Trump Says His Tariffs Will Address Unfair Global Trade. Is He Right?

President Trump has accused America’s trading partners of undermining the United States for decades, saying they have engaged in unfair trade practices to steal the country’s wealth and enrich their own economies.He has set his sights on not only adversaries like China, but also traditional allies like Canada and Europe. And he has complained about a number of factors, including high tariffs that other countries charge American products, and persistent trade deficits the United States has with foreign countries. Mr. Trump has promised to correct this situation on Wednesday, when he announces expansive tariffs on foreign products that he says will level the playing field.In some cases, there’s truth to the president’s claim that the United States offers its trading partners more favorable terms than it often gets in return. As a proponent of free markets, the United States has long been more open to trade than many countries globally.That has encouraged the United States to rely on imports of many critical goods, like semiconductors and pharmaceuticals, instead of manufacturing them itself. And some countries do have tough trade barriers to U.S. exports, or economic policies that distort global markets — particularly China, which has flooded the world with manufactured goods.Still, trade experts say that Mr. Trump’s claims include a heavy dose of exaggeration, as well as hypocrisy.For example, Mr. Trump has singled out high tariff rates that countries charge on certain U.S. exports including Europe’s tax on cars and India’s levy on motorcycles. But the United States also has high tariff rates that it charges on certain imports, such as a 25 percent fee on light trucks. And Mr. Trump has lumped in friendly allies like Canada, which have some limits to U.S. exports outside a few sectors, with nations like China, which have extensive trade barriers.The tariffs that Mr. Trump is rolling out now are also drastically raising trade barriers, potentially to a level beyond what other countries impose on the United States.According to calculations by The New York Times, the trade measures that Mr. Trump has introduced so far have more than tripled the estimated dollar value of tariffs that importers must pay to bring products into the United States compared with last year. And that’s before his new reciprocal tariffs and 25 percent auto levies go into effect this week.In his first term, Mr. Trump’s collective tariff actions on foreign metals, China and other products ended up doubling U.S. tariffs, but those changes took roughly two years to unfold, according to Daniel Anthony, the president of Trade Partnership Worldwide, a research firm.The president has dismissed any concerns about his approach, referring to his plan to impose reciprocal tariffs as “Liberation Day.”“They’re reciprocal — so whatever they charge us, we charge them, but we’re being nicer than they were,” he said on Monday.William Reinsch, a senior adviser at the Center for Strategic and International Studies, a Washington think tank, called the president’s claims about trade “a huge exaggeration.”Mr. Reinsch said that Mr. Trump’s idea that the United States gave the world a gift by opening its markets after World War II and was now locked in a permanent disparity on tariffs was “wrong historically” and “wrong factually.”“The unfairness that he rails on is not what he says it is,” he said.U.S. tariff rates are low, but not that lowAmerica’s tariffs are, on average, lower than many countries. But they are pretty comparable to other rich nations, which also tend to have low barriers to imports.Data from the World Trade Organization showed the United States had a trade-weighted average tariff rate of 2.2 percent in 2023, compared with 2.7 percent for the European Union, 1.9 percent in Japan, 3.4 percent for Canada, 3 percent for China and 1.7 percent for Switzerland.Some poorer countries do have higher rates. India’s trade-weighted average tariff rate is 12 percent, while Mexico’s is 3.9 percent and Vietnam’s is 5.1 percent.“U.S. tariff rates are somewhat lower than tariff rates in other countries,” said Ed Gresser, the vice president and director for trade and global markets at the Progressive Policy Institute, a think tank. “But vis-a-vis other rich countries, it’s not a lot.”Tariffs for specific products vary widely. The United States levies individual tariff rates on about 13,000 foreign products, according to Doug Irwin, a trade historian. The U.S. trades with almost 200 countries, each of which have set their own rates for different products.These rates were negotiated at the World Trade Organization or its predecessor, a treaty called the General Agreement on Tariffs and Trade. The tariff rates that countries charge one another on products often don’t match, because different countries had different priorities when they negotiated their levels.In general, most governments impose higher tariffs on products that they make domestically and want to protect, and lower tariffs on products that they don’t make and want to import.As a result, economists say that Mr. Trump’s idea of matching the tariffs that other countries set doesn’t necessarily make economic sense. Charging a higher tariff on products that America doesn’t make much of — like coffee, cobalt or bananas — would be self-defeating.“To say some other country has a higher tariff rate than we do and therefore ours should be higher is not good economic thinking,” Mr. Gresser said. “You have to think about what is the effect of the tariff on our economy.”“The basic approach to tariff policy should be, what makes economic sense for the United States, not what are some foreigners doing and we have to copy and match them,” he said.The U.S. also has high tariffs on protected industriesMr. Trump has often highlighted the high tariff rates that foreign countries charge on specific U.S. exports.For example, India charges a 50 percent tariff on imported motorcycles, a 60 percent tariff on automobiles and a 150 percent tariff on alcoholic beverages, the Office of the United States Trade Representative said in a report this week.The president has also seized on Canada’s dairy system, which charges a high tariff after a certain volume of imports is reached, a system known as a tariff-rate quota. According to U.S.T.R., goods imported from the United States above quota levels “are subject to prohibitively high tariffs,” like 245 percent for cheese and 298 percent for butter.Last week, Karoline Leavitt, the White House press secretary, also called out a 50 percent tariff that the European Union charges on American dairy and a 700 percent tariff that Japan charges on American rice.“This makes it virtually impossible for American products to be imported into these markets, and it has put a lot of Americans out of business and out of work over the past several decades,” she said. “So it’s time for reciprocity, and it’s time for a president to take historic change.”But the United States also has high tariffs on certain imports. The United States charges 350 percent tariffs on tobacco from many countries, 260 percent tariffs on Irish butter substitutes and 197 percent tariffs on Chinese stainless steel kitchenware.The United States also has relatively high tariffs on peanuts, apparel, footwear and sugar. These are legacies of industries Washington wanted to protect at some point, though some, like clothing makers, have since largely vanished from the United States.“We’ve got some peaks,” Mr. Reinsch said. “They’ve got some peaks.”“We complain about the Canadians, correctly, but they could complain about us, correctly,” he said.Tariffs on China make more sense than on CanadaOne area that many trade analysts agree with Mr. Trump is his stance on China. They say the country has wielded huge subsidies and other economic practices that give its industries a competitive advantage. Beijing’s approach has fueled the growth of a $1 trillion-plus trade surplus — meaning China exports far more than it imports. That surplus exceeds that of any other country this century.The Office of the United States Trade Representative said this week that China had used industrial planning and other policies to target sectors like robotics, aerospace, new energy vehicles and biopharmaceuticals for “domination.” Those programs had allowed Chinese firms to win market share at the expense of foreign competitors.The low price that Chinese goods are sold for worldwide has made it hard for U.S. factories making semiconductors, electric vehicles, solar panels, steel and other products to stay in business. And America’s trade deficit has widened as U.S. consumers snap up cheap Chinese products instead of goods manufactured elsewhere.But some critics say that Mr. Trump has been too focused on penalizing close allies of the United States, such as Canada, rather than working with them to put pressure on China to reform its trade practices. Since coming into office, Mr. Trump has placed an additional 25 percent tariff on many products from Canada, but only an additional 20 percent tariff on goods from China.Robert D. Atkinson, the president of the Information Technology & Innovation Foundation, a Washington think tank, said that Mr. Trump’s indiscriminate application of tariffs against allies and adversaries “makes no sense.”“Canada is an ally that mostly plays by the rules,” he said. “China is an adversary relying on unfair trade practices to overtake America in advanced technology industries.”