One way Donald Trump has already imposed his focus on the American public is that tariffs have suddenly become a major political topic. During the winter period between the election and his inauguration, Trump responded to Washington mail A report stated that he intends to establish a new ten percent tariff on many foreign goods entering the United States, a prospect that would turn the global trading system upside down, by making clear that his actual plans would cover everyone Foreign goods. He then spent the first hours of his term promising to impose a 25% tariff on goods coming from Mexico and Canada by February 1, and insisted that he would create a “Foreign Revenue Service” to collect customs duties and “other customs duties relating to foreign trade.” “Revenues.” Suddenly, a subgenre of financial news has emerged, where bankers quietly assign probabilities to massive changes in the supply chain and adjust valuations accordingly, and executives at companies that rely on parts from abroad emerge to issue private pleas. In the United States: “Everyone has a lot of anxiety here.” He said the Wall Street Journal. “In two words: Please don’t do it.”
But if the new tariff system has received too much media coverage, it has been somewhat under-theorized. If the plan aims to disrupt the existing order, based on the conviction that global free trade has undermined American interests and American workers, then what is meant by replacing it? Because almost no mainstream economists think global tariffs are a good idea, there is no ready-made policy model to adopt. To further complicate the situation, Trump’s nominee for Treasury Secretary, Scott Besent, tried to reassure Wall Street that the president’s tariff threats were merely a negotiating tactic. “My general view is that at the end of the day, he’s a free trader,” Besant said He said the Financial Times This fall. “It’s escalation to de-escalation.”
Since Trump was first elected, in 2016, his chief mentor and interpreter on trade matters, the man largely tasked with turning the president’s protectionist instincts into theory and practice, has been a seventy-seven-year-old Washington lawyer, soft-spoken and witty. Lighthizer — a worker in a deeply American sense — served Trump’s first term as US Trade Representative. In those years, Trump’s economic nationalism was a more marginal position within the Republican Party. At one point, while Lighthizer was renegotiating NAFTA, Trump invited him into the Oval Office. “Bob, everyone is against you,” Trump said. Paul Ryan was calling him seemingly incessantly. The card Lighthizer had to play was ideological affinity. “Mr. President, that’s because I’m the only one who sees it the way you do,” he said.
One Friday afternoon in December, I visited Lighthizer on the island of Palm Beach — a few miles from Mar-a-Lago — where he now spends most of his time, in an apartment in an Art Deco apartment building next to the beach. He is now at a point in his life where Washington gurus are looking for followers, but he has enough of them that the finalists to be US Trade Representative in Trump’s second term, including Jamison Greer, who was eventually chosen for the role, were both. His former assistants. Lighthizer has been involved in economic policy since the late 1970s, when Bob Dole appointed him to be the Republican director of the Senate Finance Committee. A few years later, he joined the Reagan administration as Deputy United States Trade Representative. “Nobody understands business deals like Bob, because he’s negotiated so many of them,” Gordon Hanson, an economist at Harvard’s Kennedy School, told me. When other Republicans called Trump to pressure the White House on trade, the president would say, “Call Lighthizer.” His bureaucratic fighting style was to pepper the conversation with details. “I had [Greg] Lighthizer told me that Mr. Abbott called Texas. “And of course, he’s smart and knowledgeable and well-prepared, but he never made any progress because I knew the case ten times as well as he did. Paul Ryan will call. I’ll keep talking as long as they want to talk.” (Abbott and Ryan did not respond to requests for comment.)
The view Lighthizer has arrived at after nearly half a century of work on the issue is that free trade is a fantasy, and only Americans and economists (and, intermittently, the British) believe it. “Free trade does not exist anywhere in the world,” he told me. “That’s not happening. And that’s not largely down to the details. Even in the absence of tariffs, countries are doing all sorts of things to protect domestic manufacturing. I have a hard time explaining that to even someone high up in government,” Lighthizer said. “It’s also Banking system. It is the labor system, the environmental system, public regulations, and safety standards that all structure the market in favor of domestic production and increased exports.
As Lighthizer sees it, technicalities in trade agreements can create entire industries in one part of the world and bankrupt a region elsewhere. One example he likes to cite is the “Rules of Origin” chapter in his book NAFTAwhich originally stipulated that for a vehicle to be eligible for duty-free import, 65% of it must be of North American origin. But the “rules of origin” negotiated by the Clinton administration failed to take new technologies into account. As Mexico entered into its own free trade agreements with Asian and European companies, it gained access to more foreign components, which soon made up larger parts of new cars. Ultimately, most of the duty-free cars the United States imported from Mexico originated abroad, often in East Asia. By Trump’s first inauguration, nine of North America’s eleven newest auto plants were built in Mexico, and the American auto industry had lost about two hundred thousand jobs. Millions of lives were affected, Midwestern politics became increasingly bitter, and none of it was inevitable. It just stopped at the pen of an inattentive lawyer.
