One way Donald Trump is already imposing stereotypes on Americans is by suddenly making tariffs a major political topic. In response to a report in the Washington Post that President Trump intends to impose new 10% tariffs on many foreign goods entering the United States during the winter gap between the election and Inauguration Day. He answered as follows: He revealed that his actual plan would cover all foreign products. He then spent the first hours of his administration pledging to impose a 25% tariff on goods from Mexico and Canada by February 1st, and to increase the amount of tax and “other foreign trade-related” taxes he could collect. He advocated the establishment of an “External Revenue Service.” income. ” Suddenly, a subgenre of financial news has emerged in which bankers calmly allocate the likelihood of untold changes in supply chains and adjust their ratings accordingly, and executives at companies that rely on parts from overseas. appears and announces a special petition. “There’s a lot of anxiety on everyone’s part here,” Steven Senter, head of Kia Motors’ U.S. operations, told the Wall Street Journal. “In two words, stop.”
But while the new tariff system is much hyped, it is also less theorized. If the plan is to destroy the existing system in the belief that global free trade is harming American interests and workers, what is its replacement? Virtually no mainstream economist thinks universal tariffs are a good idea, so there is no off-the-shelf policy model to adopt. Complicating the situation, Trump’s nominee for Treasury secretary, Scott Bessent, is trying to reassure Wall Street that the president’s tariff threats are nothing more than a negotiating tactic. “My general view is that at the end of the day, he’s a free trader,” Bessent told the Financial Times this fall. “It’s been escalating from escalating.”
The man who has been Trump’s main mentor and trade interpreter since he was first elected in 2016, and who is primarily responsible for translating the president’s protectionist instincts into theory and practice. was a loquacious and intelligent 77-year-old Washington lawyer named Robert. Mr. Lighthizer is an American businessman in the deepest sense of the word, serving as U.S. trade representative during President Trump’s first term. At the time, Trump’s economic nationalism was more marginal within the Republican Party. At one point, as Lighthizer was renegotiating the North American Free Trade Agreement, Trump summoned him to the Oval Office. Ta. “Bob, everyone is against you,” President Trump said. Paul Ryan was calling him incessantly. The card Lighthizer had to play was ideological affinity. “Mr. President,” he said, “that’s because I’m the only one who sees this the way you do.”
One Friday afternoon in December, I visited Lighthizer on Palm Beach Island, a few miles from Mar-a-Lago. He now spends most of his time there, in an art deco apartment by the beach. He is currently at a stage in his life where masters in Washington are looking for protégés, including two finalists for Trump’s second term as U.S. trade representative, including Jamison Greer, who was ultimately selected for the role. He has enough disciples that any of their names could be candidates. His former aides. Lighthizer has been involved in economic policy since the late 1970s, when Bob Dole hired him as Republican staff director on the Senate Finance Committee. A few years later, he joined the Reagan administration as deputy U.S. trade representative. Gordon Hanson, an economist at the Harvard Kennedy School, told me, “No one understands trade agreements better than Bob, because he negotiated many of them.” When other Republicans called Trump to lobby the White House on trade, the president would say, “Call Lighthizer.” His approach to bureaucratic battles was to fill the conversations with detail. “I had (Greg) Abbott from Texas call me,” Lighthizer told me. “And of course he was smart and briefed and well prepared, but I knew the problem 10 times more than he did, so we never made any headway. Paul Ryan calls I’ll just keep talking as long as they want to talk.” (Mr. Abbott and Mr. Ryan did not respond to requests for comment.)
The view Mr. Lighthizer has reached after nearly half a century of working on the issue is that free trade is a fiction believed only by Americans and economists (and, intermittently, the British). “Free trade does not exist anywhere in the world,” he told me. “That’s not the case. And it’s not primarily because of the details.” Even in the absence of tariffs, countries are taking every step to protect domestic manufacturing. “It’s hard to explain this even to government officials,” Lighthizer said. “It’s also the banking system. It’s the labor regime, the environmental regime, the general regulations, the safety standards that build a market that prioritizes domestic production and expands exports.”
The way Lighthizer sees it, technicalities in trade deals can create entire industries in some parts of the world and bankrupt others. An example he likes to cite is NAFTA’s “Rules of Origin” chapter, which originally required 65 percent of a vehicle to be of North American origin to qualify for duty-free import. It was stipulated that But the “rules of origin” negotiated by the Clinton administration failed to account for new technology. As Mexico forged its own free trade agreements with companies in Asia and Europe, it gained access to more foreign parts, which eventually made up the majority of new cars. In the end, most of the duty-free cars that the United States imported from Mexico were produced overseas, often in East Asia. By President Trump’s first inauguration, nine of North America’s 11 newest auto factories were built in Mexico, and the U.S. auto industry had lost about 200,000 jobs. Millions of lives were affected, politics in the Midwest became increasingly fraught, and nothing was fatal. It was just the pen of a careless lawyer.
