The Time Is Definitely Right for Trump’s Reciprocal Zero-for-Zero Tariff Plan
When Pres. Donald Trump took office in 2017, he promised free, fair, and reciprocal trade, including deals to open markets to U.S. exports and bring more investment to the United States.
Unfortunately, his chief trade advisors, Director of Trade and Manufacturing Policy Peter Navarro, and U.S. Trade Representative Robert Lighthizer, overlooked the “free” part of Trump’s pledge.
Instead of opening foreign markets to U.S. exports, their policies closed them. Instead of working to bring more job-creating investment to the United States, they characterized foreign investment as conquest by purchase and a transfer of wealth. Lighthizer even endorsed a capital access fee — aka a tax — to discourage foreign investment.
Their tariff schemes were an undisputed failure. Lighthizer’s Section 301 tariffs on China alone have cost American manufacturers and families $235 billion and counting. That’s the equivalent of nearly $1,800 for every American household. Rather than changing its unfair practices as Lighthizer expected, China instead imposed retaliatory tariffs on U.S. goods, as pointed out in Trump’s 2019 Economic Report of the President.
Americans will soon learn whether Trump is ready to try something different. As he wrote in The Art of the Deal, “I also try to protect myself by being flexible. I never get too attached to one deal or one approach.” Let’s hope so.
During his first term, Trump proposed a smarter approach than the one pursued by Lighthizer: reciprocal zero-tariff trade deals to eliminate unfair foreign trade barriers and boost U.S. manufacturing. Early in his first term, Trump specifically called for dropping all barriers to trade between the United States and the European Union.
Trump adviser Larry Kudlow repeatedly reiterated that Trump saw tariff threats as a negotiating tool to get to zero tariffs, in contrast to some of his advisors who pushed tariffs as an end goal.
There is ample precedent in U.S. history for Trump’s reciprocal zero-tariff approach. Our country’s first commercial treaties, with France and Great Britain, called for equality, reciprocity, and the avoidance of burdensome preferences.
In the early 1800s, Congress endorsed agreements based on general and reciprocal abolition of all discriminating duties. In 1890, the McKinley Tariff Act eliminated tariffs on goods like sugar and tea. Congress hoped that Pres. William McKinley could use the threat of reinstating them to secure reciprocal tariff cuts from our trading partners.
Following the Great Depression, U.S. trade negotiations were governed by a succession of reciprocal trade agreement acts. The resulting deals significantly reduced foreign trade barriers. The average world tariff for countries participating in the General Agreement on Tariffs and Trade coming out of World War II was 22 percent. As of 2017, the average world tariff rate was just 2.6 percent, a remarkable 88 percent cut.
Trump embracing reciprocal zero-tariff trade deals would be a welcome change from the Biden administration’s trade policies. Agreements pursued by Biden explicitly failed to seek tariff cuts. The Biden administration even called this a feature of its approach, not a bug. Instead, it pursued international regulations designed to promote equity, women’s empowerment, and inclusivity. Trump’s zero-tariff deals would reject this model of complex, bloated agreements governing noneconomic issues.
Trump often refers to McKinley’s tariff policies. According to McKinley, “Most desirable from every standpoint of national interest and patriotism is the effort to extend our foreign commerce.”
Trump can leave a lasting legacy by pursuing reciprocal zero-for-zero trade deals that extend our commerce abroad and combat high prices at home.
Bryan Riley is the director of the Free Trade Initiative at the National Taxpayers Union.
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