'Like trying to do surgery with a saxophone': Trade expert blasts Trump's 'damaging' tariffs
03 February
Republican presidential nominee and former U.S. President Donald Trump speaks during a rally, in Henderson, Nevada, U.S. October 31, 2024.
We speak with longtime trade policy expert Lori Wallach about President Donald Trump’s move to impose sweeping tariffs on imports from Mexico, Canada and China — the three largest trading partners of the United States. It has sent global stocks tumbling and raised fears of more inflation. Trump has imposed 25% tariffs on most imports from Canada and Mexico and an additional 10% on goods from China, set to take effect Tuesday (After our broadcast, Mexico announced Trump had paused the new tariffs on Mexico for a month). Energy resources from Canada will carry a lower 10% tariff. Canada and Mexico have vowed to enforce retaliatory tariffs on the U.S., upending decades of economic integration under free trade agreements. Trump has also threatened to impose tariffs on the European Union. Wallach says that while tariffs can be an effective tool as part of a larger economic package, Trump’s approach is likely to do more harm than good, even on his own stated goals of curbing immigration and drugs. “We certainly don’t want to hold on to the old, devastating neoliberal trade agenda, but the random tariffs on Mexico and Canada … aren’t going to get you the outcome you want,” says Wallach, director of the Rethink Trade program at the American Economic Liberties Project and board member of the Citizens Trade Campaign.
In a statement, the White House claimed the tariffs are needed to hold the three countries “accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country,” unquote.
Trump is also threatening new tariffs on the European Union.
On Sunday, Trump addressed reporters outside Joint Base Andrews.
PRESIDENT DONALD TRUMP: Mexico, we’ve had very good talks with them. And this is retaliatory. This is retaliatory to a certain extent. Millions of people flowed into our country through Mexico and Canada, and we’re not going to allow that.
AMY GOODMAN: Economists on the left and right have widely criticized Trump’s move, which is expected to raise consumer prices — the extremely conservative editorial page of The Wall Street Journal's headline, “The Dumbest Trade War in History.” The National Association of Manufacturers said they'll ultimately, quote, “bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk,” unquote.
But Trump defends the tariffs, saying he’s fulfilling his campaign promise. He was questioned by reporters last week.
REPORTER: You promised Americans to try to reduce costs. And so many of the products —
PRESIDENT DONALD TRUMP: Yeah.
REPORTER: — that would be tariffed, when they come into the country, the outgoing country is not paying the tariff. The buyers in the United States —
PRESIDENT DONALD TRUMP: Yeah.
REPORTER: — pay that, and then that’s passed on to consumers —
PRESIDENT DONALD TRUMP: Right.
REPORTER: — in most instances.
PRESIDENT DONALD TRUMP: Sometimes.
REPORTER: How would you expect to have prices come down if you have such a broad plan for tariffs? And what do you say to the voters who want to see you reduce everyday costs?
PRESIDENT DONALD TRUMP: Well, let me just tell you that I got elected for a lot of reasons. Number one was the border. Number two was inflation, because I had almost no inflation, and yet I charged hundreds of millions of dollars of tariffs to countries. And think of it: I had almost no inflation and took in $600 million of money from other countries. And tariffs don’t cause inflation. They cause success, and cause big success. And we’re going to have great success. There could be some temporary, short-term disruption, and people will understand that.
AMY GOODMAN: Meanwhile, Mexico and Canada responded to Trump’s tariffs by issuing retaliatory tariffs on U.S. goods. This is Mexican President Claudia Sheinbaum.
PRESIDENT CLAUDIA SHEINBAUM: [translated] Mexico does not want confrontation. We start from the collaboration between neighboring countries. Mexico not only does not want fentanyl to reach the United States, but we do not want it to reach anywhere. Therefore, if the United States wants to fight criminal groups and wants us to do it jointly, we must work in an integral way.
AMY GOODMAN: And this was the response Saturday from Canadian Prime Minister Justin Trudeau to Trump’s new tariffs.
