The writer is President Trump’s senior counselor for trade and manufacturing
The international trade system is broken — and Donald Trump’s reciprocal tariff doctrine will fix it. This long-overdue restructuring will make both the US and global economies more resilient and prosperous by restoring fairness and balance to a system rigged against America.
For decades, under the biased rules of the World Trade Organization, the US has faced systematically higher tariffs from its major trading partners and far more punitive non-tariff barriers. The result is a national emergency that threatens both our economic prosperity and national security.
At the heart of this crisis is a trade deficit in goods that has ballooned to more than $1 trillion annually. The economic models of free trade that predict chronic trade imbalances will always be eliminated through price adjustments via exchange rates are dead wrong.
The US cumulative trade deficits in goods from 1976 — the year chronic deficits began — to 2024 have transferred over $20tn of American wealth into foreign hands. That’s more than 60 % of US GDP in 2024. Foreign interests have taken over vast swaths of US farmland, housing, tech companies, and even parts of our food supply.
A central driver of this one-sided trade is the WTO’s “most favored nation” (MFN) rule, which requires member countries to apply the lowest tariff they offer to any one nation to all WTO members. America’s trading partners can maintain high, uniform tariffs across the board — with no incentive to negotiate fairer terms with the US.
Since 1979, the year that manufacturing jobs peaked in America and the Tokyo round of the General Agreement on Tariffs and Trade ushered in major MFN-driven tariff reductions, the US has lost 6.8mn manufacturing jobs. Since China joined the WTO in 2001, real median weekly earnings in the US have largely stagnated — rising little more than 10 % over the entire period.
Today, the average US MFN tariff is just 3.3%. China’s is double that at 7.5 %. Thailand and Vietnam both hover near 10% and India stands at a staggering 17 % The imbalance extends to autos: the EU charges four times the US car tariff at 10% for saloon cars, China’s base import tariff for passenger vehicles is 25%.
Even worse than this is the barrage of non-tariff weapons foreign nations use to strangle American exports, unfairly boost their shipments to the US, and wall off their own markets. These tools include currency manipulation, value added tax distortions, dumping, export subsidies, state-owned enterprises, IP theft, discriminatory product standards, quotas, bans, opaque licensing regimes, burdensome customs procedures, data localization mandates and, increasingly, the use of “lawfare” in places like the EU to target America’s largest tech firms.