As Alan Beattie has eloquently argued, we can’t really answer that question because what Trump actually does on trade will depend on how a myriad of internal court struggles play out. Various courtiers, consigliere, groupies, grifters, cronies, lobbyists, family members and foreign emissaries will clash at the foot of Trump’s Mar-a-Lago golf cart throne, and trade policy outcomes will be one of the prizes.

To quote notable trade expert Detective Jake Peralta of Brooklyn’s 99th precinct, “Cool. Cool cool cool.”

With that said, while we can’t say exactly what Trump will do once handed the reins of US trade policy, we can with some confidence list some of the things he seems to believe about it. In that spirit therefore, let us kiss our loved ones farewell, put our affairs in order, lift the signature toupee, and slide into the mind of the President-Elect.

What we Know: Beliefs

Belief One: The US has been a sucker

Core to Trump’s worldview on trade is a sense of grievance – the existing system has fostered conditions that allow other countries to take advantage of the US by selling more to Americans than they buy from them.

It may be hard to appreciate, sitting in any country that isn’t the United States, how the once and future leader of the wealthiest, most prosperous and powerful country in the history of human civilization manages to feel like the system the US was instrumental in designing has screwed it over. That’s largely irrelevant.

He believes it, he’s not about to be convinced otherwise by your well-footnoted article for the Peterson Institute for International Economics, and from the 20^th of January 2025 he again gets to run US trade policy.

While China is a strong focus of his ire in this regard, his sense of affronted grievance is much broader. From Japan to Europe and everywhere in between, Trump sees a victimised US operating in a system built by his soft-hearted and naïve predecessors.

President Trump literally (well, figuratively since it was ghost written) wrote the book on negotiating ‘deals’ and his tome makes it abundantly clear that he views any discussion of terms as an exercise in comparative power and leverage. For Trump, seeing a world where only a handful of states have made commitments to bind their tariffs at levels lower than those of the US makes no sense. The US is the gorilla in any room, why did it agree to give up all those bananas?

Once he’s in office we can fully expect Trump to attempt to redress the perceived imbalance by seeking concessions, both real and purely cosmetic. He feels aggrieved and will seek to both fix it, and prove he’s no one’s sucker.

‍Belief Two: Tariffs ain’t so bad

During and after the election there were a thousand explainers written to challenge, in great detail, Trump’s assertion that it is foreign countries that pay tariffs.

If you want to read a detailed breakdown of why the question of who actually ends up eating the cost of tariffs is ‘it depends’, ‘it’s complicated’, and ‘often kind of everyone’ then I recommend Sam Lowe’s excellent substack on the subject.

I was part of the push back too, but I think it’s clear that trump thinks tariffs are great irrespective of who ends up paying them. Look at it from his perspective.

• Even if you assume Americans pay 100% of all US tariffs – so what? Taxing someone for the unpatriotic crime of buying foreign made goods probably strikes him as more reasonable than taxing someone’s income, corporate revenue, inheritance, or capital gains.
• Changing the US tax code is a messy, complicated process involving Congress and navigating the Senate filibuster – and when you try people tend to ask annoying questions like how you’ll pay for it and how it aligns with your promises to slash the US deficit. By contrast, many experts believe he’ll be able to use executive authority under a combination of existing Acts to unilaterally move tariffs up and down as he sees fit.
• Sure, tariffs may make some politically visible products cheaper or damage some US firms but they’re micro-targetable and adjustable. If a tariff on a specific product is causing him headaches, he can just lower it again as easily as he raised it.

‍Belief Three: If you raise them, they will come a beggin’

Trump’s expectation is that if he denies (or threatens to deny) access to the US market to countries that sell into it and US companies reliant on importing foreign goods, both will have to come begging to him for waivers and exemptions like he’s the Godfather of a Sicilian crime family.  

He is not wrong.

US consumption is vast and lucrative. For many companies around the world, facing tariffs into the US would be very painful, but facing tariffs while your competitors do not would be unthinkable.

Similarly for US firms sourcing components from overseas, a 20% tariffs on intermediate goods would be very painful, but not nearly as painful as trying to compete with a rival US firm that managed to get their own imports put on an exemptions list.

No matter how distasteful they may find negotiating under duress, they’ll have to do it because they know their competitors will.

Taking a rather rosy view of the Trump Administration you could say this will allow them to negotiate deals and arrangements favourable to the United States by exploiting a vast pool of previously untapped leverage. Taking a rather more cynical view, you could note that it creates vast opportunities for personal enrichment and self-aggrandizement. I'll leave that one to your own judgement.