PRIME MINISTER JUSTIN TRUDEAU: I want to speak directly to Americans, our closest friends and neighbors. This is a choice that, yes, will harm Canadians. But beyond that, it will have real consequences for you, the American people. As I have consistently said, tariffs against Canada will put your jobs at risk, potentially shutting down American auto assembly plants and other manufacturing facilities. They will raise costs for you, including food at the grocery store and gas at the pump. It will impede your access to an affordable supply of vital goods crucial for U.S. security, such as nickel, potash, uranium, steel and aluminum. They will violate the free trade agreement that the president and I, along with our Mexican partner, negotiated and signed a few years ago.
AMY GOODMAN: For more, we’re joined in Washington, D.C., by Lori Wallach, director of the Rethink Trade program at American Economic Liberties Project, board member of Citizens Trade Campaign, the U.S. national trade justice coalition of unions and environmental, consumer, faith, family, farm and other groups.
Lori, welcome back to Democracy Now! Respond to what’s supposedly going to be enacted tomorrow. Now, let’s be clear. That’s Tuesday. Trudeau said he’s tried to reach out to the president; he won’t return his calls. The president says he’s going to speak to both presidents, Mexico and Canadian prime minister and presidents today. What’s going on here?
LORI WALLACH: So, tariffs can be a very effective tool to achieve lots of goals. If you’re for enforceable labor standards in trade agreements to raise wages, you’re for tariffs. If you are for border carbon adjustment to promote low-carbon production, you’re for tariffs. Tariffs are part of the formula of the tools you use to try and reestablish our ability to make things here that we need and create good jobs for the two-thirds of Americans who don’t have a college degree, so making solar panels, medicine, EVs.
But slapping on tariffs on Mexico and Canada, ostensibly about migration and drug trafficking, is not just ineffective — I mean, it’s like trying to do surgery with a saxophone instead of a scalpel — but also is going to be damaging. It’s going to cause enormous disruption, but without any of the outcomes and goals that one might actually want to use a tariff to achieve to help working people or build our resilience.
AMY GOODMAN: What is Trump trying to accomplish here? Some have said — I mean, on the one hand, he’s been threatening China with tariffs, but he’s doing, he said, 10% on China, and with his allies, Mexico and Canada, 25%. Some suggest that maybe the fact that Elon Musk has a factory in Shanghai brought down the tariffs on China. Your thoughts?
LORI WALLACH: The reason probably for the 10% is that there are already around 20% tariffs on two-thirds of all of our trade with China still in place from 2018 during the first Trump term, and then President Biden raised tariffs on EVs, on solar and other things to 100% with respect to China. So this is 10% on top of the existing 20%. So, actually, now everything will have at least 10%, but a lot of stuff will have 30% or 100% coming from China.
But, you know, here’s the question. Again, tariffs, legitimate tool, but what is the purpose here? If you’re trying to fix the redone NAFTA, the so-called U.S.-Mexico-Canada Agreement, which was Trump’s redo of NAFTA, then there’s a built-in six-year renegotiation that basically starts now. If you can’t fix it, you get rid of the whole thing. But there’s a process to do that. You know, USMCA was supposed to bring down the NAFTA trade deficit and end job offshoring. Instead, since 2020, the trade deficit has doubled, and offshoring has continued, so that Trump trade negotiation clearly needs some fixing. But there’s a way to do that. It’s not the tariffs.
Or, if you’re trying to generally use tariffs to try and rebalance our chronic trade imbalance, which is promoted in deindustrialization and income inequality, well, then, you use a variety of tools together, including to make sure that the companies that have had record profits from this old system pay for the transition by having — making it easier to organize unions and doing anti-price-gouging policies, so companies don’t use their monopoly power to raise prices.
