Donald Trump’s tariff measures are like an earthquake that has upended the landscape of global trade. But this earthquake is caused by shifting tectonic plates – the long-standing difficulties that the American middle class has faced.
Like other developed countries, it has suffered from globalization and robotics, but, unlike other developed countries, US social policy has failed to help workers adapt to global change, says Richard Baldwin, professor of international economics at the IMD Business School in Lausanne.
This has fueled the economic frustration of the middle class and supported the election of a protectionist. But tariffs cannot solve social problems. They could be solved by greater redistribution, which would require higher taxes, but this is politically impossible, the expert concludes.
In short, middle-class discontent led to trade policy indecision during the first term of US President Barack Obama (who embraced free trade but imposed tariffs on Chinese tires; the Trans-Pacific Partnership, negotiated after years and intended to eliminate 18,000 tariffs on US goods and make US exports more competitive with Chinese ones, was never ratified and was then abandoned by Trump). During Trump’s first term, US indecision turned to hostility, and in Trump’s second term, it turned into something approaching isolationism.