Is This What Winning Looks Like?

The Trump administration’s trade agenda has isolated the United States on the world stage, jeopardized millions of American jobs,¹ and made the average U.S. household poorer² and less secure.³ While it can be challenging to state anything with certainty, given the on-again, off-again of the administration’s tariffs,⁴ it is worth considering whether there are lessons to be learned from the six months since the president launched his unprecedented trade war. Looking past the roil of the daily headlines, definite trends can be identified. Here are eight takeaways that come to mind when considering Trump’s trade agenda:

1. The Trump administration’s dealmaking has largely failed to deliver meaningful progress on long-standing trade issues. The world has not responded as the Trump administration expected. In fact, 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, as well as the diplomatic and economic leverage of the United States.
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, among other things, export controls as a bargaining chip in trade negotiations muddies the difference between national security and commercial advantage. Expanding the scope of traditional trade deals to include export controls,⁵ visas,⁶ and private sector sales⁷ 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 tariffs⁸ in several key markets—including Canada, the European Union, and China—and a foreign consumer backlash⁹ 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 or collecting “external revenue,” it is 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,¹⁰ and American manufacturers are paying more for imported parts and materials.
7. Chaos has consequences. The Trump administration’s approach to tariffs combines two gut punches for American businesses and their workers. Extremely high tariff rates increase the cost of imports needed to produce and sell competitively in the United States. And the variability of the administration’s actions makes future planning nearly impossible. While frustrating, the former could presumably be accounted for by most businesses, even if it means higher prices are passed on to consumers, eating into inventories, or switching to lower quality inputs. However, the latter is nearly impossible, since businesses cannot plan or invest with any certainty.
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 distrust¹¹ of the United States as a reliable partner. Foreign governments are likely to demand additional and novel assurances of the United States’ commitment to any agreement, which could in turn limit the negotiating space (and time) for negotiators to focus on other, higher value, more impactful aims.

The Trump administration has increased U.S. tariffs to levels not seen in more than a century. At one point following Trump’s “liberation day” announcement of reciprocal tariffs, the average U.S. tariff rate reached 22.5 percent, the highest since 1909¹²—a time when tariffs were the primary source of revenue for the U.S. government.¹³ At present levels, the Trump administration’s tariffs could cost the average American household $2,800 and raise the unemployment rate by 0.5 percentage points, which equates to the loss of 641,000 American jobs, according to the Budget Lab at Yale.¹⁴

Current tariffs have not been sustained at this high level since 1910,¹⁵ an era when tariffs were the primary source of funding for the federal government. Nearly all goods that enter the United States from abroad are currently subject to at least a 10 percent tariff,¹⁶ with many products facing far higher duties. 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.¹⁷

Despite the continued warnings from top executives,¹⁸ workers,¹⁹ and the investment community²⁰—and ongoing legal challenges²¹—the Trump administration has pursued a trade war against friend and foe alike, treating most foreign governments in a cursory, often hostile manner.²² Indeed, the president began establishing his trade policy even before taking office, threatening Canada and Mexico²³—the United States’ two largest trading partners—with 25 percent tariffs weeks before his inauguration and threatened Colombia with a 25 percent tariff shortly after his term as president began.²⁴ The tariffs on Canada and Mexico were a response²⁵ to the flow of migrants and fentanyl into the United States. In the case of Canada, this was particularly nonsensical,²⁶ given that Canada accounted for 0.2 percent of the fentanyl imported into the United States in fiscal year 2024. It was also particularly unfortunate because cooperation with Canada is key to reorienting global supply chains²⁷ toward North America, especially in key strategic sectors such as electric vehicles, batteries, and steel.

