Analyzing historical events reveals insights into the potential future of Donald Trump’s trade strategy during a possible second term. His first term saw significant tariffs imposed on imports from Canada, Mexico, and China, leading to retaliatory measures from the EU. Conflicts arose over steel, aluminum, and a Boeing-Airbus dispute, resulting in various tariffs on both sides. As tensions escalated, threats of new tariffs emerged, particularly targeting French goods, though these were ultimately suspended before the Biden administration took over.
Understanding Trump’s Trade Strategy
Examining historical events can provide valuable insights into future developments. This is especially relevant when considering the potential trajectory of Donald Trump’s second term in office. Many anticipate that he will revive and intensify the trade policies he enacted from 2017 to 2021. Just days after his inauguration, the former businessman wasted no time in implementing significant tariffs, levying a 25% tax on goods from Mexico and Canada, while imposing a 10% tariff on imports from China. Additionally, Trump indicated that soon, European products would also be subject to customs duties.
The Impact of Trump’s First Term on Global Trade
During his initial presidential term, following an unexpected victory over Hillary Clinton in the 2016 election, Trump took over a year before igniting a trade conflict with Europe and China. In alignment with his campaign pledges, he enacted a 25% tariff on steel and a 10% tariff on aluminum imports in 2018, citing national security concerns as justification.
This led to a swift response from the European Union, which retaliated by imposing tariffs on $2.8 billion worth of American goods. Key targets included iconic American products such as Harley Davidson motorcycles, orange juice, and bourbon, predominantly from states that supported Trump. In 2018, Trump also sent shockwaves through the European automotive industry, particularly in Germany, with threats of raising vehicle import tariffs to 25%, although this measure was never put into action.
The following year marked the beginning of a second wave of tariffs. In October 2019, the U.S. imposed additional tariffs on $7.5 billion worth of European products, stemming from a longstanding dispute between Boeing and Airbus over EU subsidies, with the World Trade Organization siding with the U.S. These tariffs included a 10% tax on commercial Airbus aircraft, which later increased to 15%, along with a 25% tariff on various agricultural items such as French wine, cheese, whiskey, olives, coffee, and pork sausages.
By 2020, the tables turned as Brussels received WTO approval to levy $4 billion in tariffs on American imports. Boeing aircraft faced a 15% tariff, while numerous agricultural, agri-food, and industrial goods were taxed at 25%. In December 2020, the U.S. responded with increased tariffs of 25% on still wines and cognacs, as well as a 15% tariff on aircraft spare parts.
In the final year of Trump’s first administration, he also threatened new tariffs targeting French products in retaliation for France’s GAFA tax, aimed at American tech giants. This warning specifically called out cosmetics and handbags, but ultimately, in January 2021, just before the transition to Joe Biden’s administration, the Trump administration chose to suspend these sanctions.