Discussion of whether this means the end of the postwar free trade world

President Trump’s set of tariffs is partly intended to protect the American industry, raise funds, and, as we have seen, use it as a negotiation tip.

Republicans are already leviing tariffs Imports from Chinaannounced plans for a 25% obligation for all steel and aluminum importsand threatened to place it. 25% tariffs in Canada and Mexico. We still don’t know how far he will go, but if anything already on the table passes, it will raise the average tariff to the highest since the 1940s and signal a new chapter in world trade.

(Since the end of World War II in 1945, tariffs backed up the industries they were meant to protect amid rising consumer prices, declining options and inevitable retaliation. It has been widely regarded as connected, but are we turning our backs on this era?

I held discussions with two economic experts on trade policy to lift the impact of Trump’s policy on the US and the world, and about who is the biggest winner or loser among us. We explored different views.

Meredith Crowley He is a professor of economics at Cambridge University. She believes that tariffs could lead to a much heavier financial burden on those with the lowest income.

Jeff Ferry Honorary for the Chief Economist of the Prosperous American Union. He believes tariffs can cause growth and restructure US manufacturing.

Dharshini David (DD): President Trump described tariffs as “the most beautiful word in the dictionary.” This is really interesting. What is his appeal?

Jeff Ferry (JF): I think Trump has made it quite clear that he thinks tariffs are “beautiful” for several reasons.

First, they can revive and rebuild American manufacturing. He also sees the US with a massive trade deficit. In 2024 there was a record $1.2 trillion in goods trade deficit. This means that the world, particularly trade surplus countries, are generating a large amount of revenue from selling to the US market. This gives the US a powerful negotiation tool and has seen him use it in the past few days in regards to drugs and immigration between Canada and Mexico.

Meredith Crowley (MC): My estimate is that what is truly concerning Trump is the decline in manufacturing jobs in the US over the past 40 years.

He observed that many jobs that once existed in the US had migrated to other low-wage countries such as Mexico and China. I think his hope is that by imposing tariffs, it can inspire job creation.

DD: We know that the state is also considering retaliation measures. To what extent will these measures affect Trump’s economic goals?

JF: There is no doubt that tariff policies, coupled with investment and growth strategy policies and national security policies, will expand the US economy and do a better job of bringing about productivity growth than we have seen in the last 25 years. Frankly, it was awful to traditional American standards.

500 years of history have been the obsession with economics professions in short-term equilibrium, not only American workers and Americans, but also in fact British people and British workers and workers in many countries. It shows that it was harmed.

DD: In the postwar era, we saw the idea that destruction of trade barriers and globalization was good. Are we seeing a backlash against this now?

JF: We see a historic shift from the post-World War II consensus that emerged from a time when America was far ahead of the rest of the world – and America is a communist I was very worried about the threat.

So what you call “free trade” and I Breton Woods The fixed exchange rate consensus was designed for the United States to support and even subsidize the growth of the European and other economies.

We are now moving to a new phase where the US economy began to fade in the 1970s, and China basically makes the world’s number one production by leveraging all the rules within the system. It was a great help.

A new system is required.

MC: I have been diagnosed differently as to what has happened in recent history.

It is clear that more protection has become very popular over the past 40 years. Between 1981 and 1994, the US restricted the import of cars from Japan, with two ultimate results.

One is increasing the prices of American cars. Second, in the long run, it has led to investments by Japanese manufacturers in the US, and today the US has a vibrant automotive industry. With direct government support, we can support our industry more directly.

Trump has now created uncertainty that Canadian manufacturers will now have access to the US market in the future. And because Trump successfully poses tariffs on China in 2018, large companies may be revising plans to expand their operations in Canada or Mexico to serve the US market. These trading partners have a pullback to actual economic activity.

DD: Meredith, Trump admits that, like you said, tariffs tend to mean higher prices, so in the short term, Americans may have “a little pain” for them.

