Latest news with #ReciprocalTradeAgreementsActof1934
Yahoo
26-04-2025
- Business
- Yahoo
Reciprocity done wrong
Core to President Donald Trump's view of global trade is the notion of 'reciprocity' — that the United States should do to other countries' exports what they do to ours. The idea, which Trump has embraced for decades, has a certain seductive simplicity: Isn't it only fair that 'we' charge 'them' what 'they' charge 'us,' and that if 'they' want relatively free access to 'our' market, then 'we' should have the same in 'theirs'? Alas, reciprocity is not that simple — at least not how the current administration implements it. Indeed, the concept of reciprocity has been central to the modern global trading system, starting with the Reciprocal Trade Agreements Act of 1934 and the creation of the General Agreements on Tariffs and Trade in 1947 and continuing today in bilateral and regional free trade agreements, including Trump's own U.S.-Mexico-Canada Agreement. Yet, his personal version of reciprocity is something very different, and it's a catastrophically bad idea for practical, economic and geopolitical reasons — some of which the Trump administration itself has now admitted. In response to the president's April 2 'Liberation Day' proposal of tariffs as high as 49%, global markets fluctuated wildly. Less than a week later, Trump announced a 90-day suspension on tariffs exceeding 10%. He says he's willing to negotiate new trade deals during this pause, but their details — and final U.S. tariff rates — are unclear. In reality, however, the best outcome for the U.S. economy would be restoring much of the status quo of existing reciprocal trade pacts — a status quo that both Trump and former President Joe Biden wrongly abandoned. Here's why. Trump's reciprocal tariff system suffers from an unavoidable tension between accuracy and speed. Reciprocity as Trump describes it would apply a different tariff rate for every imported product from every country, based on both that country's restrictions on the U.S. version of these goods and the United States' own tariff and nontariff measures already in place. For example, the United States would apply a 'reciprocal' tariff on pickup trucks from Germany that accounted for not only German restrictions on American truck imports (including the European Union's 10% tariff) but also the United States' existing restrictions on German trucks (including our 25% tariff). Enacting such a system, however, would be exceedingly difficult. For starters, there are more than 13,000 different products in the current U.S. tariff schedule, so applying a reciprocal tariff to all 186 member countries in the World Customs Organization would require more than 2.5 million different tariffs — an exponential increase over the current system and one that would demand vast government resources to create and administer. One trade lawyer recently told The New York Times that managing these new tariff lists would alone be 'a herculean task' for U.S. Customs and Border Patrol, especially as countries change their policies, supply chains shift in response to the new reciprocal tariff regime or bad actors work to evade it. The government would also need to give the private sector time to adapt to and comply with the new system before it's activated. Currently, companies and customs brokers only pay close attention to where imported products are made for a small handful of products that get special duty rates, such as those falling under U.S. trade agreements or subject to various restrictions. All other shipments require no such efforts, as the tariff rate will be the same regardless. Under a new reciprocal system, on the other hand, these and other customs rules and procedures — some taking months to document — would matter not for a few products and countries but for every single thing entering the United States, no matter its origin or complexity. That's trillions of dollars-worth of goods each year imported by tens of thousands of U.S. companies. It would take them, their agents and their foreign suppliers months, if not longer, to ensure they're following the new rules and paying the proper tariff rates. Calculating the appropriate U.S. reciprocal tariff would be a similarly herculean task. First, the government would need to define and quantify all the foreign barriers supposedly blocking U.S. exports and then convert them all into a single 'tariff equivalent' for the country and product at issue. This includes relatively simple policies like tariffs and quotas, but also many domestic government policies with highly uncertain and indirect trade effects. Government subsidies, regulations, intellectual property rules, Europe's value-added taxes and other domestic policies can have indirect trade effects. Even the metric system could be a nontariff barrier where foreign regulations require its use (e.g., on speedometers). It would take years for U.S. government economists and lawyers to distill all these effects into a final tariff number for every country. The same issues would apply to U.S. trade barriers, which an accurate reciprocal system must consider. The United States has low average tariffs but many high ones on politically sensitive products like sugar, dairy products, textiles and apparel, footwear, and pickup trucks. Washington also employs many nontariff measures to impede foreign competition, including subsidies, quotas, 'Buy American' restrictions, domestic shipping restrictions and regulatory protectionism like the FDA's near-blockade on baby formula. The United States is also one of the world's biggest users of 'trade remedy' measures, such as antidumping duties and today applies more