RELEASE: New CAP Report Analyzes 6 Months of the Trump Administration’s Trade Policy and What it Means for the Future

Washington D.C. — In six months, the Trump administration’s trade agenda has isolated the United States on the world stage, jeopardized millions of American jobs, and made the average U.S. household poorer and less economically secure. A new Center for American Progress report discusses eight takeaways from the Trump administration’s on-again, off-again trade agenda and how it is affecting the U.S. economy and trade partnerships around the globe: 

1. 1. The Trump administration’s dealmaking has largely failed to deliver meaningful progress on long-standing trade issues. Many countries have demonstrated their frustration with the Trump administration’s zero-sum view of trade by locking arms in support of trade relationships with each other that, over time, will limit the involvement of U.S. companies in global markets. 
   2. Other countries seem more inclined to placate the Trump administration rather than negotiate mutually beneficial solutions to long-standing trade impediments. Most trading partners do not appear to have tabled new ideas for resolving bilateral or multilateral challenges. Instead, they have largely engaged the Trump administration with an eye toward limiting the damage to their markets and reputations. 
   3. The willingness to use export controls as a bargaining chip in trade negotiations will make future trade negotiations muddies the difference between national security and commercial advantage. Expanding the scope of traditional trade deals to include export controls, visas, and private sector sales has opened a pandora’s box for future negotiators and created a vector for possible corruption. 
   4. The backlash against the Trump administration’s policies is hurting U.S. companies and U.S. exports. U.S. exporters now face retaliatory tariffs in several key markets—including Canada, the European Union, and China—and a foreign consumer backlash against products seen as symbols of the United States. The latter may be more consequential over the long term as consumers’ preferences are locked in and brand loyalties are established. 
   5. Despite strong evidence to the contrary, the Trump administration believes tariffs will convince multinational firms to move production back to the United States. Tariffs on their own are not enough to reorient global production patterns, especially if the administration settles on an across-the-board tariff of around 10 percent that does not adequately account for the cost difference between producing elsewhere versus in the United States, nor does it advantage one foreign production center over another. 
   6. The Trump administration’s tariffs are increasing costs for American households and American businesses. Despite years of misleading statements about foreign governments paying tariffs, it’s clear now that Americans are paying the cost of the Trump administration’s massive new tariffs. Importers are passing costs on to consumers in the form of higher prices, and American manufacturers are paying more for imported parts and materials. 
   7. Chaos has consequences. The variable nature of the administration’s tariffs make it nearly impossible for businesses to plan for the future or engage in long-term partnerships. The result is broad hiring and investment freezes that hurt the overall strength of the U.S. economy. 
   8. Future agreements will be negotiated in the absence of trust. Any future economic agreement involving the United States will occur in an environment defined by active distrust of the United States as a reliable trade partner. 

“Trump’s trade war is forcing American consumers to pay more for everyday goods and small businesses are struggling to survive,” said Ryan Mulholland, senior fellow at CAP and author of the report. “In almost all cases, U.S. consumers, businesses, and workers—along with their counterparts abroad—are worse off than before Trump took office, facing higher tariffs, more uncertainty, higher borrowing costs, and rising inflation.” 

Read the report: “Is This What Winning Looks Like? Analyzing Six Months of the Trump Administration’s Trade Policy and What It Means for the Future” by Ryan Mulholland

For more information or to speak with an expert, please contact Sarah Nadeau at [email protected].