Even if you’re trying to stop the flow of fentanyl, bizarrely, if you actually read the executive order, there’s a loophole the president has authority, called the de minimis loophole — we’ve talked about it before — the president has existing authority to close. And they still allow informal entries of these 4 million packages a day in which the fentanyl is buried, which he could have fixed if he really was focusing on drugs. So, it is a very mysterious and potentially damaging state of affairs.
AMY GOODMAN: And in the case of fentanyl, I think in 2024 there were like 43 pounds of fentanyl that was seized at the American-Canadian border. I think more went the other way. I also want to turn to the UAW President Shawn Fain on tariffs. He wrote on social media, “The UAW supports aggressive tariff action to protect American manufacturing jobs as a good first step to undoing decades of anti-worker trade policy. We do not support using factory workers as pawns in a fight over immigration or drug policy,” he said. Lori Wallach, your response?
LORI WALLACH: So, I think UAW President Shawn Fain had it exactly right. And actually, in my long tweet thread about these tariffs, I cited him, because, again, as I started out, tariffs are a really powerful tool, and when used particularly in combination with things like investment policies to try and actually spur domestic production capacity, new factories, creating demand for American-made, high-wage, high-environmental-standards goods, by putting together a package of policies and keeping them in place — not just random tariff here, could go away tomorrow — you actually incentivize the kind of investment you could rebalance. We certainly don’t want to hold on to the old, devastating neoliberal trade agenda.
But the random tariffs on Mexico and Canada, compared to a strategic use of tariffs with a mix of other tools, are — the random tariffs aren’t going to get you the outcome you want, even on the fentanyl — again, closing the de minimis loophole, a thing a president has authority to do, stopping the ability of 4 million packages, mainly e-commerce packages, mainly from China, to come in uninspected, without the normal customs information. So, they closed half of this in this executive order. They said that stuff can’t slip in without paying tariffs anymore. OK. But then they allow the stuff to come in uninspected. And so, ostensibly, if you’re trying to stop fentanyl, probably more important than the “pay the tariff” is the “don’t sneak in the stuff uninspected.” But they didn’t do that. This is something they could actually fix tomorrow if they wanted to. The bigger use of trade policies to try and fix our mess, what they did, or may or may not impose tonight at midnight, doesn’t fit into an agenda of making things better for working people or the planet, not here, not anywhere.
AMY GOODMAN: And let’s talk about immigrants. AP cites a new study by Warwick McKibbin and Marcus Noland of the Peterson Institute for International Economics. The study found, quote, “For Mexico, a 25 percent tariff would be catastrophic. Moreover, the economic decline caused by the tariff could increase the incentives for Mexican immigrants to cross the border … into the US — directly contradicting another Trump administration priority.” Lori Wallach?
LORI WALLACH: Well, I mean, this is, again, the perverse irony. There was a Trump trade plan issued on January 20th that laid out in an orderly fashion a rational sense of how to do a new trade agenda. This is unrelated to that, because, for instance, one of the things that spurred the original wave of migration from Mexico to the United States was NAFTA, the North American Free Trade Agreement, which displaced millions of campesino peasant families off of their rural livelihoods by dumping subsidized U.S. corn into Mexico and suddenly destroying the livelihoods of millions of people, who first went to the border, to the low-wage maquiladora plants — couldn’t make a living there, couldn’t feed your family on $5 a day — and then used migration to try and come to make a living for themselves and their families, in a way forced by this economic displacement of the neoliberal trade agreements. And we saw that repeated with Central America Free Trade Agreement, an increased migration from Central America.
So, if we want to get to the root causes of the neoliberal economic policies imposed through these so-called trade agreements and junk them, yes, that has to happen. Is what 25% tariffs on Mexico and Canada, unrelated to any of those economic goals, going to help the situation versus make it worse? No. Are tariffs part of the solution? Yes. Is this use of tariffs going to help? No, it could make things much worse.
AMY GOODMAN: Lori Wallach, I want to thank you for being with us, director of the Rethink Trade program at the American Economic Liberties Project and a board member of the Citizens Trade Campaign.