than 700 of these restrictions on mainly manufactured goods like steel and chemicals. According to the independent Global Trade Alert, which monitors nations' trade liberalization and protectionist policies, the United States has implemented the most 'harmful' trade interventions — tariffs, nontariff barriers, subsidies, etc. — of any nation since late 2008. Any other approach to 'reciprocity' could move faster but would inevitably produce a system disconnected from economic reality, omitting certain products and countries or setting new U.S. tariff rates that exceed those needed to equalize trade treatment between two countries. This result not only would mean greater economic pain for the American consumers and companies forced to pay the tariffs and greater uneasiness from investors about the U.S. government's competence, but would also dissolve the tariffs' justification, i.e., that 'fairness' demands U.S. tariffs mirror foreign trade barriers. The latter flaw, in turn, would undermine the tariffs' supposed goal of negotiating lower barriers to U.S. exports abroad: high, 'spitballed' tariffs are sure to alienate foreign governments — prodding them to see 'reciprocity' as just a bad-faith excuse for protectionism — and make them less likely to engage in future talks. In choosing between accuracy and speed, the Trump administration chose the latter. Unveiled on April 2, the Trump administration's reciprocal tariff regime included both a 10% global tariff and even higher tariffs based not on an actual assessment of a particular country's trade barriers or U.S. trade barriers but simply the nation's overall trade surplus with the United States. The U.S. trade representative admitted that it examined only overall balances because 'individually computing the trade deficit effects of tens of thousands of tariff, regulatory, tax and other policies in each country is complex, if not impossible.' But few, if any, economists consider the shortcut calculation legitimate. Trade balances, economists explained, were a terrible proxy for unfair trade practices, and the tariff rates presented were unrealistic at best. Final 'reciprocal' rates were often far higher than any reasonable estimate of the foreign countries' barriers. Tariffs were carelessly slapped on uninhabited islands and U.S. military bases. Nations considered free trade exemplars and partners were given the same tariff rate as notorious trade scofflaws. Small, poor nations ended up with some of the highest tariffs for the trade-crime of simply being too small or poor to buy much American stuff. And U.S. trade barriers were ignored entirely. Many economists further explained that the calculation used to assign the tariffs suffered from several basic errors, and that — even granting the administration's flawed approach — a proper calculation would generate tariffs four times smaller than what Trump's team got. The backlash even extended to the economists the Trump administration itself cited to justify its tariff calculations, with many of them openly disagreeing with both the process and results. As one put it, 'There's not a lot of trained economists I know of, including myself, who would argue that trade imbalances are an important metric for policymaking. Yet the people who are setting policy have decided it's a really important metric.' Nevertheless, the practical problems with a reciprocal tariff system — even the administration's over-simplified one — go beyond its form. For starters, varying U.S. tariff rates on the same goods from different countries would encourage companies and governments to circumvent the highest levies, adding even more pressure on customs enforcement along the way. Companies could, for example, reroute their products' supply chains to locate final assembly in countries that now face lower U.S. tariffs. Or they could adjust a product's input sourcing, so that it legally originates in a lower-tariff place. Or they'll find other legal loopholes — and illegal ones too — to continue shipping goods to the United States at the lowest possible cost. We saw exactly these moves in response to previous U.S. tariffs on steel, aluminum and certain Chinese goods. Once the measures were imposed, multinational corporations got to work finding ways around them. Thus, for example, U.S. tariffs on Chinese imports proved ineffective in blocking out Chinese content because companies found creative (mostly legal) ways to still get those goods in the country. Logistics professionals proved similarly nimble when the pandemic and other disasters hit, quickly rerouting goods and supply chains to keep trade flowing. A system with widely varying tariff rates across dozens of countries is sure to do the same, turning U.S. trade policy and enforcement into a game of global whack-a-mole as private firms work to evade high tariffs and U.S. officials respond to said evasion with additional tariffs. Tariff evasion is as old as the republic itself, and — as we've learned quite well with our domestic tax system — smart lawyers, accountants and other professionals make a killing (for them and their clients) exploiting regulatory complexity. The reciprocal tariff system will be complexity on steroids. There are also more fundamental problems with Trump's reciprocal vision, regardless of its design. First, it requires the United States to apply high tariffs on products that we don't make for reasons that have nothing to do with trade or economic policy. Due to climate and geography, for example, the United States produces relatively little coffee, imports a vast quantities, and — to the delight of caffeine addicts everywhere — has applied a zero tariff on imports of