The April Fools’ Day +1 tariffs actually have two components. The first is a universal 10 percent tariff that has nothing to do with trade deficits; it presumably was enacted either to raise money for tax cuts or to encourage import substitution, but not both, since one precludes the other. The second, the “reciprocal tariff,” assumes that trade imbalances with particular countries must be due to legal barriers, most of them having nothing to do with tariffs. What is Trump’s objective with them?
He may be using them as leverage to make deals. The problem, of course, is that the assumption behind them is faulty; most trade imbalances exist for reasons other than legal barriers, and they won’t go away with the stroke of a pen. There is no way, for example, that we can have a trade surplus with Vietnam even if the Vietnamese completely eliminate their tariffs because the population simply can’t afford to buy large quantities of expensive goods made in America.
I think Trump’s end game with the reciprocal tariffs is a series of managed trade agreements along the lines of the unsuccessful one he negotiated with the Chinese in his first term. The problem with that idea is that democratic states can’t order their citizens to buy American products and limit their exports. Mercantilism can work with authoritarian governments, but not with liberal democracies.