MC: Research into what happened in one of Trump’s tariffs in China in 2018, in the first two years, the majority of the cost increase was absorbed by importers and distributors and not passed on to consumers. That’s what it was. However, prices tend to rise, but come more slowly.

Once they realize that the tariffs are in force forever, the manufacturer realizes that everyone has to pay it, and gradually raises the price.

One concern with economists is that people who buy more products than services tend to be low-income. So, if you put tariffs on things like kids’ trainers, backpacks, clothing, and these kinds of consumer items, you’re not really the one who spends money, but a much heavier tax on people with the lowest income in the country. It puts a burden. Vacation and private education for children.

DD: Jeff, are you worried about a global trade war that could backfire Trump’s purpose?

JF: Since China entered the world trading community, it has been involved in the trade war since 2001. The trade war has been around for many years. The US is taking action now, not because many people are worried about a trade war, but because they may lose a valuable market for their products.

But I want to go back to consumer prices.

People focus purely on the negative. The purpose of tariffs is to stimulate domestic industries. Therefore, on the positive side, we will create new investments in the domestic industry. On the negative side, prices rise. So, in both cases, it depends heavily on numbers.

What we know from one of Trump’s tariffs between 2018 and 2019 is that while prices for tariff products such as steel have risen, newer like steel mills, which employ hundreds of people Promised to build a factory – Great Blue Collar Work People who speak in general do not have a university degree.

The current stage of globalization, which began around 1990, was a major mistake. The idea that the US could compete with Mexico on salaries, particularly with manufacturing workers, was just insanity.

DD: Let’s take a look at Meredith’s view on this. Frankly, do you agree that globalization hasn’t been a great idea since the 1990s?

MC: I understand Jeff’s point that the president’s only concern should be the happiness of Americans. However, between 1990 and 2023, the number of people living in extreme poverty around the world fell from 2 billion to around 700 million for less than $2.15 (£1.75) a day. More than a billion people are humanity’s incredible achievements to withdraw poverty due to increased globalization.

It is entirely clear to everyone that the benefits of globalization were not equal in American society. So it’s completely clear that it’s really necessary in the US to think about how to improve the well-being of unskilled people and how to do their job. The economy to help them.

What makes me different from Trump is that there are more effective tools. Subsidies for industrial policy or production are required. We are constantly investing in labor savings technology, so America is extremely productive, but as a result, our proficiency has declined, which means that we have a much more skilled life than we did 30 years ago. It’s getting worse.

JF: I agree with Meredith 100%.

DD: This is attractive. Looking at the types of trade barriers Trump wants to introduce, what does that mean for this issue of equality?

MC: When we start to put barriers between countries, it creates many opportunities for what we call monopoly profits in the world of economics. Restricting admission means existing producers will increase prices and exploit consumers.

If the US enters a trade war with China, what will happen to imports from countries where the US is not interested in engaging in a trade war?

If the US and China deepen their trade wars, this could affect sub-Saharan African countries’ participation in the US and China’s supply chains. Trade wars.

Therefore, the effects of spillover can be very negative.

DD: Jeff, is this a price worth paying? What impact can it have on your growth?

JF: I don’t consider it a price worth paying for. I consider it to be an evolution of the global system. And this is not the mainstream economics view that I have a large focus on trade and minor productivity improvements.

The world has grown through industry success. The prosperity of the United States from 1900 to 1970 was primarily due to the automotive industry. What you saw was a huge increase in productivity as Henry Ford and all his successors invented and developed mass production. You saw wages rise and spending increase, and we had the most prosperous economy in the world.

So what we need is industrial growth, and when we look at the national security framework, we cannot rely on China for more products than we do today. We are so dependent on China here in the US. Europe is too dependent on China. So, what is the solution? The solution is pretty obvious – we need to make certain products here in the US.

Produced by: Rosemary McCabe, Rhoda Buchanan, Harriet Whitehead

Top Picture Credit: Getty Images

This transcript has been edited for clarity and brevity.

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