President Donald Trump has said his recent raft of tariff measures amounted to “Liberation Day” for US traders and not a fatal blow for a global trading system that has served international commerce well for decades following the turbulence that existed prior to and up to the Second World War in the early 1940s.
The measures amounted to a blanket 10% tariff on virtually all imported goods, including those from Australia. along with what he termed “reciprocal” tariffs on countries he claims are unfairly exploiting the US. Little alleviation for least developed countries – indeed the opposite.
This was his second fatal blow against the trading system when he crippled its dispute settlement procedures, in effect making them unworkable, thereby devaluing the rules and processes that underlay it – rules and processes that had been in the making and accepted for almost a century and much respected.
Was his blunderbuss approach justified? There are deficiencies in the system that could be and were in the process of being corrected. But they are now beyond repair. The objective of free, open and fair trade has been lost along the way.
Trump has never liked international institutions that might have a say or interfere in the outcome of policy issues in disputes that might concern him. He has never had a good word for the United Nations, for the World Health Organisation, or the World Food Program, unless someday he might find himself starving in a desert. When it comes to international trade, he has a simple belief that surpluses on his side are good, and deficits bad. Whether that was due to efficiency with the surpluses and good business was neither here nor there. International organisations are staffed by failed bureaucrats, not smart businessmen like himself. If a bureaucrat made a profit, it must be due to corruption somewhere down the line.
The craving for power and influence explains his love of “great power politics”, with decisions being made by statesmen like himself. Anything less is a waste of (his) time. He carries that view into his dealings with Russia over Ukraine. The imperative here is that he must succeed, regardless of collateral consequences. Collateral consequences are what await international trade once his broad-based tariff measures are implemented, and not just for the US itself.
We are told that Trump is not much of a reader, but he’s read enough to learn of a tragic predecessor, the late President William McKinley, who also believed that tariffs can be used to adjust trade in one’s favour as well as generate copious revenue to correct an unfavourable balance of payments. If tariffs were designed with some precision and used sparingly this might be so. This is how the WTO would have it. But Trump and his staff have adopted a means of determining tariff rates for a given country which cannot be justified by any rational system of calculation. A surplus by definition implies cheating and the calculation used also omits reference to non-tariff barriers which run deep and restrict a whole lot of world trade. In short, Trump’s measures will do little to increase positive trade and will only cause resentment and disbelief – and panic in the exchanges, as we are seeing.
McKinley was followed by President Herbert Hoover who presided over the worst depression in America’s history, before and since – a depression that spread far and wide throughout the world culminating, directly or indirectly, in World War II. That fostered a determination among the surviving states to prevent a repetition ever again – the same thinking as was being developed with respect to international security through the United Nations.
Trump appears to be someone incapable of learning from history and should not be allowed to repeat or ignore catastrophic mistakes. He might argue that mistakes would be avoided if the “Great Game” of old was in the hands of the great powers, of even strength and with similar understandings.
Indeed the “powers” should not stand in the way of necessary adjustments within their respective spheres. “Trump has said the United States must annex Greenland, make Canada the 51st state, and reclaim the Panama Canal. He seems to envision a world in which strong states and strong rulers can do more or less what they like… But the further Trump takes this expansionist agenda, the more he risks alienating Washington’s closest allies and abetting the autocrats’ spheres-of-influence’ game”. [Hal Brands, The Renegade Order, Foreign Affairs. March-April 2025 at pp.22-35].
He adds: “The democratic recession of recent years could become a rout if Washington quits the fight for the world’s ideological future – or worse still, joins the other side.”
Andrew Farran in his younger days was a diplomat, Commonwealth civil servant and law academic (Monash). His subsequent business interests included international trade, intellectual property and publishing, and wool growing. He was a regular contributor to Pearls & Irritations from 2017 – 2020.
Writes extensively on international affairs and defence, contributing previously to major newspapers (metropolitan and rural). Formerly director of major professional publishing company. Currently apart from writing he directs a registered charitable foundation with links in both Australia and overseas.