Belief Four: Trade leverage can be used for anything

Even before taking office, the President-Elect issued ultimatums and used them to open negotiations with Canada and Mexico - with the threat of tariffs as his cudgel.

What’s edifying about this opening gambitis his choice of targets: asylum seeker and illegal immigrant flows across the border, and illegal shipments of the drug fentanyl. Neither of these are trade issues in any traditional sense.

Instead, President-Elect Trump feels like he can use the leverage created by withdrawing access to US consumers to extract concessions on anything he likes. Moreover, at least in so far as opening a discussion he’s undoubtedly correct. Within hours of issuing his threat via Truth Social, diplomats from Mexico and Canada were on the phone to Florida arranging direct discussions at the leader level. At least in so far as starting a conversation, the cudgel worked.

Having seized for himself a tool (tariffs) that he can deploy at will, micro-target, and that has demonstrable success in forcing his counterparties to the negotiating table, we can expect him to deploy it widely and frequently. To a man who sees the world as a high stakes game of cards, control over the US tariff code is a licence to print (sorry) trump cards.

Belief Five: Rules are for other people

Without relitigating decades' of debate about his business practices and personal ethics, I think even Trump’s biggest fans would admit that he does not consider laws or even promises to be sacrosanct divine edict.

The way that he operates clearly signals that he believes laws, rules, norms and standards are just a system to be navigated – with violations considered through the lens of reward, risk and severity of direct potential consequences.

He does not believe that rules, and fidelity to them, are inherently virtuous or advantageous, and therefore does not prioritise compliance with them for its own sake.

This is significant in considering trade policy because almost every legal structure we’ve built since the second world war, from the World Trade Organization to free trade agreements like NAFTA (now USMCA) are held up almost entirely by a shared consensus that rules are fundamentally preferable to a power-politics free-for-all. To the extent that they have 'enforcement' measures, these exist largely to resolve disputes between parties about what properly implementing the rules means in practice, not to compel rules compliance on parties who no longer see their value.

In evaluating any potential course of action that runs contrary to the commitments of the United States, we can expect the Trump administration to take a very narrow view:

“If we do this, what will the immediate, direct consequences for us be?”  

They will consider the likely quantifiable, measurable risks and either entirely disregard or heavily discount more abstract notions about loss of faith in the US as a negotiating partner, damage to ‘the system’ and the international order.

Anyone expecting them to behave otherwise is deluding themselves. Trump has been operating this way for his entire life, with betrayals, double dealing and literal felonies as matters of public record – and the US public still twice elected him Leader of the Free World. He thinks what he’s doing works and he’s got the Air Force One pyjamas to prove it.

What we Don’t Know

While the above beliefs provide a useful guide to how he’s going to approach trade policy questions, they still leave a lot of uncertainty because they boil down to: “Trump thinks tariffs are a good tool to achieve his objectives” but those objectives are difficult to pin down.

What exactly is President-Elect Trump hoping to achieve through his tariff policy? He’s mentioned a lot of goals, and it’s not clear that even he has an internal ranking for them or quantifiable metrics by which to measure their success.

In some areas he may be willing to accept purely symbolic bending of the knee or practically inexecutable promises – in others he may want to see concrete actions and measurable results. We just don't know which and where.

He’s has repeatedly stated for example that he wants to bring manufacturing back to the United States. Except, we know that was kind of happening a bit already, and we also know that US manufacturing is increasingly capital and skills intensive. The dream of a high-school graduate wandering into a factory and collecting a high salary for forty-five years alongside every other able-bodied man in their small town is not something the US can get back to.

So what will he accept as a win here? A few more factories moving to Arizona? More parts of the automotive supply chain relocating from Mexico and Canada?

He’s clearly focused, at least rhetorically,on reducing the US trade deficit, but even with maximum leverage it’s not clear exactly what he’s picturing or what he’ll be satisfied with. Most countries do not directly control where their consumers and companies buy from, and so a negotiated commitment to increase imports from the US is either a purely theoretical promise, or a weaselly one to be delivered by sourcing bulk commodities like oil or liquid natural gas from the US. He may bludgeon some countries into further lowering their own tariffs, but that alone may not be enough to significantly alter the way US goods are flowing.