green coffee beans from all countries in the world. Under Trump's proposed system, however, coffee from large exporters Vietnam and Indonesia would have faced 45% and 32% tariffs, respectively, solely because those nations ran large trade surpluses with the United States. Such tariffs would not encourage domestic coffee production or boost U.S. coffee exports, yet they would harm American coffee roasters and consumers. Plenty of other food and beverage products, along with specialty or name-brand manufactured goods, are made only by specific countries and companies and would suffer the same fate. Furthermore, a reciprocal system that automatically matches U.S. tariffs to foreign trade barriers outsources U.S. trade policymaking to other governments. If officials in Tokyo, for example, put high restrictions on U.S. goods, reciprocity demands we do the same on Japanese goods, regardless of our tariffs' effects on American companies and consumers or their consistency with other U.S. government objectives. Indeed, given that around half of all U.S. imports are manufacturing inputs like steel, reciprocal tariffs could raise American manufacturers' costs and in turn reduce their output and export competitiveness — precisely the opposite of what the reciprocal system was allegedly supposed to do. In general, the United States should remain free to improve its economy without the need to wait for other countries to do likewise. Regardless of whether you think the United States needs higher or lower tariffs, the decision should be based on what's best for most Americans and the economy as a whole, not what some random government official in some random country decides (often for political, not economic, reasons). That approach has worked well for the United States for centuries, and abandoning it is particularly nonsensical when urged by 'America First' proponents who decry — sometimes rightly — 'globalist' policies that cede U.S. policymaking and sovereignty to foreign powers and international organizations. Finally, the Trump administration's reciprocal tariffs ignore that the traditional model of reciprocity has successfully eliminated foreign barriers to U.S. goods and services and increased U.S. exports — precisely what Trump says he's trying to achieve. Under this longstanding model, a government agrees to lower most of its trade barriers in exchange for another government doing the same, with both seeking an overall balance of concessions — not a line-by-line mirror image — to allow for different carveouts that reflect each nation's political sensitivities. Following extensive negotiations involving multiple domestic stakeholders (business, labor, legislatures, etc.), the governments lock in their new market access terms via a comprehensive agreement. The United States today has 14 of these bilateral and regional free trade agreements with 20 different countries, and each eliminates not only the vast majority of partner countries' tariffs (typically more than 98%) but also many nontariff barriers to U.S. goods, services and investment. As a result of these deals, U.S. exports to partner countries have increased faster than U.S. exports to the rest of the world. By 2023, 47% of U.S. goods exports went to places committed to accepting exports from the United States duty-free. American companies and consumers, meanwhile, have gained from improved access to imports from these same places. And both American and foreign investors have gained from the certainty that — unlike the executive actions Trump has enacted — a trade agreement hardwired into law provides. Overall, studies have repeatedly shown that U.S. trade agreements have generated small but significant improvements in the American economy, boosting gross domestic product, manufacturing output, inflation-adjusted wages and total employment for both college-educated workers and those with only a high school degree. And all these gains were achieved without new and costly tariffs and trade wars. Indeed, the sad irony of our current reciprocal tariff experiment is that several of the most prominent targets of Trump's tariffs — Japan (24%), Vietnam (46%), Malaysia (24%), Taiwan (32%), and Indonesia (32%) — are currently members of or applicants to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, as is the U.K. (10%). Like all trade agreements, the CPTPP reduces the vast majority of member countries' barriers to other parties' exports. But Trump abandoned the deal on his first day in office in 2017. If he'd instead championed it, tariffs on almost all of the member countries' products would today be at zero. Given these facts and the partnership's goal of countering China's influence in the Asia Pacific, Trump's abandonment of the deal is in retrospect a colossal mistake. Past U.S. free trade agreements and the reciprocity model on which they're based weren't perfect — they are, after all, political creatures and suffer from the kinds of practical, economic and legal flaws that government 'sausage-making' inevitably produces. Real weaknesses aside, old-school reciprocal trade deals successfully reduced foreign trade barriers and increased U.S. exports — and did so without the costly trade wars, heightened geopolitical tensions and vast market uncertainty we're seeing today. Those harms, in fact, were just what the traditional reciprocal system sought to avoid — harms that resulted from decades of tit-for-tat tariff actions a century ago. Returning to that system may unfortunately require relearning those lessons the hard way today. Scott Lincicome is the Cato Institute's vice president of general economics and its Herbert A. Stiefel Center for Trade Policy Studies.
