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Trump’s Trade Revanchism

US President Donald Trump believes that the global economic system is rigged against America, and he wants to change it fundamentally. Short of reneging on trade deals, imposing tariffs, and engaging in full-scale protectionism, his administration has four other options for pursuing its goals.

GENEVA – While US President Donald Trump has promised an “America first” approach to economic policy, it is simplistic – even misleading – to describe that approach as merely protectionist. Rather, Trump’s modus operandi is revanchism. As he put it in his Inaugural Address: “We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs.”

Trump believes that the global economy is rigged against America, and he wants to change the rules fundamentally. But what revanchism will look like in practice is an open question. During the campaign, Trump said that he would be prepared to impose significant and comprehensive tariffs on imported goods. Frankly, however, this is unlikely to happen. Terminating existing trade agreements, or disregarding the global trade rules that prevent the US from unilaterally raising tariffs, would invite a trade war, which would have immediate and harsh economic consequences. It is hard to believe that the US Congress would allow this.

A more realistic scenario is that the new administration will employ four other instruments.