The administration quickly paused its tariffs on U.S.-Mexico-Canada Agreement-compliant goods,²⁸ apparently realizing that Canada and Mexico are highly integrated with U.S. supply chains, making imprecise tariffs a burden on U.S. producers as well as those on the other side of the border.²⁹ In a pattern that would later reveal itself, the administration justified its pause by claiming that it had secured important new commitments from Mexico City and Ottawa, which upon closer inspection proved to be less significant.³⁰

But that was just the beginning. The Trump administration has now imposed sector-specific tariffs, announcing new duties on steel and aluminum³¹ (which have been doubled to 50 percent³²), automobiles,³³ auto parts,³⁴ and copper.³⁵ It also launched investigations into semiconductors,³⁶ lumber,³⁷ pharmaceuticals,³⁸ critical minerals,³⁹ and trucks and truck parts,⁴⁰ which will likely result in additional tariffs in the coming months. Furthermore, the president mused about movie tariffs⁴¹ and repeatedly threatened⁴² other countries with higher tariff rates seemingly at a whim.

Brazil has faced tariff threats for its legal prosecution of its former right-wing president for attempting to overturn his election defeat.⁴³ Emerging economies have faced tariff threats for considering nondollar-denominated trade.⁴⁴ India and others have faced threats for doing business with Russia.⁴⁵ Colombia has faced threats for not accepting deportation flights.⁴⁶ What is important, and often lacking in commentaries on Trump’s trade policy, is that in each of these instances, the collateral backing the president’s tariffs threats is the prosperity of the American economy. If the administration were to follow through with these tariffs—none of which are designed to address cost-of-living concerns, create or sustain jobs here at home, or strengthen overall U.S. competitiveness—it would be American consumers and businesses that foot the bill.

The president’s most sweeping “liberation day” tariffs⁴⁷ were announced at a Rose Garden ceremony on April 2. Using untested legal authority,⁴⁸ the administration enacted a new 10 percent across-the-board tariff⁴⁹ on nearly all countries, and additional “reciprocal⁵⁰” tariffs ranging from 10 percent to 50 percent on dozens of U.S. trading partners. Within hours, it became clear that the so-called reciprocal nature of the new tariffs was a misnomer. Rather than calculating the impact of every country’s tariffs, taxes, and regulatory burden, as the president and his team had proposed, the administration simply divided the trade deficit by a country’s goods exports to the United States and then cut it in half⁵¹—a calculation that baffled trade professionals,⁵² foreign governments,⁵³ and economists.⁵⁴

The result was that the Trump administration’s tariff rates were staggeringly high⁵⁵ and made no distinction for markets that export needed goods to the United States. Moreover, nearly uninhabited islands were not immune⁵⁶ to the chaos, as the administration announced tariffs on Heard Island and the McDonald Islands. Tiny Lesotho, a nation President Trump derided as a place “nobody has ever heard of,”⁵⁷ received the highest tariff rate—50 percent—despite having an economy more than 13,000 times smaller than the United States.⁵⁸

After initially trying to justify such absurdity,⁵⁹ the administration “paused”⁶⁰ its reciprocal tariffs within hours of them taking effect⁶¹—presumably to provide time to negotiate deals with other governments.⁶² At one point, the president bragged about negotiating 200 trade deals at once,⁶³ but this too turned out to be bogus. Eventually, the president admitted to the impracticality of negotiating⁶⁴ so many deals simultaneously, announcing that the administration would instead send “letters”⁶⁵ to foreign leaders, informing each country of their tariff rate going forward. The administration even floated the idea that some tariff rates would be “regional,”⁶⁶ walking back the idea of bilateral tariffs and separate negotiations with each government.

On July 7, the president began posting screenshots of letters that he sent to the leaders of different countries, informing them of the tariff rate on their exporters starting August 1.⁶⁷ The letters were noteworthy for their tone as much as their substance. In reality, the letters largely extended the 90-day pause that the administration has imposed one day after its country-specific liberation day tariffs took effect. The president then announced that the August 1 deadline was not 100 percent firm, only to contradict himself hours later, announcing that “no extensions will be granted” if deals are not completed by that time.⁶⁸

The president’s whipsaw approach to tariffs is, however, best demonstrated by his actions in regard to China.⁶⁹ The administration first imposed a 10 percent tariff⁷⁰ on Chinese imports (on top of other duties already in place) as part of its “emergency” actions to stop the illegal import of fentanyl. Following China’s retaliation, the administration increased its tariffs on Chinese goods to 20 percent.⁷¹ Then, during the liberation day event, the administration assigned China an additional 34 percent tariff,⁷² which within a few days was raised again to 84 percent⁷³ and then to 145 percent⁷⁴ in response to China’s retaliatory response.