“Strategic decoupling” is a phrase Lighthizer uses to describe the changes to trade with China that he envisions during Trump’s second term. The modern international trading system was formally established in the 1990s when the United States joined NAFTA, the World Trade Organization was established, and China was granted most-favored-nation status. (Mr. Lighthizer was wary of the deal at the time. In 1997, when the Senate was considering granting most-favored-nation status to China, Mr. Lighthizer told the Times that he would pass the deal. As Lighthizer explained to me, what he wants to see is a “new trading system” in which the United States trades less favorably than it did in the 1990s. cooperation A series of new agreements with other democracies, wealthy or not, corrected those mistakes. He said the other countries will likely be unhappy about this and “will have to overcome retaliation,” but he believes that ultimately other countries will need to sell into our market and will renegotiate. He said he was
He was passionate about the vision. “We have the political momentum to do it,” Lighthizer said. “We benefit from trillions of dollars in trade deficits, which gives us tremendous leverage. “It’s not easy,” he admitted. “Now, there’s going to be a lot of resistance to that, because when everyone’s robbing banks, there’s not a lot of incentive to stop robbing banks, right?” Lighthizer said. “But you can create enough pressure where you can. And the wisest thing to do is go back to that sense of the benefits of trade and say, you do what you can, I’ll do what I can. Sho.”
If the second Trump administration marks a break with the post-Cold War free trade regime and the start of something new, one would hope that Mr. Lighthizer would be a part of it. He isn’t. He had no interest in reprising his old job as U.S. trade representative or the vague-sounding position of trade czar. According to Politico, Mr. Lighthizer would have been interested in the Treasury Secretary or Commerce Secretary position, but that position went to a Wall Street insider. The Treasury Department went to currency trader Scott Bessent, and the Commerce Secretary went to major cryptocurrency investor Howard Lutnick. Mr. Lighthizer did not seem particularly impressed with Mr. Trump’s economic team. He said bluntly, “I probably know more about taxes than anyone coming into this administration.”
In Mr. Lighthizer’s memoir, No Trade Is Free (2023), he describes why he views international economic competition with such suspicion. That’s because he grew up in the iron transportation town east of Cleveland, along the southern coast of Lake Erie. A beach not far from the Pennsylvania state line. His father, a doctor, is from Appalachia, Ohio, and his mother grew up in Kentucky, where she was the first in her family to attend college. Ashtabula’s economy depended on shipping iron ore from Minnesota via the Great Lakes. At a depot near Bridge Street, “hundreds of hopper cars” could be seen being filled with ore on their way to factories near Pittsburgh. Products made from this ore were particularly vulnerable to international competition, and Ashtabula’s population peaked in 1970. “We have this in my hometown, but it’s a town of a million people,” he told me. “Suddenly, people are told, ‘You’re stupid, your boss is bad, all this stuff, and it’s all trade policy.’ We messed them up in Washington, and it’s all their fault. I said it was my fault.”
By the 1970s, Lighthizer had also left Ashtabula, leaving the Catholic school for Georgetown and then pursuing a career as a conservative lawyer. The party, in his view, has always had a dual personality. “There have always been two parties in the Republican Party,” Lighthizer said. “There’s always been a party of the smart, the rich, the elites of the Northeast, and then there’s the party of Taft, the common-sense anti-elites of the Midwest.” When it comes to trade, the difference between the two is very clear. It was. His villains include President Bush. Mr. Lighthizer argues that his heroes go back to William McKinley, but also include Richard Nixon and Ronald Reagan, who raised tariffs in response to low-cost manufacturing from Asia. “Reagan was an extraordinary economic nationalist,” he said. He saved the automobile industry by placing restrictions on imports to Japan. ”
One reason Mr. Lighthizer may have been more tolerant of Mr. Trump than many of his contemporaries in Washington is that he sees the casino billionaire not as a rebellion against Republican politics, but as part of a persistent trend in Republican politics. Because I saw it as a manifestation. At the White House, Trump was given an old brown book he owned from the 1880s called “The Great Debate,” a collection of political arguments for and against tariffs. I expressed some skepticism that President Trump’s interest in this history goes far beyond humoring Lighthizer. “I would talk to him about this,” Lighthizer said. (The White House did not respond to requests for comment.)
But Mr. Lighthizer’s faction remained strong for much of his early career, especially in the 1990s, when important trade deals were struck. When I asked Mr. Lighthizer to explain how he sees the cumulative impact of these agreements, he said, “I hardly know where to start.” He pointed out that there were 14 years between 1960 and 1980 when the U.S. economy grew by more than 3%, and 14 years between 1980 and 2000. Since 2000, there have been five cases. At the same time, he continued, the process of moving operations overseas eroded America’s technological advantages. Part of the reason is overly idealistic trade agreements that have done more to protect their own industries than our own. We invented computer chips, of which, for example, we currently manufacture only 8% of them. “And there wasn’t the smallest one,” Lighthizer said. An Australian study recently found that American technology has declined compared to China in 57 out of 64 categories measured.
