President-elect Donald Trump’s nominee for Treasury, Scott Bessent, understands the nature of properly done tariffs. In a recent speech, he noted, as cited by The Wall Street Journal,
…Bessent argued for increasing tariffs on national-security grounds and for inducing other countries to lower trade barriers with the US. He criticized trade policy with China for enriching Wall Street, weakening domestic industrial might, and failing to lead to Chinese economic overhauls.
Bessent called for tariffs to resemble the Treasury Department’s sanctions program as a tool to promote US interests abroad. He was open to removing tariffs from countries that undertake structural overhauls and voiced support for a fair-trade block for allies with common security interests and reciprocal approaches to tariffs.
“President Trump is right that actual free trade is desirable,” Bessent said in prepared remarks at the time. “It might seem counterintuitive from a free market perspective, but he is also right that in order to actually create a freer and more extensive trading system over the long term, we need a more activist approach internationally.”
Yewbetcha, to coin a phrase. Bessent, and Trump, are among the few who understand that international trade is not only about economics—in fact it has little to do with economics—and is mostly about foreign policy.
Even protectionist tariffs—when not done solely for mercantilist reasons—have their foreign policy uses: that removing tariffs from countries that undertake structural overhauls and voiced support for a fair-trade block for allies bit, for instance.
Bessent has serious weaknesses, though, and I did not support his open, public campaigning for the position. That politicking, his penchant for speaking out of turn, is the sort of behavior that was so counterproductive in Trump’s first term. Hopefully, he’ll curb his tongue once installed (if he’s confirmed).
Still, I look forward to his reopening Trump’s proposal to the G-7, made during his first term, of a no-tariff-at-all free-trade agreement.
“No tariffs, no barriers. That’s the way it should be. And no subsidies. I even said, ‘no tariffs’,” the US president said, describing his meetings with fellow Group of Seven leaders as positive “on the need to have fair and reciprocal trade[.]”
That offer was wholly ignored at the time, except by the executives of the German car industry.
We’ll see.