“Strategic decoupling” is the phrase Lighthizer uses to describe the changes he envisions in trade with China in Trump’s second term. The modern system of international trade was formalized during the 1990s, when the United States entered NAFTA, The World Trade Organization was established, granting China most favored nation status. (Lighthizer was a vocal alarmist about the arrangement at the time; in 1997, when the Senate considered approving MFN status for China, Lighthizer wrote in times and that if the deal were to go through, “every U.S. manufacturing job would be at risk.”) What Lighthizer would like to see, as he explained to me, is a “new trading order” in which the United States moves away from the unfavorable trade agreements of the 1990s and negotiates a A new series of agreements with other democracies, rich and not, corrected those wrongs. Lighthizer said other trading partners probably wouldn’t be happy about this, and “you’re going to have to fight your way through retaliation,” but he ultimately believed other countries would renegotiate because they needed our market to sell.
It was warm to see. “We have the political momentum to do this,” Lighthizer said. He added: “We have the advantage of a trillion-dollar trade deficit, which gives us enormous leverage. “We’re taking unilateral action, disrupting the system, and building over a not-so-long period of time toward what I’m proposing.” He admitted that it would not be easy. “Now, you’re going to have a lot of resistance to that, because when everyone’s robbing the bank, there’s not a lot of incentive to stop bank robbers, right?” Lighthizer said. “But you can create enough pressure where you can do that. The most logical thing would be for you to get back to feeling the benefits of trading — that you do the things you can do better, and I do the things I can do better.”
If a second Trump administration will represent a break with the post-Cold War order of free trade and the beginning of something new, Lighthizer is expected to be part of it. He is not. He was not interested in regaining his old job as US trade representative, or the more obscure position of trade czar. According to Politico, Lighthizer was interested in the Treasury Secretary or Commerce Secretary jobs, but those positions went to Wall Street insiders: currency trader Scott Besent got the Treasury, and the trade went to major cryptocurrency investor Howard Lutnick. Lighthizer did not seem particularly impressed with Trump’s economic team. “I probably know more about taxes than anyone who goes into administration,” he said to me offhandedly.
In Lighthizer’s memoirs, “There is no free trade“From 2023, the account he gives of why he viewed international economic competition with such suspicion is that he grew up in Ashtabula, Ohio, an iron shipping town east of Cleveland along the south shore of Lake Erie, not far from the Pennsylvania state line. . . His father was a physician in Originally from Appalachia, Ohio, his mother, who grew up in Kentucky, was the first in her family to go to college. Ashtabula’s economy relied on transporting iron ore shipped from Minnesota across the Great Lakes in rail yards Near Bridge Street, you could see “hundreds of hopper cars” filled with ore on their way to mills near Pittsburgh. Products made from that ore were particularly vulnerable to global competition, and Ashtabula’s population peaked in 1970. “I have,” he told me. “This is in my hometown, but it’s a million cities.'” “Suddenly, people are being told, ‘You’re stupid, your boss is bad,’ and all that kind of stuff — and it’s all business policy. “We fooled them in Washington, then told them it was all their fault.”
By the 1970s, Lighthizer had also left Ashtabula, moving from Catholic schools to Georgetown and then working as a conservative lawyer, in a party that had always, in his view, had a divided personality. “There have always been two Republican parties,” Lighthizer said. “There was always a Northeastern elite-type party of a smart, wealthy guy, and then the Taft Party, from the Midwest, a common-sense, anti-elite party.” The difference between the two was very clear when it came to trading. Among his villains are both Presidents Bush; His heroes go back to William McKinley, but they include Richard Nixon, who raised tariffs in response to low-cost manufacturing from Asia, and Ronald Reagan, Lighthizer insists. “Reagan was an eccentric economic nationalist,” he said. He placed limits on Japanese imports and saved the automobile industry.
One reason Lighthizer was more open to Trump than most Washington lawyers of his generation is that he saw the casino billionaire as an expression of the enduring trend in GOP politics — not a revolt against it. At the White House, he gave Trump an old brown book he had from the 1980s called “The Great Debate,” which compiled the political arguments for and against tariffs. I expressed little doubt that Trump’s interest in this history would have extended beyond Lighthizer’s banter. “I would love to talk to him about this,” Lighthizer said. (The White House did not respond to requests for comment.)
But Lighthizer’s faction was on the run for much of his early career, especially during the 1990s, when important trade agreements were struck. When I asked Lighthizer to describe how he saw the cumulative effects of these agreements, he said: “I almost don’t know where to start.” He noted that between 1960 and 1980, there were fourteen years in which the American economy recorded growth of three percent or more, and another fourteen years between 1980 and 2000; Since 2000, there have been five. At the same time, he continued, offshoring has eroded America’s technological advantage, in part because of overly idealistic trade deals in which our counterparts did more to protect their industries than we did ours: where they invented computer chips, for example, we now do Only eight percent of them are manufactured. “And none of the kids,” Lighthizer said. An Australian study recently found that American technology declined compared to China in fifty-seven categories out of sixty-four measured.
