on March 13, 2025
In the print edition of tomorrow’s Wall Street Journal, Phil Gramm and I decry Trump’s cooption of the term “reciprocal tariffs” to mean something quite different from what this term has meant throughout the post-war era – and even what Pres. McKinley meant by suggesting, on the day before he was assassinated, a policy of what became known after WWII as “reciprocity.” A slice:
McKinley’s reciprocal trade policy was aimed at opening markets for U.S. products with agreements that lowered tariffs on imported products proportionately as other countries lowered theirs on U.S. products. President Franklin D. Roosevelt used reciprocal trade policies to back the world out of the Smoot-Hawley tariff. His successors used reciprocal trade to lift the majority of the world’s population out of poverty and achieve 75 years of peace and prosperity.
The Trump perversion of reciprocal trade co-opts a politically appealing phrase to justify his preferred policy. While the president uses European and Japanese tariffs on American cars to justify comparable tariffs on U.S. imports, nowhere does he propose real reciprocity. He could eliminate the 25% U.S. tariff on imported trucks as an inducement to other countries to eliminate their tariffs on U.S. automobiles. Mr. Trump denounces high tariffs on U.S. exports to Central and South America and would use his theory of reciprocity as an excuse to raise U.S. tariffs on imports from those countries. But real reciprocity would be achieved by eliminating the quota on U.S. imports of sugar, for which Americans pay twice the world price, in return for Central and South American countries lowering their tariffs against U.S. products.
