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6: Tariff Wars pt. 2 · Rittener Reflections

• There's no shortage of news, opinions, analysis, and ongoing speculation on this tariff war. As I follow along and try to keep up, I notice that the information and subsequent discussion is becoming more tense, reactionary, and urgent. Hello, this is Jeff Rittner, and welcome back to Rittner Reflections, a forum to address the dynamic, complex, and essential nature of cross-border trade in our world today. As the title of this episode suggests, I intend to keep the discussion of tariffs front and center as the tariff war continues to escalate and has become even more turbulent and relevant since my last episode recorded two weeks ago. I stated in each of my previous episodes that we are facing times of incredible uncertainty. I also stated that one of the things we could be certain of in 2025 would be tariffs. What I failed to fully anticipate is that even the tariff agenda itself in how it is being managed or mismanaged has become a new, even greater uncertainty. Will he or won't he? Today I will catch you up on where we stand with tariffs, explore the rationale behind President Trump's obsession with tariffs, and at the end announce plans for a series of updates next week. As I start, let me remind you that, given the fluidity of the tariff war under the Trump administration, details and use of tariffs around the world may have changed multiple times before you get a chance to listen. However, I will move on with where we are at currently today, March 14th. First, here is a summary of the use of tariffs by President Trump over the past 40 plus days. You will notice that a pattern exists, tariffs on or tariffs off. For example, February 2nd, 2025, Trump imposes across the board 25% tariffs on imports from Canada and Mexico. The next day, February 3rd, Trump announces a deal to pause tariffs on Canadian and Mexican goods for 30 days. Fast forward to February 26th, White House says Canada and Mexico will be subject to tariffs after a pause. March 4th, Canada and Mexico tariffs go into effect. Same day, Commerce Secretary Lutnick hints that the tariffs will be adjusted, but says for now, no pause. Next day, March 5th, White House grants automakers covered under USMCA a 30-day tariff pause. Next day, March 6th, Trump announces 30-day pause for tariffs in Mexico. Next day, March 7th, Trump says he will impose new tariffs on Canadian lumber and dairy. March 11th, Trump imposes additional retaliatory steel and aluminum tariffs on Canada. Same day, Trump increases steel and aluminum tariffs to 50% on Canadian exports in response to Ontario's electricity surcharge. Same day, March 11th, Trump keeps the steel and aluminum tariff rate at 25% for Canada and all other trading partners. Next day, March 12th, 25% of global steel and aluminum tariffs come into force. Same day, Canada and the EU retaliate with their own tariffs. Next day, March 13th, Trump threatens 200% on European alcohol. March 14th today, still waiting to see what will happen. This tit-for-tat approach is escalating global turmoil, while driving countries and companies crazy, causing markets to plummet and potentially propelling the US into, yes, a recession. As we arrive at the 50-day mark of this administration, it has become evident that compared to his first term, President Trump has become more nationalist on foreign policy, more protectionist on trade policy, and more transactional in his approach. There's no shortage of news, opinions, analysis, and ongoing speculation on this tariff war. As I follow along and try to keep up, I notice that the information and subsequent discussion is becoming more tense, reactionary, and urgent. Although there is extraordinarily little discussion supporting the use of tariffs, there are exceptions. For example, Britain. They are partying company with the European Union by not retaliating to the tariffs that President Trump imposed on steel and aluminum imports. It appears that the Prime Minister, Kare Starmer, is thinking he can negotiate a trade deal with the United States that would spare his country in the long term. Starmer said in the UK Parliament that he was disappointed by the global tariffs on steel and aluminum, but Britain would take a pragmatic approach. Also, the US steel industry is in favor of the President's use of tariffs. Bill Bell, who is the president of the Steel Manufacturers Association, told Fast Markets in an interview that it is vital for the domestic steel industry to move forward with the trade policies under the Trump administration to enable trade partners to understand the tremendous privilege it is to be able to sell steel products in the US. He also said tariffs are important to make sure that the playing field is level. He said, "You are going to see more countries adopt trade policies like ours, understanding that if you want access to our market, that's a right that has to be earned." So individuals often have their own perspective and may sometimes advocate for their personal interests. In my