I don't know how President Trump's tariff plans will work out.
He is certain to get enormous pushback from many directions--our trading partners, the massive number of U.S.businesses that import foreign goods, Democrats, free trade Republicans and all of the mainstream media.
The stock market yesterday was obviously pushing back as well. Of course, the market abhors uncertainty and nobody is certain about what comes next after the tariffs are fully in place.
![]() |
Source: https://www.reuters.com/markets/us/ |
Donald Trump is usually thinking long term when he embarks on an issue like tariffs. He is also always taking into account his negotiating position on whatever his end game is. You can be sure that he is thinking about what deals can be struck considering the leverage he has. More on that below.
I do know that Trump is correct when he states that a long line of politicians--Democrats and Republicans alike--sold out the United States and were largely responsible for hollowing out good paying middle class jobs as result of our trade policies over the last 50 years,
For example, China's economic power grew over the years with its one-sided trade views. China effectively closed off imports of U.S. goods for decades. To do business and get access to its huge consumer market the Chinese government forced many U.S. companies to commit to manufacturing sites there, in addition to requiring them to provide their most valuable intellectual properties in order to have an entry into the Chinese market. What intellectual property China did not obtain legally they stole illegally.
At the same time, China began flooding the U.S. with imported products fueled by cheap labor and lax environmental and labor standards.
Republicans and Democrats alike did nothing about the inequity or the illegality. Our elected representatives literally gave away substantial portions of our domestic economy by thinking short-term rather than long-term. They had the advantage of having the most attractive market in the world and yet they gave it away and did not get anything in return.
China grew and got richer with each passing year. At the same time, the United States saw millions of high paying middle class manufacturing jobs lost. This change also caused a further worsening of the social and economic divide between the college-educated service class and the high school educated worker class.
Consider an umbrella manufacturer in the United States. It pays its employees and also pays the employer share of FICA. It must pay for their unemployment insurance. Under Obamacare, it must provide healthcare. It pays property taxes on the plant property and personal property taxes on the equipment. It is subject to an immense number of regulations from the EPA to OSHA. Then, if there are any profits left, it must pay a corporate income tax.
A single umbrella manufactured in the United States carries a staggering amount of costs that support why the United States is the United States. Schools, hospitals, the social safety net and all the rest.
What about the umbrella that was manufactured in China, Vietnam or someplace else and imported to the United States?
It provides nothing to support the United States other than a lower price. There is no contribution at all to pay for Social Security, Medicare, Medicaid, food stamps, schools or anything else, not to mention the defense security of the market that makes it such a stable, lucrative market.
We have the greatest consumer market in the world but the large number of countries that are taking advantage of that market are not contributing to it in any way.
Decades of political neglect created this situation.
Only one man really stood up and questioned the wisdom and fairness of it all. That man was Donald J. Trump in 2016.
In fact, Trump was talking about this very issue as far back as 1988 on the Oprah show.
![]() |
Source: https://www.indiatoday.in/world/us-news/story/id-make-our-allies-pay-trumps-1988-interview-with-oprah-winfrey-resurfaces-amid-tariffs-glbs-2703724-2025-04-04 |
In 2024 the United States had a trade deficit with the rest of the world of $918 BILLION.
That was a 17% increase (from $785 billion) compared to 2023.
The goods trade deficit by itself was $1.2 TRILLION offset by a services trade surplus of $293 billion.
To put this in further perspective, when Trump first ran for office in 2016 and made trade and tariffs an issue, the U.S. trade deficit was only $500 billion. Today it is almost double that amount despite the efforts Trump made on this issue in his first term.
Here are the countries that the United States had the largest trade deficits with in 2024.
China is responsible for almost one-third of the total U.S. trade deficit.
30 years ago (pre-NAFTA), the United States had a $5 billion trade surplus with Mexico that has become a $157 billion deficit today. The U.S had a $23 billion trade deficit with China in 1993 that has ballooned to a $270 billion deficit.
Trump's tariffs on China (which were continued by the Biden administration) have had an effect on reducing the trade deficit with that country. When Trump took office in 2017 the trade deficit with China was $375 billion.
However, a lot of what the United States imported from China has just been moved to countries such as Vietnam and Thailand.
For example, the United States had a trade deficit with Vietnam of $38 billion which has increased by almost three-fold since 2017. Thailand's trade deficit with the United States has doubled from $20 billion to $42 billion.
The United States had a $236 billion trade deficit with the EU in 2024. It was $151 billion in 2017.
Closer to home, the trade deficit of Mexico has increased from $71 billion to $157 billion since 2017. Canada's trade deficit has also surged over three-fold from $18 billion to $55 billion in that time.
The United States imported around 8 million passenger vehicles alone last year. That is about half of all U.S. vehicles sales.
Combined with engines and parts, U.S. automotive imports were almost half a trillion dollars.
![]() |
Source: https://www.the-independent.com/politics/trump-motor-car-auto-tariff-impact-world-global-b2723371.html |
United States automotive exports were less than a third of total imports---$144 billion.
Incredibly, the largest U.S. exporter of automotive vehicles is BMW--a German company which has a manufacturing plant in Spartanburg, S.C.
![]() |
Source: https://www.cbtnews.com/bmw-leads-u-s-auto-exports-outpacing-domestic-brands/#:~:text=BMW%20leads%20U.S.%20auto%20exports%2C%20outpacing%20domestic%20brands |
That is higher than GM, Ford, Stellantis and Tesla.
Looking at the numbers it is clear that if the United States is going to get to a place with free and fair global trade it needs to look at the tariff situation globally.
It should also be evident in looking at the numbers that the United States has a lot more leverage in a trade war scenario than our trading partners who are benefiting by almost $1 trillion per year.
Trump understands the big picture. He also understands the long game. Trump also understands that to win you have to fight and take calculated risks. Of course, it is easier to do that if you have less to lose than the other guy.
On this issue the United States has a lot less to lose than anyone else.
Trump indicates that every trading partner has already called inquiring what kind of deal can be stuck to allow them to continue to access the United States market without the new tariff schedule.
Leading up to all of this we have also seen trillions of dollars of new business investments that have been announced as companies have become more interested in investing in the United States due to the threat of tariffs.
We will undoubtedly see some short term pain as the markets attempt to adapt and adjust to Trump's tariff strategy.
Will Trump be able to withstand the heat?
It goes without saying that no other politician would have had the courage to even attempt to do what Trump has done.
All I know for sure is that if Trump can't take the heat on this issue no one can.