Politicization of U.S. trade policy

The world was prepared for some turmoil under the new Trump administration, but it was likely not fully prepared for the fast and furious speed of Trump’s actions. He had said that he would continue his trade fairness actions against China, and everyone knew that it was only a matter of time before Trump started paying more attention to Europe. Both China and Europe have heavily subsidized industries and high tariffs to protect them against U.S. goods. Trump’s goal is fair trade at any cost and that the U.S. has had enough. Trump has been in the White House for less than three months and the global trade tensions have already exploded into full wars, at least against China, and trade negotiations with more or less every trading partner in the world.

The politicization of U.S. trade policy can be described as the increasing influence of domestic political considerations such as partisan divides, interest groups and electoral pressures on trade decisions that were traditionally guided by economic principles. This trend has become more pronounced in recent decades as trade policy has become a central issue in debates over globalization, national security, and economic inequality. Trump is taking the politicization to the next level as he justifies the U.S. actions by stating that the U.S. has been treated unfairly for decades and he will rectify this.

Trump is a nationalist and a businessman and his key focus is to make decisions that are good for the American people and workers. Some call it protectionism or even isolationism, but in reality, China and Europe in particular, have been using the U.S. for too long and it is time for a change. The effort to protect American industries and jobs has a higher priority than free trade. In particular China is a concern for the U.S. The U.S. has imposed export controls on technology sectors to limit China’s access to critical innovations. Trump’s team is openly anti-China, in particular Vance, Rubio and Navarro, and they should be. China has been using the U.S for decades and they have no good intension. The U.S. will need to stay strong against continued Chinese adversary actions and be increasingly forceful against their global foe. Europe should join the U.S. in the actions against China, but they are too dependent on China as an export market and will likely not follow the U.S. aggressive path.

China’s economy is built on a system that needs exports and to some extend distorts free trade. Determined to grow at any cost, China has been overproducing everything. It started with roads and rail lines, then moved to apartments and mansions, and not it is cars, refrigerators and semiconductors. These goods are dumped on foreign markets, including the U.S. Since the early 2000s, China has leveraged cheap labor and lax environmental standards to flood the world with low-cost goods, displacing American industries. More than 3.5 million U.S. jobs have been lost to China. Intellectual property theft and other unfair practices have allowed China to advance from low-quality goods to high-tech manufacturing in areas like computing, robotics and semiconductors. China has been able to do this with government subsidies, currency manipulation, monopolies and restrictions on foreign companies operating in China. China produces nearly one-third of the world’s goods. Exports make up about 20% of China’s GDP.

China’s overproduction and subsidies have left its economy vulnerable. Youth unemployment is high, municipalities are drowning in debt and the housing market is in crisis. Despite this, China is unwilling to slow down production and the growth target is about 5%, showing that central planning overrides market signals and profit incentives. The new trade war will have an impact on China. After all, America buys more from China than any other country in the world, except Mexico, to the tune of about $440 billion in 2024. The U.S. export to China was $143 billion in 2024. The overall U.S. export volume has decreased over time, it was 14% of the GDP in 2014, and in 2024 American exports were only 11% of the GDP.

There are some obvious implications of politicization of tariffs such as increased uncertainty and global tension as businesses face unpredictability. Domestically, while protectionist measures may benefit some industries, they often lead to higher consumer prices and retaliatory tariffs from trading partners. Under Trump, the politicization of U.S. trade is likely to continue, especially as China is not backing down. Future administrations will need to balance economic interest with political realities, shaping the role of the U.S. in the global trade system. The development might also be part of the global trend of de-globalization and the creation of two blocs, one ties to the U.S. and one tied to China. This is already in motion with the BRICS trading group expanding, reshoring and nearshoring of manufacturing, regionalization of trade and declining global trade growth. Trump is a supporter of continued de-globalization so this trend will likely accelerate during his presidency.