“Tariff Man 2” or the comeback of the “tariff man”. This is not a Marvel Studios blockbuster, but a remake of a political scenario that has already been tested: the election of Donald Trump as the head of the United States for a second term. Economically, his victory would once again be under the sign of the trade war, as suggested by the nickname he gave himself.
This crucial election is far from being decided, but considering Joe Biden’s weakness in the polls and Donald Trump’s probable nomination as the Republican candidate, the hypothesis of his return to the White House is conceivable. Starting to think about what a second term could look like may be useful.
Beyond the political implications for the future of American democracy, three years after the assault on the Capitol, and geopolitical implications for global stability, a victory for Donald Trump would, economically speaking, be a case of déjà vu, but worse. The main proposal at this stage is to impose a 10% tariff on all products imported into the United States. This would triple the current average applied rate.
The measures taken by Donald Trump during his first term, most of which have not been challenged by his successor, are nothing compared to what would happen in the event of victory. This time, the trade war would be generalized with serious repercussions for both the United States and the global economy as a whole.
No bounce in the curves
The same causes producing the same effects, the Trumpian logic has little chance of leading to better results than those achieved through the policy pursued from 2018 onward. His frenzy of increasing tariffs, supposedly to protect the American economy, has caused damage without addressing the problems it claimed to solve. Tripling the stakes will not make the recipe work better.
Increasing tariffs is supposed to achieve three objectives. It is meant to reduce the abyssal trade deficit of the United States, to encourage hiring through industrial reshoring, and to restore balance in the face of a global economic organization in which the United States would be the main victim.
As for the trade balance, the failure is evident: under Donald Trump’s presidency, the deficit increased by a quarter! The growth of jobs in the industry is real, but not spectacular and is part of a long-term trend of reindustrialization initiated under Barack Obama. The Trump parenthesis has not caused any rebound in the statistical curves.
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