Miami Herald
04-04-2025
- Business
- Miami Herald
Can Congress stop Trump's tariffs? What to know after ‘Liberation Day' levies
In an unprecedented move, President Donald Trump issued sweeping tariffs on goods from most of the world, sending stocks tumbling, throwing foreign leaders into retaliation mode and leaving some wondering whether Congress can step in. During an April 2 White House address, Trump announced a 10% baseline tariff on all imports to the United States. He slapped even higher tariffs on dozens of trading partners, including a 20% levy on the European Union and a 34% levy on China. 'Our country and its taxpayers have been ripped off for more than 50 years, but it is not going to happen anymore,' the president said, claiming that his new tariffs will boost American manufacturing and reduce the national debt. Trump justified his actions by stating the tariffs are reciprocal — meaning they are in response to tariffs imposed on the U.S. by other countries. However, the administration calculated rates based not on countries' tariffs, but based on America's trade deficit with them, resulting in arbitrarily high rates, according to the Tax Foundation, a nonpartisan nonprofit. Now — after polls have shown most Americans disapprove of Trump's tariff agenda and as fears of recession rise — some are asking: Can Congress do anything about it? Lawmakers indeed have several options to remove Trump's tariffs — but whether or not they will use the tools available is an open question, experts said. Who has the power to tariff? Article 1 of the U.S. Constitution grants Congress the power to institute and collect duties and taxes. 'But, through a number of actions, Congress has ceded much of that power to the President,' Christopher Cooper, professor of political science at Western Carolina University, told McClatchy News. For example, the Reciprocal Trade Agreements Act of 1934 — passed during the Great Depression — authorized the president to negotiate trade agreements with the purpose of reducing tariffs and strengthening international trade. But, most of the laws that delegate tariff authority to the president were passed during the 1970s, Sarah Binder, a professor of political science at George Washington University, told McClatchy News. Of relevance is the International Emergency Economic Powers Act (IEEPA) of 1977, which allowed the president to regulate transactions after declaring a 'national emergency.' 'The delegation regarding national security needs was broad, but motivated by beliefs about needs in case of a war,' Robert Gulotty, a political science professor at the University of Chicago, who has written a book on tariffs, told McClatchy News. 'They could not have imagined a president would use emergency authority to bypass Congress and impose tariffs on the entire world,' David Karol, a professor of government at the University of Maryland, told McClatchy News. What Congress can do under existing law If it wanted to, Congress could put an end to Trump's tariff policy simply by using existing laws, though it would require large majorities in both houses, experts said. This is because, in issuing his latest round of tariffs, Trump cited his authority under the IEEPA and the National Emergencies Act — enacted in 1976. Both of these laws stipulate that Congress can pass a joint resolution ending a president's declared national emergency, from which he derives the authority to unilaterally impose tariffs. However, in order for it to pass, the resolution would need a veto-proof majority — namely, two-thirds of both the Senate and the House. Due to this high hurdle, no joint resolution ending a national emergency has ever been enacted without the president's approval, according to the Congressional Research Service. The most recent attempt to terminate a national emergency came just days ago, when the Senate, with the help of four Republicans, voted 51-48 to revoke Trump's authority to impose tariffs on Canada. What Congress can do with new legislation Congress could also pass new legislation to claw back its tariff powers, a method that is already being attempted. On April 3, a bipartisan group of senators — including Iowa GOP Sen. Chuck Grassley — proposed a bill that would amend the Trade Act of 1974, which gave some tariff authority to the president. Specifically it would require Congress to approve of any new tariffs within 60 days, otherwise they would expire after this deadline. 'So rather than going through the process of trying to end an emergency, the bill provides a generic procedure for blocking tariffs directly,' Binder said. However, given Trump would likely veto the legislation, Congress would again need two-thirds majorities in both chambers for it to pass, Hartley said. So far, a few Republicans — North Carolina Sen. Thom Tillis and Nebraska Rep. Don Bacon — have publicly signaled they would consider voting for Grassley's bill, according to NBC News. 'I like congressional review … In trade, it's a good example,' Tillis said. 'I'll support Grassley if it gets a vote.' But, for it to stand a chance at passing, the bill would need far more Republican support — which is unlikely, experts said. 'The important question is whether a significant number of Congressional Republicans are willing to break with Trump on tariffs or anything else,' Karol said. 'If they are, they have ways to address and reverse his actions. But given Republican voters' loyalty to him, we haven't seen GOP legislators willing to cross him in sufficient numbers.'