career, I have learned the hard way, the importance of always seeking first to understand. In our current predicament, I decided with this in mind to take a deeper look at Trump's rationale for pursuing this highly disruptive and controversial path and the philosophy and views that are the driving force behind Trump's Chaotic Tariff Strategy. First, I dusted off a book I started reading a while ago by Robert Lighthizer, who is the former US trade representative during Trump's first term. In his book that was published in 2023, Lighthizer offers a critical look at decades of free trade policies and their impact on American workers. And then, second, I downloaded chapter 26 from the Project 25 playbook, which is also known as the 2025 Presidential Transition Project. It is a political initiative led by the Heritage Foundation, conservative think tank, with the goal of reshaping the federal government of the United States and consolidating executive power in favor of right wing policies. Chapter 26 contains two articles making the case for fair trade written by Peter Navarro and making the case for free trade written by Kent Losman. So back to Lighthizer, in his book No Trade is Free, Lighthizer argues that tariffs are necessary to protect American industries and workers. He believes that tariffs can help address unfair trade practices, reduce trade deficits and strengthen national security by limiting dependence on foreign goods. Lighthizer emphasizes that tariffs are crucial in dealing with countries like China, which he views as an existential threat to the United States. He believes that trade should be balanced and fair and that reciprocal tariffs can help achieve this by ensuring that if one country imposes tariffs on U.S. goods, the U.S. should respond with equivalent tariffs on that country's goods. This approach aims to level the playing field and protect American industries and workers from unfair trade practices. He also argues that factors like currency manipulation, lax labor standards and foreign subsidiaries have disadvantaged U.S. companies. It is worth noting that these principles are frequently cited by President Trump during many different occasions today. I'm uncertain whether I fully support them all, but I am, however, weary of the incredibly undisciplined erratic and chaotic way they are implemented. Control is vital, but methodology makes the world go around or not. I found the book to be a fascinating read, given today's environment. As Lighthizer is meticulous in documenting detailed dialogue of meetings with the president, negotiations with other countries and outcomes of important trade decisions, he describes the painstaking meeting after meeting efforts to negotiate the U.S.-China trade agreement, the last-minute heroics to ensure Congress signed the U.S. MCA. This was the trade agreement between Canada and Mexico and the U.S., and the steps taken to implement and use Section 301 tariffs to confront China over unfair practices. Consequently, he offers five actions that the U.S. should pursue unilaterally or with other like-minded countries without waiting for the WTO. You will recognize them all. First, demand fair trade within our own market and require reciprocity from our trade partners. Two, take unilateral action by utilizing basic tools of trade such as tariffs, Section 301 and 252, etc. Three, make substantial changes to our import laws by not allowing companies who violate social policies, such as environmental or labor or worker safety or carbon, to import or at least to charge them higher duties in such cases. Four, subsidize specific crucial industries. Good example of this is the semiconductor industry. And five, finally, utilize tariffs and other ideas to achieve balanced trade. The goal, no trade deficits. Now, let us talk about Peter Navarro, who, as I stated earlier, is one of the authors of Chapter 26 from the Project 25 playbook. He is currently serving as the senior counselor for trade and manufacturing in the Trump administration. He was appointed to this role in December of '24 following his release from prison earlier that year. In this position, Navarro is responsible for advancing and communicating the administration's manufacturing, tariff and trade agendas. He also served as senior trade advisor during Trump's first term and is a strong advocate for tariffs. Before I jump into his position on tariffs, let me tell you the story of my interaction with Mr. Navarro. I met with him on two occasions during Trump's first term. The first meeting was in early 2017, when the administration was just beginning its first term. What I remember most about this meeting was that we were in this very large room in the Eisenhower Executive Office Building. Now, this is the building located right next to the White House. It houses various offices, including the Office of the Vice President and the Office of Management and Budget. But in the room, on the walls was pasted, all around the room was pasted exceptionally large post-it notes with lists of key topics on each poster. When we left the meeting