The administration then announced a 90-day pause, reducing tariffs on China to 30 percent⁷⁵ following a May 12 meeting in Switzerland with Chinese negotiators. Despite claiming an “historic”⁷⁶ deal with China, the Chinese maintained tight control over rare earth exports,⁷⁷ hurting American manufacturers. Moreover, U.S. farmers lost export deals to China,⁷⁸ as farmers in South America swooped in to backfill lost orders⁷⁹ from the United States. The United States and China met again for a conference in London a few weeks later that resulted in a “framework agreement”⁸⁰ that, despite President Trump touting it as a “great win”⁸¹ for both countries, did little more than roll back the punitive measures both sides had enacted since their agreement in Geneva.

Perhaps the clearest example of the president’s tendency for boastful exaggeration was the “major trade deal⁸²” he announced with the United Kingdom. The president claimed the deal was “full and comprehensive,”⁸³ yet several essential details required further negotiation,⁸⁴ causing the BBC to describe it as “the bare bones of a narrow agreement.”⁸⁵ As another example, on July 2, the administration announced its second “fantastic,” “heavily one-sided”⁸⁶ trade dea—this one with Vietnam. But here again, it appeared that many of the particulars still needed to be worked out.⁸⁷ In fact, in the weeks after the deal’s announcement, no details were released, raising questions about whether an agreement was reached at all.⁸⁸

Part of the challenge many trading partners have is the administration’s inconsistencies and its willingness to use tariffs as a hammer for every nail. Take India, for instance. The Trump administration appears close to a trade deal with India, as evidenced by the fact that India did not receive a tariff letter announcing its tariff rate starting August 1.⁸⁹ But the president keeps talking about tariffs on pharmaceuticals,⁹⁰ which would hurt India’s exports to the United States more than most other countries.⁹¹ He has talked about new tariffs on the BRICS group of emerging economes, of which India is a part.⁹² And he has talked about tariffs on countries that do business with Russia, which India does.⁹³ Is India really close to a deal if a large percentage of its exports are still subject to tariffs imposed through a different mechanism? Or take, for example, Mexico, which has faced multiple tariff threats over the first six months,⁹⁴ each time reducing the incentive for Mexico City to negotiate a comprehensive deal with the Trump administration, since any deal will almost certainly be overtaken by a new tariff threat in the future.

The tariff threats, across-the-board tariffs, and country-specific reciprocal tariffs have not caused the world to respond as the Trump administration anticipated. The Trump team believed the world would offer concessions in exchange for tariff reductions.¹⁰⁸ The administration also expected it would be able to play world leaders against one another, dealing with each country bilaterally to maximize the leverage and size of the U.S. economy relative to other countries.

Yet, the tariff offers from most U. S. trading partners have been limited.¹⁰⁹ The administration has been left to tout “frameworks”¹¹⁰ or “the first phase”¹¹¹ of deals that, given President Trump’s history, are unlikely to ever result in more fulsome agreements. The “phase one” trade deal that the first Trump administration cemented with China, for example, never led to a more comprehensive agreement.¹¹² In the case of Vietnam¹¹³ and the United Kingdom, the deals that were reached would at best be described as preliminary and are in need of significantly more detailed negotiations to fully conclude. Not only is there no indication that the deals negotiated by the Trump administration will be put to Congress for ratification—a step that would cement their legal status and provide confidence in their long-term durability—but in the case of the U.K. deal, the only thing made public is a three-page fact-sheet, a far cry from the traditional trade agreement that includes dozens of detailed chapters, often many annexes, and ususually several side letters to confirm each sides’ understanding of key issues.¹¹⁴

In most instances, there seem to be no major concessions offerered—in part, because there is little incentive for world leaders to offer anything of consequence, not to mention the significant political risk of closely associating with the Trump administration. Canadian Prime Minister Mark Carney¹¹⁵ and Australian Prime Minister Anthony Albanese,¹¹⁶ for example, owe their electoral landslides at least in part to their willingness to publicly counter Trump’s aggression rather than appease him. The political motivation of foreign leaders to push back against the Trump administration’s tariffs is made stronger by the potential for the U.S. Supreme Court to rule, like multiple lower courts already have,¹¹⁷ that¹¹⁸ the president does not have the authority to impose tariffs using the IEEPA.