Bloomberg
14-02-2025
- Business
- Bloomberg
What Are the Reciprocal Tariffs Trump Is Promising?
After promising to unleash ' the big one,' President Donald Trump signed a measure Feb. 13 directing his administration to propose a round of so-called reciprocal tariffs that could remodel America's trading relationship with the world. If exports from a multitude of countries to the world's biggest economy end up being taxed more heavily, there's a risk of higher inflation in the US and slower economic activity everywhere else. Howard Lutnick, Trump's nominee to lead the Commerce Department, said the proposals could be ready by the start of April. The term 'reciprocal,' when used in the context of trade, usually refers to measures taken by both parties to ensure fairness in bilateral commerce. In recent decades, that has typically meant lowering trade barriers. In the US, the Reciprocal Trade Agreements Act of 1934 marked the end of an era of American protectionism and allowed the US and partner countries to negotiate lower tariffs on each others' goods.
Yahoo
10-02-2025
- Business
- Yahoo
Opinion - Trump's tariffs wars and aid shutdowns are foolish and immoral
About 95 years ago, the Smoot-Hawley Tariff Act aimed to protect American industries by imposing record tariffs on imported goods. Despite warnings from economists, President Herbert Hoover plowed ahead, triggering swift retaliations from major trading partners. U.S. exports plummeted, global trade shrank and the Great Depression deepened, worsening global economic instability, contributing to turmoil that would later fuel World War II. It was a disaster. Recognizing its failure, the U.S. reversed course with the Reciprocal Trade Agreements Act of 1934, promoting international trade instead of protectionism. The whole episode serves as a textbook example of how trade wars backfire, choking commerce and harming economies rather than helping them. But President Trump doesn't seem to know this, and so he's threatening a brutal tariff war with America's democratic neighbors (as well as with China — less indefensible) while also abandoning the world's most vulnerable by shutting down USAID and halting nearly all foreign aid. It is a master class in how to be both stupid and immoral at the same time. The decision to impose 25 percent tariffs on Canada and Mexico has been suspended for a month after those countries threatened counter-tariffs and offered some concessions to Trump's demands. Let's hope that Trump pockets this fake win and does not return to an attitude that violates existing free trade agreements and would harm U.S. consumers. Trump's justifications for the tariffs range from the absurd to the incoherent. He initially framed them as a way to combat fentanyl trafficking, a scourge that has devastated American communities. Yet Canada plays almost no role in the fentanyl crisis, and Mexico had already taken significant steps to curb trafficking. The real effect of these tariffs will be higher consumer prices, disrupted supply chains and job losses. Retaliatory tariffs would further squeeze American exporters. And for what? The U.S. runs a relatively balanced trade relationship with Canada and Mexico. In 2023, the trade relationship with Canada amounted to $441 billion in exports versus imports of $482 billion; in 2022, it totaled with Mexico exports of $362 billion versus imports of $493 billion. For context, in Trump's first term he placed tariffs on Canadian lumber. This, together with tariffs on aluminum and steel, was estimated to cost the average U.S. family at least $300 per year. The current threatened tariffs could cost 10 times that much. Meanwhile, if Trump's tariffs are merely foolish, his move to halt nearly all foreign aid and decision to shut down USAID is also immoral. Foreign aid — less than 1 percent of the federal budget — serves as a strategic instrument of soft power, fostering diplomatic goodwill, economic ties and geopolitical stability. By investing in education, health care and infrastructure in developing nations, donor countries create long-term alliances, enhance