was lowered to 15 percent from 25 percent, and the EU also agreed to a 15 percent rate, down from 30 percent. These agreements included pledges that Japan and the EU would make sizable investments in the U.S. 

Amid this, many investors assumed the main areas of contention were now resolved, and the stock market went on to set record highs. However, this assessment proved premature when Trump began to threaten additional tariffs on countries that displeased him for various reasons, many of which had nothing to do with trade. 

The most egregious was his threat to acquire Greenland either through purchase or military ahead of the Davos Economic Summit in January. Previously, he announced that eight European countries would face tariff increases of 10 percent if they did not back him. When EU leaders took a firm stance to challenge Trump, he quickly rescinded the threat. 

There are several lessons to be gleaned from what has transpired in the past year.  First, Trump remains convinced that key trading partners of the U.S. — especially allies of the U.S. — are “ripping off” America. Second, he views trade as a zero-sum game, in which there are winners and losers based on whether a country runs a surplus or deficit. Third, he believes the way to win the game is with force and intimidation. 

In the process, Trump has ruptured the post-war order and the Western alliance that produced unparalleled peace and prosperity. In its place, there no longer is a rules-based system for trade, and individual countries must fend for themselves while the U.S. and China divvy up the spoils. Meanwhile, chaos and uncertainty reign. 

Nicholas Sargen, Ph.D., is an economic consultant and is affiliated with the Darden Business School.  The second edition of his book “Global Shocks” is forthcoming. 

Copyright 2026 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

More Opinions - International News

The big new controversy over the Epstein files, explained

Pentagon removes director of Joint Staff, sends him back to Navy role

Tampa man killed in Cuban boat shootout wanted to overthrow island’s ...

GOP senators warn Justice Department to release all Epstein files mentioning ...

Whitmer says US-Canada bridge Trump threatened to block ‘will open’

Wesley Hunt points to Vance, Scott in defending missed votes

Trump administration urges Supreme Court to end temporary protections for ...

Vance, Oz announce pause in Medicaid funds to Minnesota amid fraud probe

Democrat calls Noem meeting ‘heated and tense’ after call for impeachment

Rove: Trump made ‘key mistake’ during State of the Union

Democrats fume after Boebert leaks deposition photo of Hillary ...

Hillary Clinton criticizes UFO, Pizzagate questions from GOP during Epstein ...

Crockett up by double digits in Texas Senate Democratic primary poll

Hillary Clinton says she does not recall meeting Epstein as Oversight ...

Where things stand in Texas ahead of the primary

Mamdani says Trump told him ICE-detained Columbia student ‘will be released ...

Applebee’s closing restaurants in 3 states

The Hill Podcasts – Morning Report

© The Hill