For now, the American economy remains strong, with rising wages and the lowest unemployment rate in 50 years. But with less trade, American jobs up and down the value chain that are seemingly unrelated to importing and exporting goods could suffer, including research and development, retail and marketing products.
Douglas Irwin, a trade historian at Dartmouth College, said Mr. Trump’s tariff battle with China was bringing about “a new status quo for the world economy.”
“If we do have this consensus that we want to isolate ourselves from China, that’s a big historic shift in U.S. trade policy,” Mr. Irwin said. “We’ve moved away from tariffs as a bargaining chip to get a better deal to tariffs as a means to an end to decouple the economies.”
Mr. Trump and his economic advisers say the administration’s trade policy is aiding the American economy, companies and consumers. And despite the tough approach, the administration continues to insist its goal is to strike trade agreements that give American businesses better trade terms overseas.
At a briefing last week, Steven Mnuchin, the Treasury secretary, praised the president’s trade policies for helping economic growth thus far and said the administration supports “free and fair reciprocal trade.”
But if the goal really is freer trade, the administration has never been further from achieving that goal than it is today, said Chad Bown, a senior fellow at the Peterson Institute for International Economics.
“They’re heading in the opposite direction,” Mr. Bown said.
Beyond an update to the United States agreement with South Korea, no other free trade deals have been finalized. Mr. Trump’s revisions to the North American Free Trade Agreement with Canada and Mexico still await passage in Congress, while trade talks with the European Union and Japan have been troubled from the start, with governments squabbling over the scope of the agreement.