In truth, several countries seem more inclined to work together in opposition to the Trump administration’s tariffs than negotiate bilaterally with the United States. Since President Trump’s election in 2024, the European Union has finalized a trade deal¹¹⁹ with MERCOSUR, the South American trading bloc; India and the United Kingdom signed a “historic” trade deal;¹²⁰ the United Kingdom joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),¹²¹ and New Zealand has¹²² restarted free trade agreement talks with India.¹²³ In addition, China has announced new trade deals¹²⁴ with South Korea and Japan (two of the United States’ closest allies in Asia), and with ASEAN to promote more regional trade.¹²⁵ China is also touting itself as a champion of free trade¹²⁶ actively working with the European Union on semiconductors¹²⁷ and with Latin America¹²⁸ on trade more broadly. Moreover, China announced in June that it was removing all tariffs on imports from Africa,¹²⁹ making its market a far more attractive destination for African raw materials and other natural resources than the United States. Even the EU, long a champion of the World Trade Organization is openly considering what comes, broaching ideas such as a successor organization to manage global trade or joining CPTPP to create a nonaligned pact of free-trading nations.¹³⁰

The rest of the world has, in effect, demonstrated its frustration at 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 and the diplomatic and economic influence of the United States more broadly. Future U.S. trade negotiators will be hamstrung by agreements other governments have made absent the United States and, in some cases, specifically to contest the Trump administration’s vision of world trade. And this is to say nothing of the impact that changing attitudes toward the United States and China will have on future negotiations, as the United States’ traditional partners and allies begin to view the United States and China as equal adversaries to be played off one another.

Excluding its deal with the United Kingdom, none of the trade pacts negotiated by the Trump administration began with both countries viewing the discussions as mutually beneficial. Instead, each began in response to massive new tariffs imposed by the Trump administration, or the threat of new tariffs—sometimes made formally and sometimes via the president’s social media posts.

Unsurprisingly, most governments therefore appear to have engaged the Trump administration in trade negotiations intent on limiting the damage to their markets and offering little in terms of concrete, actionable changes to their policies. Most political leaders have tried to balance the threat of economic harm posed by Trump’s tariffs against the political, diplomatic, and precedential harm of appeasing the Trump administration’s hostile use of tariffs to extract concessions. And some, such as Canadian Prime Minister Carney, used the negotiations to justify politically challenging domestic actions such as revoking a planned digital service tax that was long an irritant for Canadian businesses and threatened to raise prices for Canadian consumers.¹³¹ Indeed, allowing the Trump administration to claim that Canada “caved”¹³² to the demands of President Trump, as the administration publicly touted, in exchange for better trade terms is exactly the sort of tactic that world leaders have developed over the last several months: That is, give the headline-chasing Trump administration the short-lived news story it wants in exchange for winning the less publicized but far more meaningful details of any agreement.

Foreign governments have largely determined that it is in their interest to see what the administration could extract in negotiations with others before deciding how to proceed.¹³³ If Vietnam can lower its tariff rate in exchange for, among other things, building a Trump golf course,¹³⁴ then why would another country offer a major concession that would dramatically reorient its economy? Why should a leader do something with longer-term political or economic consequences if the same result can be obtained by ordering more Boeing airplanes¹³⁵ or agreeing to purchase more U.S. agricultural exports, which both Vietnam and Indonesia apparently agreed to?¹³⁶ And why would a foreign government make a major concession in exchange for a reduction of U.S. tariffs that are at best imposed through emergency authority, and not subject to congressional approval, and at worst could be overturned by the U.S. Supreme Court in the months ahead?

