Driven by aspects of his personality that make him peculiar among US presidents, Donald Trump’s stance towards international trade policy sticks out starkly. His most recent suggestion of implementing a 30% tariff on European Union imports from August 1st is seen as yet another ploy to leverage economic strength as a means to win trade-related advantages. With a significant amount of trade at stake, this move has shaken European leaders into action, as they denounce Trump’s move and plan counter tariffs on US products while negotiating a deal that could potentially revert to the trading conditions under President Biden.
President Trump’s persistent inclination to force tariffs on allies and opponents alike has been the subject of widespread criticism among leading economists. These professionals believe that his unique personality characteristics have led him to misconstrue tariffs as an effective tool of coercion and to misinterpret their impact on economic activity, as well as the motivations of international leaders. There are three specific traits that differentiate him from past US presidents.
Trump’s first defining trait is his unyielding belief in his own unparalleled intelligence and knowledge, irrespective of the topic at hand. He often asserts that he ‘never makes mistakes’ and touts his ‘extraordinarily high IQ’, claiming it is superior to those of past presidents or his political adversaries. This amplified sense of self has led him to overstate his capability to manipulate foreign leaders into agreeing with his demands through tariffs. For instance, on July 11th, he promised to impose a 30% tariff on EU goods to address ‘prolonged and substantial, trade deficits’, and threatened Canada with a 35% tariff intended to obstruct the influx of fentanyl into the US from its northern neighbor.
Mr. Trump has threatened other nations as well. In fact, he threatened Spain with an increased tariff following its prime minister’s rebuff of NATO’s latest defense spending goal. Despite his steadfast confidence in his ability to utilize tariffs as an effective bargaining instrument, his success has been dubious, to say the least. On April 25th, he professed that he could utilize tariffs to swiftly manipulate the leaders of as many as 200 countries into signing trade treaties greatly beneficial to the US.
Up until now, only the United Kingdom, China, and Vietnam have consented to sign new deals. However, none of these agreements incorporated changes with the potential to significantly shift the current balance of trade. Instead, they simply set the tariffs lower than the ones previously imposed by Trump – for instance, the Vietnam agreement specifies a 20% tariff, as opposed to the earlier 46%. Consequently, these pacts are not only burdensome for both parties involved, but they also fail in their purported objective of significantly reducing American imports or augmenting exports.
Another notable feature of President Trump’s personality is his lack of interest in comprehending abstract concepts, including functions of policy tools. This attitude leaves him susceptible to misunderstanding how import tariffs, essentially taxes enforced on goods imported into a nation, influence enterprises and consumers. Specifically, he derives immense pleasure from imposing import tariffs, as he erroneously believes these costs are borne by the businesses that ship goods to the US and not by American companies and consumers.
Trump’s ignorance related to the functionality of policy tools is also displayed in his inability to identify the inherent contradiction in his two main arguments concerning the supposed benefits of tariffs for the US. On one side, he proposes that the income generated from high tariffs would enable the US government to abolish income taxes altogether. If this were to happen, tariff rates would need to be both enduring and astronomically high – 100-percent or more – to replace the approximately $3 trillion currently generated by income taxes on an annual basis.
On the contrary, he claims that new factory jobs would ’emerge strongly’ across the US as consumers start avoiding overpriced imported goods in favor of domestically produced ones. These two goals are fundamentally – and seemingly obviously – conflicting. If tariff rates remain high enough to deter consumption of imported goods, leading to the revival of American manufacturing jobs, then tariff-generated income would plummet.
Contrarily, if he wishes to continue deriving substantial income through tariffs, Trump would need to negotiate deals that lower tariffs to a level – perhaps between 10 and 20% – where foreign businesses still consider their products competitive in the American market. Such a situation would largely negate the need for creating numerous new US manufacturing jobs. Therefore, attempting to simultaneously generate record revenue via tariffs and ‘reshore’ significant manufacturing employment is an unfeasible proposition.
The third and final distinguishing trait of President Trump is his elevated sense of distrust towards other people. This has led to his assumption that leaders of other nations are planning to exploit and weaken the US through what he terms as ‘unfair’ trade practices. Therefore, he believes he is justified in using tariffs to penalize nations he accuses of ‘cheating’ on international trade agreements – for instance, nations that maintain a persistent overall trade surplus with the US or a surplus in certain product categories, or nations enforcing standards, such as food safety norms, which US businesses are reluctant to comply with.
This facet of his personality also casts doubt on whether he’ll adhere to any new trade pact with the EU. No matter the provisional agreement, he is likely to soon deduce that the EU is seeking to exploit the US and counteract this perceived threat with additional tariffs. Given this characteristic of his personality, European leaders should perceive any agreement reached in 2025 as a brief pause in the dispute instead of a solid foundation for enduring peace in this tumultuous trade conflict.
Trump’s philosophy towards trade is shaped by his overconfidence, inadequate understanding of policy instruments, and suspicious disposition. Because of this, trading partners have become cautious while American industry faces instability. Keeping in mind his personality traits, European leaders ought to consider potential agreements reached in 2025 as temporary truces, rather than a long-term resolution to the ongoing trade war.
In conclusion, Trump’s unconventional approach to trade, driven by a unique blend of personality traits – including overconfidence, poor comprehension of policy methods, and a generally mistrustful nature – has resulted in tensions between the US and its trade partners. These characteristics have propelled Trump towards a trade policy that seems to overlook established economic and diplomatic conventions, while unsettling traditional alliances, turning friends into foes, and unraveling the very fabric of international trade.
Drawing from his personal traits, Trump’s approach to trade policy appears to prioritize short-term wins over long-term stability, causing considerable turmoil. From imposing exorbitant tariffs to regularly threatning trading partners, his methods differ greatly from conventional trade practices. Consequently, there is increased uncertainty, friction, and instability within international trade. Despite his claims, his policy results have been mixed, and his understanding of tariffs as a policy tool and their impacts remains questionable.
Finally, Trump’s unique personality, combined with his significantly different approach to trade, raises valid concerns about the future of international trade. Ultimately, the success or failure of his trade policies will heavily depend upon the dynamics prevailing between the involved countries, their leaders’ strategies, and future global economic conditions. For now, the trade partners, including the EU, can only brace for the challenges ahead, hoping for a balanced and less tumultuous trading environment.