Why Trump’s trade wins keep shocking the ‘experts’

If America is in the midst of a trade war, the question we have to ask is: Are we tired of winning yet?

President “Donald Trump reaps $50bn tariff haul as world ‘chickens out,’” reads the Financial Times headline.

“Only China and Canada have retaliated against US president’s tariff war,” its subhead adds.

“In the Trump-dominated global economy, the US gets plenty but gives nothing in return,” reads a rueful post on X from Axios — another publication with an upmarket readership — promoting an article titled, “Trump trade deals prove access to the US still matters above all else.”

Populist publications have a different take on Trump’s spate of trade victories.

“Trump’s trade deal bloc — let’s call it The Free World — now encompasses 57% of global GDP . . . 40% of total global trade in goods,” and “18% of the world’s population,” according to Breitbart’s John Carney.

The president has only been in office six months, and his tariffs haven’t even been in place that long, but already the results are undeniable.

At a time when there otherwise seems to be no end to federal deficits, Trump’s trade policy put the federal government in the black for the month of June, with a $27 billion surplus — and, as it happens, about $27 billion in tariff revenue.

It’s one thing that Trump so often surprises political opponents who underestimate him at election time and can’t understand the root of his appeal.

What’s more remarkable is Trump seems to defy the very laws of economics — or rather, the law as laid down by economists.

Other social sciences have lately lost credibility thanks to a “republication crisis” that shows how the results reported in leading journals of psychology and other fields all too often fail to be repeated when experiments are conducted anew and data are re-examined.

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Will the economics profession — whose mainstream is fervently in favor of free trade and is convinced tariffs are madness — face a similar reckoning for getting this test wrong?

Trump can do things the economists say can’t be done because he approaches trade the way he conducts his real-estate business: It’s a negotiation, and leverage is what counts.

Precisely because the United States has such an enormous trade deficit with the rest of the world — amounting to more than $918 billion in 2024 — other nations depend on access to our market as an outlet for their goods.

The size and wealth of the American consumer base is unmatchable, and countries that get cut off from it can’t easily make up the difference by selling more goods and services somewhere else.

Whole industries in Europe and Asia would collapse without access to the American consumer.

Trump is willing to give them access — for a price.

Instead of using punitive tariffs to exclude foreign goods altogether, Trump is willing to strike a deal with anyone to allow goods to be sold in America at a price that makes the trade worthwhile for Americans and foreign companies alike.

The hitch: The deal must be on terms favorable for American workers and industry.

The president’s arrangement with the European Union levies a 15% tariff on most EU goods — but that’s peanuts compared to the 30% Trump was threatening if Europe didn’t cooperate.

The deal calls for new European investments of $600 billion in America, as well as for EU members to buy more energy and military equipment from us.

The 15% tariff is higher than what European producers were paying before Trump returned to the White House — high enough that American producers will get some protective advantage, but not so high that foreign companies won’t be able to compete.

That’s crucial because competition is what keeps prices down for American consumers.

Foreign firms can’t easily “pass on” a tax on their goods — which is what a tariff is — to the Americans who buy their products when those same Americans can choose from domestic producers instead.

The modest protection a 15% tariff affords gives more investors at home a reason to put their capital into American companies — which is good for our workforce and consumers alike.

It means more jobs and more goods; more money in Americans’ pockets and more stock on the shelves, which keeps prices down.

There’s risk in all this, but the upside opportunity is much greater, as entrepreneurs here and abroad recognize.

For the Europeans, it’s a no-brainer: The American market is so rife with profit possibilities that a 15% access fee is a very modest cost of doing business.

American businesses should recognize their opportunity as well — they’re native to a market the entire world is desperate to be in, and they should use that advantage to the fullest, investing at home and making the sales that foreign firms are so eager to make here.

In this trade war, all Americans are winning — except, perhaps, the overeducated prisoners of the Ivory Tower.

Daniel McCarthy is the editor of Modern Age: A Conservative Review and editor-at-large of The American Conservative.