and discussed our experience, we all noticed the notes and realized that these were lists of the top priorities of the new administration. Because I think of the difference between Trump term one and Trump term two, I now realize that the first administration was still figuring out what they wanted to achieve and focus on as they started governing, kind of like fixing the airplane while it is in the air. Whereas today, we see, although it's chaotic, thanks to Trump, a well-thought-through and planned agenda that they are rapidly executing. I saw a phrase the other day that, to me, most accurately describes this current administration. Everything. Everywhere. All at once. Not sure that was the case back in 2017. Now, my second meeting with Mr. Navarro a year later was a very different meeting. In this one, Navarro was much more focused on administration objectives. And what I remember most was a large poster that had to be folded in half to fit into my handbag that he was so proud of and wanted me to have. This poster was a large color-coded document containing more than 50 line items. And the title was Communist China's Categories of Economic Aggression. It contained things like currency manipulation, data localization mandates, and, of course, retaliatory tariffs. Last the poster were columns categorizing where each one of these aggressive steps fell under China's strategic objectives. He wanted us to understand that this was the battle they were fighting. Now, I kept this poster on the wall of my queue back at work as a reminder and a resource every time there was a new rule levied against China. Sadly, when we left our cubes during the pandemic, I locked up the poster in a cabinet. Sometime before officially returning back to work, I discovered that through extensive office cleanup, all contents of cabinets, locked or not, were removed and destroyed. I was so disappointed that I had lost the copy of Navarro's poster. However, I could not believe my eyes when I read Chapter 26 of Project 25 and found that the entire poster, the contents of the document are contained in Chapter 26. So if you would like to see the chart, you can find it right there in Chapter 26. So before I get into the actual details, let me share with you a perplexing thought. The administration vexed over what they call China's economic aggression. But the current aggressive approach with tariffs is economic coercion. Using tariffs as a weapon to shape US policy and strategic objectives. I found that quite fascinating. So back to Navarro. From his article, The Case for Fair Trade, he articulates his belief that tariffs are essential for protecting American industries and workers from unfair trade practices. Navarro argues that tariffs can help reduce trade deficits, promote domestic manufacturing, and strengthen national security by reducing dependence on foreign goods. He emphasized that the US should adopt a no exemptions, no exclusions policy when it comes to tariffs, ensuring that all countries are treated equally. Navarro also views tariffs as a strategic negotiation tool, asserting that they can use them to pressure other countries into fair trade agreements. He has been vocal about the need for the US to take a tough stance on trade, particularly with countries like China. Now he also in the document provides 18 policy options for dealing with China that he developed for Trump's second term, and he strongly urges the president to consider adopting all of them as a package. Now I will not go over the complete list, but will describe a few that should look familiar to you. And I also strongly suggest that you find the document and read them for yourself. So examples include one, trade deficits. Navarro urges that trade deficits are a sign of economic weakness and harm American workers and businesses. He believes that the US has been a loser in global trade due to unfair trade practices by other countries, and in particular China. Two, reciprocal trade and tariffs. Navarro advocates for a reciprocal trade approach, where the US would impose tariffs or other trade barriers on countries that do not offer reciprocal access to their markets. He believes that tariffs are necessary to protect American industries and jobs from unfair competition. Three, decoupling from China. Navarro calls for a decoupling of the US economy from China's, arguing that China's economic and military rise poses a threat to American national security and economic interests. He advocates for reducing US dependence on China for manufacturing, supply chains and technology. And finally, number four, protecting American manufacturing. Navarro emphasizes the importance of protecting American manufacturing jobs and rebuilding the US industrial base. He believes that trade policies should support domestic manufacturing and discourage offshoring. Please note that these policy options are currently in play today by President Trump. As I said earlier, although I'm not certain I fully support all these views, I certainly do not support the incredibly undisciplined, erratic, and chaotic