Trump's Trade Policy and Economic Strategy

The economic strategy under Donald Trump's administration is characterized by a pragmatic and sometimes unpredictable approach to trade and manufacturing.

Tariff Policy and Economic Impact

• Trumpism is expected to face challenges with economic realities such as recession or inflation.
• There has been an on-again, off-again tariff policy, particularly concerning Mexico and Canada, affected by Wall Street reactions.
• Duties on steel and aluminum have been imposed on countries other than Mexico and Canada, minimizing inflationary impact on U.S. manufacturing.

Domestic and International Responses

• Trump uses tariffs as a strategic tool to improve the U.S. trade balance and support domestic manufacturing.
• Trading partners gain insight into Trump's threshold for domestic economic pain through his tariff actions.
• Internally, there is resistance to drastic fiscal measures like cutting spending, which influences Trump's policy adjustments.

Fluid Policy and Negotiation Strategy

• Trump's approach is to start from an extreme position and adjust based on economic and political friction.
• This method involves public declarations followed by strategic negotiations, adding an element of unpredictability.

Objectives and Limitations

• The goal of rebalancing U.S. trade with the world is challenged by potential economic stalling or inflation spikes.
• Threatened tariffs can serve as leverage to bring surplus economies to the negotiating table for faster bilateral negotiations.