The US was for decades the “anchor” for global free trade. US did charge almost no tariffs on imports being the global free trade teacher of the World. Other countries charged tariffs on US goods, sometimes up to 90%. In addition, other countries imposed non-tariff trade barriers, rules and regulation of which eg the EU was a champion.
The re-introduction of tariffs on imports to the US was in the making since long. The consequences of open economic borders were felt terribly in some of the main economic sectors of the US: heavy industry, automotive, … millions of workers lost their jobs, previously florishing industrial regions of the US turned to poor and sad areas. A pariah class, the White Trash, developed on the sidelines of the US society, excluded from minority support under the Obama/Biden regime.
On the other side, a thriving service and high tech industry developed in the US, social media, banking and finance, communication and automation. US cars remained substandard, not sellable abroad and substituted by imported cars. The US economy grew, but not for large parts of the working class and their jobs and revenues were diverted to other countries. At the same time, these other countries, contrary to the US open border policy, charged huge tariffs on US products … the US balance of trade grew drastically negative with the rest of the World. Countries like China developed rapidly on the expenses of the US working class.
It is not Trump who started with the idea to change this miserable and dangerous situation for the US. Note that already his predecessor Biden introduced tariffs on other countries and products, such as in 2024 a new tariff of 100% on Chinese electric cars. It is just Trump who promised to the American people to change profoundly the tariff free system, to finish the job … and he was elected. Of course, the rest of the World is now condemning Trump in view of the losses for their industries, and, in particular, for the welfare states of Europe.
The stock markets will adjust, inflated stock prices which reached record highs in an unsustainable economic environment will balance to the appropriate level, the balances of payments, inflation and currencies will stabilize within the new economic environment. Economists know it and temporary losses will be compensated by long term gains.
Open borders have been proven to be wrong for trade, migration and even for financial flows, in particular, if only one party acts carefully and fairly and sticks to the rules of free trade.
The EU as a block has built up trade barriers, with import duties, regulations, special taxes, and new green and fairness standards. As consequence, Trump imposed a 20% tariff on all EU products. But Trump, as always, is open to negotiations. The EU should negotiate and not hate Trump for finishing what his predecessors started. The hysteric reaction of President Macron of France is contra-productive. The calm approach of the UK and Switzerland exemplary.
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