method of implementation. Principle is vital, but methodology makes the world go round or not. Looking then at the current state of play, we can summarize the rationality of using tariffs according to Lighthizer, Navarro, and Trump as these six. One, fentanyl and immigration, two, raising revenue, three, manufacturing jobs, four, paying down debt and reducing taxes, five, restoring fairness, and finally six, to reciprocate. You should also be aware that there are key dates just around the corner that have to do with tariffs. First, on March 24th, comments are due in a public hearing on Trump's proposed remedy pursuant to the China Shipbuilding 301 study. This is the docking fee on Chinese ships at US ports and export carriage restrictions. So first, many of the reports that were directed by Trump's Day 1 America First Trade Executive Orders are due. In April 2nd, tariffs on autos and major trading partners like Canada, Mexico, and the EU will begin. However, using traditional tools such as Section 232 or Section 301 means that the tariffs will not take effect on April 2nd because there are statutory requirements and timelines for investigation and remedies. So using these tools is going to require some time and I think it probably will take a few months before these tariffs actually take effect. So to conclude, in my attempt to seek first to understand, I am now better able to recognize where the different policies, decisions, and actions of the Trump administration originate. A better understanding of the past through Lighthizer and the future through Navarro will help anticipate and manage the chaos in front of us. I highly recommend both publications as you strategically plan your next moves. Speaking of next moves, I will be on the East Coast visiting with some of my VIPs, those being my grandchildren. My oldest granddaughter will be celebrating a special birthday and we will find all sorts of fun things to do while I am there. During this time, though, I am planning to disappear for just a little bit to prepare and publish three episodes of this podcast on three consecutive days. Why? The Bureau of Industry and Security is holding its annual Export Update Conference on Export Controls and Policy in Washington, D.C. BIS has offered this event to the trade community for over 36 years and provides it with current updates on crucial export topics. BIS anticipates that the sessions will include planary discussions with BIS leadership, key international representatives, regulatory updates, profiles of recent export enforcement investigations, compliance guidance on specific topics, and presentations from the Office of Information and Communications Technology and Services. Although I am not attending this year, I recall with fond memories attending my first update way back in June of 1989, which I believe was the second annual conference hosted by the BIS predecessor agency called BXA. This was the Bureau of Export Administration. The U.S. government changed the agency to BIS in 2002 to better address national security issues that surfaced because of 9/11. I was a newbie in the world of export controls when I attended this conference, and it was quite impressed with the number of attendees, the fact that senior government officials made themselves available to exporters, and the breadth of topics that we discussed. Interestingly, discussion revolved at that time around export controls on Russia and Eastern Europe, restrictions due to apartheid in South Africa, and controls on supercomputers and military, chemical, and biological equipment. Now, 1989 was a significant year in the world, one that created long-lasting geopolitical change. For example, the Berlin Wall fell, protests in Tiananmen Square were quashed, Exxon Valdez oil spilled in Alaska, the U.S. invaded Panama to capture Manuel Noriega, and San Francisco experienced a catastrophic earthquake during a Bay Area World Series baseball game. This was a time without the internet, smartphones, or social media alerts. We had to get back to our hotel rooms to listen to CNN to find out the latest news. Everyone fixated on China and Russia during this conference that was held in June. In retrospect, it is noteworthy that our current focus on export controls today remains centered on the same two countries. BIS will hold its annual conference during a year that could be as significant and consequential for the world as the year 1989 was. Now, since I'm not attending this one, in order to provide real-time reaction and analysis, I will be interviewing three people who are export control experts and they will be on the ground attending the conference. Each one will briefly offer me their views and commentary real-time. Please check back every day from March 18th to 20th for these versions of written reflection. You have been listening to Written Reflections, episode number six. This is a forum to address the dynamic and essential nature of cross-border trade in our world today. I would like to thank you for joining and thank my producer Keith Belmar. I'll talk to you again real soon.