Is he willing to accept purely symbolic concessions and best effort commitments, thus spinning a story of success domestically – or is he going to insist on something genuinely altering to the dynamics of world trade? No one knows exactly and the answer may vary depending on who is in his ear, and frankly his mood and prejudices regarding the specific question at hand.  

Competition with China will clearly be a priority for the Trump administration, as it was in his first term and for President Biden – but what exactly will this mean? The Chinese economy is not on the same seemingly unstoppable trajectory it was in 2020, but remains a formidable economic power and a critical supplier for the US across a huge range of products and sectors.

• To what extent is the Trump administration prepared to drive the costs of everyday products on Walmart shelves upward?
• To what extent is the Trump administration prepared to look the other way as production partially or purely on paper moves out of China, attempting to sidestep US tariffs by finishing production in, or trans-shipping via countries like Vietnam or Cambodia?
• To what extent will the Trump administration grant waivers and flexibilities to US manufacturing firms currently reliant on intermediate goods and components from China, or to specific primary chemicals and rare earth minerals one simply can’t readily source from other places?
• To what extent will it weight the export competitiveness of US firms reliant on foreign goods over the desirability of bringing that component manufacturing back home? 

We don’t know.

We also have no idea how he’s going to reconcile the fundamental contradiction between his desire to raise revenue from tariffs and his dream of using them to bludgeon imports out of existence.

If tariffs are raising a lot of revenue then by definition that means imports are still going strong (otherwise what are you taxing?). If tariffs have killed imports, then they are not raising much revenue. Except in rare cases where a good is completely indispensable and irreplaceable, a 3% tariff counter-intuitively raises more revenue than a 300% tariff, but probably doesn’t drive all that much production back home (while a 300% tariff may drive production home but likely raises next to no revenue).

What will Trump prioritise, more money collected to potentially fund tax cuts and spending, or more pressure on firms to relocate stateside?  

What we also don’t know is how Trump will react to retaliation and push back. The US is going to be the bigger and stronger party in any tussle, but that doesn’t mean it’s impervious. The European Union and China for example have options that can cause the US real pain – and they will face both political and strategic pressure to use them.

Will the Trump administration accept this as a natural leverage-building response and enter into negotiations, or begin an escalating spiral of retaliation to retaliation to retaliation?

Contrary to middle school wisdom, sometimes punching the bully in the nose doesn’t get them to back off or rethink their life – sometimes it just means they come back swinging a bike chain.

Finally on this non-exhaustive list of known unknowns, we don’t know how the Trump administration will behave when, a few years from now, their policies have almost inevitably failed to live up to the rather grand promises made about them.

They’ll have a range of options:

• They could quietly move away from this idea and toward other fixations.
• They could simply claim victory, pointing to real and symbolic wins secured and trusting in the complexity and disputed nature of modern political reality to drown out any evidence to the contrary.
• They could double down on tariffs as a strategy, raising them higher and higher in the belief that beatings should continue until morale improves.
• They could expand the battlefront (and in fact, may do so much sooner) to push beyond simply tariffs and into quantitative restrictions (upper limits on how much the US will import), regulatory barriers, investment controls and so forth.

How specifically they’ll react is largely unknowable, depending almost certainly on the exact political topography the nation is standing atop when these issues arise.

Comforting thought, I know.

Conclusion

I fully appreciate that if you’re a supply chain manager, a trader across borders, a fan of the rules-based trading system or even just a price-sensitive consumer, the above probably didn’t spark joy.

It wasn’t meant to.

The world of trade is about to become significantly less predictable because the world’s largest economy has just elected a man who fundamentally does not believe in the desirability of rules that constrain him to ensure that predictability. That is where we are.

Planning for and engaging with how the Trump administration is going to use the trade settings of the United States to shape the world means navigating a significantly more uncertain world – and one which is, by design, more subject to the mercurial whims and internal court politics of a Trump White House.  

Understanding their beliefs and mindset will be critical but it's still going to be a wild ride.

Good luck out there.  

‍

--------------------------------------------------------------

‍

P.S Want more trade explained clearly?

I hope you enjoyed this piece and found it informative.

I hope you enjoyed this piece and found it informative.

If so, three brief reminders: 

• I train and run workshops for government officials, corporate officers and NGO staff all over the world on how to understand and think through these issues.
• I wrote a book which offers a voters guide to trade policy without all the jargon and legal texts.
• If you're a journalist looking to better understand these issues, you can reach out at any time for a chat and I won't demand you quote me.

‍

‍