their global influence and mitigate security risks that arise from instability and poverty, which can also drive migration. Aid strengthens economic partnerships, ensuring favorable trade relations and access to emerging markets, making it a tool of enlightened self-interest. It is also a version of charity toward countries that are less fortunate due to twists of history. Moreover, former colonial powers have a moral duty to address historical injustices by supporting nations they once exploited. While some of the foreign aid — to Israel and Egypt, for example — is military, the component that goes through the USAID organization is purely for societal development. Thus, for example, Armenia, which is trying to stabilize its educational and public institutions, receives various funds from USAID — including for the American University of Armenia, which is a major source of social development. Keeping Armenia advancing toward democracy in the combustible South Caucasus is a U.S. geopolitical interest. This is the outfit that Elon Musk has puzzlingly called 'a criminal organization.' Musk has said the suspension of its programs will be permanent, which would mean the trashing of programs like these: USAID supported country-led efforts to combat the HIV/AIDS epidemic in over 50 countries, providing treatment and prevention services to millions. The Malaria Vaccine Development Program, now halted, aimed to reduce child mortality by developing effective malaria vaccines, particularly in sub-Saharan Africa. The Feed the Future Initiative focused on reducing poverty and under-nutrition by promoting agricultural development and improved nutrition. USAID's Office of Food for Peace addressed emergency food needs arising from natural disasters and emergencies. The Borlaug Higher Education Research and Development Program aimed to train individuals and strengthen institutions in developing countries to promote innovation in agriculture. Through the organization HEARTH, USAID aimed to promote conservation of threatened landscapes and enhance community well-being by partnering with the private sector to align business goals with development objectives. To such calamities we can add domestic ones: Trump muses about killing the Federal Emergency Management Agency, about which he signed an executive order for a 'full-scale review.' FEMA provides most of the aid to states like Florida that are being pummeled by hurricanes like never before due to global warming, which Trump continues to deny. All of this madness will lead to increased famine, disease, suffering and economic instability, while handing geopolitical influence to China and Russia — who are not sitting still, and are investing huge efforts to establish influence in the developing world. The U.S. is a global leader whose policies shape the fate of millions and, once upon a time, even aimed to inspire. It is stunningly reckless for the Trump administration to kneecap America's economy and eviscerate soft power built over decades, handing a massive win to the world's autocracies. At some point Americans must ask: Is this the leadership we want? The coming 21 months are a teachable moment. Dan Perry is the former Cairo-based Middle East editor and London-based Europe-Africa editor of the Associated Press, the former chairman of the Foreign Press Association in Jerusalem and the author of two books. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
10-02-2025
- Business
- The Hill
Trump's tariffs wars and aid shutdowns are foolish and immoral
About 95 years ago, the Smoot-Hawley Tariff Act aimed to protect American industries by imposing record tariffs on imported goods. Despite warnings from economists, President Herbert Hoover plowed ahead, triggering swift retaliations from major trading partners. U.S. exports plummeted, global trade shrank and the Great Depression deepened, worsening global economic instability, contributing to turmoil that would later fuel World War II. It was a disaster. Recognizing its failure, the U.S. reversed course with the Reciprocal Trade Agreements Act of 1934, promoting international trade instead of protectionism. The whole episode serves as a textbook example of how trade wars backfire, choking commerce and harming economies rather than helping them. But President Trump doesn't seem to know this, and so he's threatening a brutal tariff war with America's democratic neighbors (as well as with China — less indefensible) while also abandoning the world's most vulnerable by shutting down USAID and halting nearly all foreign aid. It is a master class in how to be both stupid and immoral at the same time. The decision to impose 25 percent tariffs on Canada and Mexico has been suspended for a month after those countries threatened counter-tariffs and offered some concessions to Trump's