It is thus unsurprising that the Trump administration announced that its 90-day pause on its reciprocal tariffs would be extended to August 1—three weeks past the original deadline.¹³⁷ It is indicative of two things: The administration clearly does not want to reinstate the massive country-specific tariffs that sent the bond market into chaos,¹³⁸ and other countries are unwilling to offer major concessions in exchange for a reduction in tariffs that could be overturned in the future by the U.S. courts. Since neither is likely to change in the coming weeks, it is entirely possible that the August 1 deadline will move again, despite the administration’s suggestions otherwise.¹³⁹

The Trump administration’s willingness to use export controls,¹⁴⁰ visas,¹⁴¹ and private sector sales¹⁴² as bargaining chips has set a lasting, negative precedent with long-term consequences. In the case of export controls, the president’s very public decision¹⁴³ to allow his negotiators to trade away protections meant to preserve the country’s core national security is particularly problematic. Previous administrations—of both parties—insisted that conversations with foreign governments around US export controls are strictly off the table,¹⁴⁴ that the United States does not trade its national security for a commercial benefit.

The Trump administration, however, has taken a different tact, effectively admitting that the stringent export controls it placed on exports to China between its “Liberation Day” tariff announcements and its meeting a few months later with Chinese officials in London were enacted for something other than U.S. national security interests. This is regrettable from a future negotiating perspective, as other countries will now insist on limits to export controls in future trade negotiations, ignoring affirmations of the national security need for specific controls.

It should be noted that the Trump administration has failed to expand trade negotiations in a way that would be beneficial. It continues to be predominantly focused on trade in goods, which—given the changes to the economy, the prevalence of services in modern commerce, the coming AI revolution, and the importance of digital services across markets—seems more anachronistic every day. While difficult to know exactly what is being discussed between the Trump administration negotiators and their counterparts abroad, there is no indication that the White House is approaching its negotiations with other countries in an effort to improve working conditions (in the United States or elsewhere), promote climate action, or protect the environment. It has thus expanded the scope of negotiations into unhelpful areas, while avoiding an expansion of traditional trade agreement topics into areas that would be broadly beneficial going forward.

Several foreign governments have reacted to the Trump’s administration’s actions by imposing retaliatory tariffs on U.S. exports,¹⁴⁵ with more threatened¹⁴⁶ if the administration moves forward with higher tariffs in the future because of their sector-specific investigations. Mexico,¹⁴⁷ for example, has warned of retaliation if the Trump administration maintains 50 percent tariffs on steel and aluminum imports. And the European Union is readying additional retaliatory tariffs¹⁴⁸ if it cannot work out a deal with the Trump administration to lower its tariff burden, noting recently that the 30 percent tariffs threatened by President Trump on its exports would “practically prohibit trade” between the United States and Europe.¹⁴⁹

However, a more detrimental backlash is occurring globally, as foreign consumers boycott products they see as symbols of the United States.¹⁵⁰ Early in the Trump administration’s tenure, Canadian grocery stores, for example, removed American liquor and wine¹⁵¹ from their shelves—not at the government’s request, but of their own volition. Wine exports to Canada have now fallen to a 20-year low.¹⁵² Consumers elsewhere are choosing to purchase agricultural products from somewhere other than the United States.¹⁵³ Seventy percent of Swedes,¹⁵⁴ for instance, have “refrained or are considering refraining from purchasing American products as a form of political protest.” In Germany, too,¹⁵⁵ 64 percent of consumers admitted to “preferring non-US products, if available.”¹⁵⁶

While difficult to quantify, this consumer-led reorientation away from the United States is potentially far larger and longer lasting than the impact of tariffs or other government-led reactions, as consumers find new brands to associate with and buying patterns change. Already, forward-looking indicators suggest a deterioration in U.S. exports, including plummeting new export orders¹⁵⁷ and declining contracts for ocean shipping containers¹⁵⁸ leaving U.S. ports. At the Port of Seattle, export volumes fell more than 10 percent in May¹⁵⁹ compared with May 2024. Similar export declines have been seen across America’s many ports,¹⁶⁰ including at the Port of Los Angeles, where exports have fallen every month since President Trump returned to office.¹⁶¹

