Nearly four months after President Trump’s “Liberation Day” announcement of higher reciprocal tariff rates on major U.S. trading partners, the dust has settled and the strategy is working.
Over the last few weeks, countries have, one by one, been offering to significantly lower tariffs and non-tariff trade barriers on US goods entering their markets, while pledging significant purchases from and productive investments in the United States.
So far, these nations have included the United Kingdom, Vietnam, Indonesia, Japan and the Philippines, with more deals anticipated in the coming days.
In each case, these countries have accepted a higher base tariff rate from the United States while lowering their rates to zero or near-zero.
These higher US rates will help rebalance the enormous deficits the United States runs with nearly all its major trade partners.
For decades, US leaders turned a blind eye to rampant abuses by our trade partners and ever-widening trade deficits that have hollowed out American industry, destroyed millions of jobs and undermined our long-term economic stability.
President Trump has done more than anyone thought possible to address these imbalances without major disruption, price increases or job losses.
The leverage offered by tariffs has been key in achieving these agreements.
Relying on the old system, governed by a slow, outdated and prejudicial World Trade Organization, to address trade abuses and imbalances was completely ineffective.
The agreements establishing that organization hadn’t been updated since 1994, and litigation often dragged out for several years — and by then, the damage was done.
Unilateral action was essential to resolve US trade imbalances, protect our producers and workers, and make American businesses competitive in world markets again.
The new trade paradigm introduced by the Trump administration is already changing market incentives worldwide.
In a recent speech, US Trade Representative Jamieson Greer noted that American and foreign companies have pledged over $5.5 trillion in investments to expand production in the United States.
These investments will create untold numbers of jobs as companies build new production facilities and fill them with American workers.
Furthermore, the deals struck by the Trump administration offer a path forward for addressing the main perpetrator of world trade imbalances: China.
While the United States put higher tariff rates on China in 2018, China has been able to avoid those tariffs by redirecting supply chains through third countries.
This made it imperative to widen the scope of American tariffs, to ensure goods from non-market economies like China do not make it into our market at favorable rates through friendlier trade partners like the Philippines and Mexico.
Language in the initial trade deal frameworks indicates our trade partners will now work with us to deter China’s trade abuses.
Lastly, Trump’s tariffs will ensure that the United States maintains and strengthens its industrial base.
Tariffs aimed at key strategic sectors like steel and aluminum, automobiles, rare earths, semiconductors, pharmaceuticals and drones will ensure our competitors that heavily subsidize such sectors will not undermine US industries, especially those essential to the future of our economic and national security.
When Trump announced new reciprocal tariff rates on our trading partners in April, economists, commentators and free traders of all stripes were quick to predict the worst.
But even with the prospect of tariffs increasing further in the coming weeks, market and consumer sentiment remains optimistic, with even former naysayers hedging on their earlier dire predictions.
What is clear now is that the United States has a path to stabilize its trade balance, strengthen economic opportunities for the middle class, and bolster our economic security — without catastrophic consequences.
Mark DiPlacido is a policy advisor at American Compass.
This story originally appeared on NYPost