demands. Let's hope that Trump pockets this fake win and does not return to an attitude that violates existing free trade agreements and would harm U.S. consumers. Trump's justifications for the tariffs range from the absurd to the incoherent. He initially framed them as a way to combat fentanyl trafficking, a scourge that has devastated American communities. Yet Canada plays almost no role in the fentanyl crisis, and Mexico had already taken significant steps to curb trafficking. The real effect of these tariffs will be higher consumer prices, disrupted supply chains and job losses. Retaliatory tariffs would further squeeze American exporters. And for what? The U.S. runs a relatively balanced trade relationship with Canada and Mexico. In 2023, the trade relationship with Canada amounted to $441 billion in exports versus imports of $482 billion; in 2022, it totaled with Mexico exports of $362 billion versus imports of $493 billion. For context, in Trump's first term he placed tariffs on Canadian lumber. This, together with tariffs on aluminum and steel, was estimated to cost the average U.S. family at least $300 per year. The current threatened tariffs could cost 10 times that much. Meanwhile, if Trump's tariffs are merely foolish, his move to halt nearly all foreign aid and decision to shut down USAID is also immoral. Foreign aid — less than 1 percent of the federal budget — serves as a strategic instrument of soft power, fostering diplomatic goodwill, economic ties and geopolitical stability. By investing in education, health care and infrastructure in developing nations, donor countries create long-term alliances, enhance their global influence and mitigate security risks that arise from instability and poverty, which can also drive migration. Aid strengthens economic partnerships, ensuring favorable trade relations and access to emerging markets, making it a tool of enlightened self-interest. It is also a version of charity toward countries that are less fortunate due to twists of history. Moreover, former colonial powers have a moral duty to address historical injustices by supporting nations they once exploited. While some of the foreign aid — to Israel and Egypt, for example — is military, the component that goes through the USAID organization is purely for societal development. Thus, for example, Armenia, which is trying to stabilize its educational and public institutions, receives various funds from USAID — including for the American University of Armenia, which is a major source of social development. Keeping Armenia advancing toward democracy in the combustible South Caucasus is a U.S. geopolitical interest. This is the outfit that Elon Musk has puzzlingly called ' a criminal organization.' Musk has said the suspension of its programs will be permanent, which would mean the trashing of programs like these: USAID supported country-led efforts to combat the HIV/AIDS epidemic in over 50 countries, providing treatment and prevention services to millions. The Malaria Vaccine Development Program, now halted, aimed to reduce child mortality by developing effective malaria vaccines, particularly in sub-Saharan Africa. The Feed the Future Initiative focused on reducing poverty and under-nutrition by promoting agricultural development and improved nutrition. USAID's Office of Food for Peace addressed emergency food needs arising from natural disasters and emergencies. The Borlaug Higher Education Research and Development Program aimed to train individuals and strengthen institutions in developing countries to promote innovation in agriculture. Through the organization HEARTH, USAID aimed to promote conservation of threatened landscapes and enhance community well-being by partnering with the private sector to align business goals with development objectives. To such calamities we can add domestic ones: Trump muses about killing the Federal Emergency Management Agency, about which he signed an executive order for a 'full-scale review.' FEMA provides most of the aid to states like Florida that are being pummeled by hurricanes like never before due to global warming, which Trump continues to deny. All of this madness will lead to increased famine, disease, suffering and economic instability, while handing geopolitical influence to China and Russia — who are not sitting still, and are investing huge efforts to establish influence in the developing world. The U.S. is a global leader whose policies shape the fate of millions and, once upon a time, even aimed to inspire. It is stunningly reckless for the Trump administration to kneecap America's economy and eviscerate soft power built over decades, handing a massive win to the world's autocracies. At some point Americans must ask: Is this the leadership we want? The coming 21 months are a teachable moment.