The Trump administration has made clear that it intends to focus its trade and economic agenda on rebuilding American manufacturing, clearly stating in its 2025 trade strategy that “the United States must have an economy focused on production.”¹⁶² Yet the administration has failed to make a meaningful investment in U.S. manufacturing, is actively clawing back manufacturing¹⁶³ investments previously authorized, and has repealed several of the tax credits that were supporting the future of U.S. advanced manufacturing.¹⁶⁴

Like a Luddite who is bad at poker, the Trump administration has taken a successful bet made by the Biden administration in the future of American industry—a bet that was already paying off in the form of good-paying jobs and new competitiveness¹⁶⁵and folded, ceding the game to China and others in order to support industries of the past at the expense of those that will define the decades to come. The result is that since Trump took office, overall manufacturing employment has declined, with both fewer jobs available in the sector and a 15 percent increase in separations both from workers leaving and being laid off from their jobs.¹⁶⁶

The Trump administration’s actions have placed U.S. small businesses in a particularly difficult spot,¹⁶⁷ especially small and medium-sized manufacturers that form the backbone of the U.S. industrial base. American firms now face a triple whammy¹⁶⁸ of higher operating costs¹⁶⁹ as import costs rise¹⁷⁰ because of Trump’s tariffs; higher borrowing costs;¹⁷¹ and fewer export opportunities¹⁷² as foreign consumers look elsewhere and retaliatory tariffs reduce the export competitiveness of U.S. firms. Even if the administration changes course in the future, many of these burdens will persist, as broken trust¹⁷³ with trading partners will remain well into the future, and foreign consumer preferences for non-U.S. alternatives become more entrenched.

Despite arguing that foreign governments pay tariffs,¹⁷⁴ even calling for an external revenue service¹⁷⁵ to collect tariff revenue, the Trump administration has been forced to concede what economists,¹⁷⁶ business leaders,¹⁷⁷ and consumers¹⁷⁸ already knew: Americans pay for Trump’s tariffs.¹⁷⁹ Based on current tariff levels, the average American household can expect to pay an additional $2,800 annually due to Trump’s trade agenda.¹⁸⁰ The price of inputs, because of tariffs, has reached levels not seen since the height of the COVID-19 pandemic,¹⁸¹ leaving U.S. manufacturers at a significant disadvantage.

Goldman Sachs estimates that companies will pass on 70 percent of the direct cost of tariffs to consumers in the form of higher prices.¹⁸² And this was largely confirmed in the June Consumer Price Index, which showed tariffs starting to have an impact on inflation.¹⁸³

The administration has tried various schemes to blunt the price effects of its tariffs, including announcing exemptions on goods such as smartphones¹⁸⁴ and automobiles¹⁸⁵ (two sectors likely to be hit hard by high tariff rates) and suggesting that lower gas prices will offset the cost of tariffs.¹⁸⁶ Nevertheless, consumers are now seeing high prices as companies both large and small increase prices on everyday goods¹⁸⁷ because of the tariffs. Walmart,¹⁸⁸ for example, has reported that it has no choice but to pass some higher costs on to consumers—a statement that led to a strong rebuke from President Trump.¹⁸⁹

Already, the price of toys and games, which are primarily imported from China, have jumped at record levels.¹⁹⁰ Car insurance premiums are likely to rise as the cost of cars and car parts increases because of new tariffs.¹⁹¹ Health insurance rates have increased, as providers remain uncertain about the impact of existing tariffs, as well as the administration’s ongoing investigation into the importation of pharmaceuticals.¹⁹² And U.S. factory input costs continue to rise.¹⁹³ All told, the chance of a recession continues to be higher than necessary due to Trump’s tariffs—and will only grow if tariff rates are increased or expanded to more goods.¹⁹⁴

The business community requires certainty to make the long-term investments necessary to run a successful company and reorient global supplier networks. If the latter is the president’s goal, then the administration’s impulsive approach to trade is a major impediment to its success. 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.

In a recent comment letter¹⁹⁵ to the U.S. Department of Commerce, the pharmaceutical industry noted that it can cost $2 billion to build a new domestic manufacturing facility—and, importantly, take five to 10 years to bring a project to fruition. No company, however committed to a particular market, can make an investment decision of that magnitude without knowing what the rules will be well into the future.

For small and medium-sized manufacturers in the United States that rely¹⁹⁶ on imported materials or component parts from China, the idea that tariffs would go from 10 percent to 20 percent, to 54 percent, to 145 percent, and then back down to 30 percent within a few weeks makes investment decisions impossible. Companies engaged with the European market have faced a similar rollercoaster of potential tariff rates. Indeed, for many firms, the chaos of the Trump administration’s trade policy is an incentive to reduce exposure¹⁹⁷ to the U.S. market.

Unsurprisingly, companies across industries¹⁹⁸ have announced hiring and investment freezes, waiting for some level of certainty before determining how best to proceed. Foreign direct investment in particular is down considerably since Trump became president, ¹⁹⁹ as investors look to Europe and other places deemed more stable.²⁰⁰ Nor would it be surprising if multinational firms increasingly seek to isolate the United States from their development plans, as exposure to the United States becomes seen as a liability. The administration may claim that its tactics deliver a form of “strategic uncertainty”²⁰¹ that is helpful in negotiations, but that claim is dubious at best. It is, instead, an attempt to put a positive spin on the type of broad uncertainty that drives investors away and restricts the business investment needed to create and sustain jobs.

Any future economic agreement involving the United States will occur in an environment defined by active distrust²⁰² of the United States as a reliable partner. Previous trade agreements have included provisions related to verification and accountability, but the Trump administration’s tariffs and tariff threats, its reneging on previous agreements,²⁰³ and its unwillingness to distinguish between friend and foe mean that future agreements will likely be judged, in large part, on the assurances trading partners can extract from the United States.

Foreign governments, companies trading with the United States, and U.S. firms that rely on consistent trade rules to support imports and exports will look at the text of any future agreement closely, seeking to judge whether agreed-upon rules provide the level of certainty needed for them to trust the agreement’s staying power. Any provision that appears soft on accountability will likely be viewed as an open door to the type of perfidy demonstrated by the Trump administration. Therefore, foreign governments are likely to demand additional and novel assurances of the United States’ commitment to the agreement, which could limit the negotiating space (and time) for negotiators to focus on other, higher value, more substantive aims. 

In one of his first official trade policy acts, the Trump administration issued its official 2025 trade policy agenda in early March, just six weeks after the president’s innaguration²⁰⁴ It outlined three metrics it suggests be used to assess the success of a country’s trade policy: a declined trade deficit; an increased share of manufacturing as a percentage of a country’s overall gross domestic product (GDP); and an elevated median household income.

Through six months, the Trump administration has failed in all three measures. The trade deficit reached a record high earlier this year,²⁰⁵ as imports surged due to the threat of massive new tariffs. Manufacturing’s share of GDP declined,²⁰⁶ no doubt driven by higher operating costs because of costlier imports and a loss of export markets. And median household income—at least relative to other expenses—is certain to decline as the new tariff burden that the average American family faces increases.²⁰⁷ It should be noted that the U.S. trade deficit declined²⁰⁸ considerably in April, but not because of a surge of domestic production—in fact, U.S. factory production declined.²⁰⁹ Rather, Trump’s tariffs devastated imports, reducing them by 16 percent²¹⁰ in April, the largest monthly decline on record.²¹¹

The future of global trade remains very much in doubt. The Trump administration’s massive new tariffs have lowered global growth forecasts.²¹² The flow of goods coming and going from the United States is declining.²¹³ Meanwhile, U.S. consumers are paying more for everyday goods,²¹⁴ small businesses are struggling to survive,²¹⁵ and traditional allies are moving on without us.²¹⁶ Is this what greatness looks like?