[Trump's Return and the American Series] II. The Present and Future of U.S. Trade Policy: The Return and Strengthening of Protectionism

I. Introduction

Donald J. Trump won the U.S. presidential election on November 5, 2024, and his second administration is scheduled to commence on January 20, 2025. Trump has once again utilized the slogan 'Make America Great Again (MAGA),' which proved effective during his first term in 2016, signaling his intention to pursue even stronger protectionist trade policies under this banner. Trade policy has been a cornerstone of U.S. economic strategy since the nation's founding, and as the world's largest economy, U.S. trade policy decisions have had extensive ripple effects on domestic and international markets. This study analyzes Trump's protectionist trade policies within their historical context and forecasts their future direction. Specifically, it examines the likely patterns of protectionist trade policies under the second Trump administration leading up to the 2026 midterm elections and considers whether this protectionist trend will persist in the long term.

II. The Past and Present of U.S. Trade Policy

1. A History of U.S. Trade Policy: 'Revenue,' 'Restriction,' and 'Reciprocity'

Douglas Irwin, an economist at Dartmouth College, argues that the history of U.S. trade policy until 2016 can be categorized into periods characterized by three R-words: 'Revenue,' 'Restriction,' and 'Reciprocity' (Irwin 2017).

First, from 1790 to 1860, trade policy was primarily viewed as a means for 'Revenue.' The core objective was to impose tariffs on imports to secure government revenue, exemplified by the Tariff Act of 1789 (Fordham 2017). During this period, tariffs were a crucial source of government funding, accounting for approximately 90% of federal revenue.

Next, the period from 1861 to 1933 is characterized by 'Restriction.' Government revenue gradually shifted towards domestic taxation, and protectionist tariff policies, aimed at shielding domestic producers from foreign competition, became prominent. The average tariff rate on imports remained around 50%, with protectionist policies reaching their zenith with the Smoot-Hawley Tariff Act of 1930, which significantly raised tariffs on over 20,000 imported goods (Irwin 2020).

However, the Smoot-Hawley Tariff Act, which led to increased import prices and reduced trade volume, was assessed as a major factor exacerbating the Great Depression. Consequently, from 1934 to 2016, the U.S. adopted 'Reciprocity' as the guiding principle of its trade policy, focusing on reducing trade barriers. The shift towards reciprocity-based trade policy began in earnest with the Reciprocal Trade Agreements Act (RTAA) of 1934, which primarily aimed to prevent legislative gridlock from hindering trade agreement progress by granting the President the authority to negotiate bilateral trade agreements (Bailey et al. 1997).

The transition to Free Trade was further solidified as the U.S. played a leading role in the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947. Following World War II, the U.S. supported the liberal international economic order, utilizing trade as a means for economic growth and geopolitical stability, and spearheaded the creation of a multilateral trade cooperation framework under the GATT system (Atkin & Donaldson 2022). In 1994, the North American Free Trade Agreement (NAFTA) created the world's largest free trade area, and in the same year, the ratification of the Uruguay Round agreements led to the establishment of the World Trade Organization (WTO), which succeeded GATT, in 1995. In the early 21st century, efforts towards trade liberalization continued with the signing of numerous bilateral free trade agreements. The George W. Bush and Barack Obama administrations pursued ambitious trade agendas, including negotiations for the Trans-Pacific Partnership (TPP) involving 12 Pacific Rim countries (Evenett & Meier 2008). However, during this period, growing domestic skepticism about the benefits of free trade began to emerge, foreshadowing subsequent policy shifts.

2. The Current State of U.S. Trade Policy: A Return to 'Restriction'

Donald Trump, inaugurated as the 45th President of the United States on January 20, 2017, pursued a strong protectionist trade policy, departing from the long-standing trend of trade liberalization under the principle of 'America First.' The Trump administration's protectionist trade policy primarily utilized tariff increases as its core instrument. Tariffs of 25% on steel and 10% on aluminum were imposed on imports from most countries, and specifically, tariffs on Chinese goods were progressively raised, reaching 25% on $250 billion worth of imports. The pressure on China, initiated with 'tariff bombs,' escalated the U.S.-China relationship into a full-blown trade war, which expanded to include sanctions on Chinese tech companies like Huawei in the U.S. market, and issues related to intellectual property theft and forced technology transfer.

Another characteristic of the Trump administration's trade policy was its rejection of multilateral trade agreements and its efforts to renegotiate existing ones. Moving away from multilateralism, which had been a cornerstone of U.S. foreign policy for decades, the Trump administration favored bilateral negotiations under the guise of correcting unfair trade practices. Shortly after taking office, it withdrew from the TPP and strongly criticized the WTO's dispute settlement mechanism, effectively paralyzing the WTO Appellate Body. Furthermore, the renegotiation of NAFTA led to its replacement with the United States-Mexico-Canada Agreement (USMCA). The USMCA included provisions to strengthen U.S. economic interests, such as enhanced rules of origin in the automotive sector, higher labor and environmental standards, and new regulations concerning digital trade and anti-corruption.

The Biden administration, which took office in 2021, criticized the unilateral approach of the Trump administration and emphasized multilateralism and allied cooperation, yet maintained a protectionist stance. For instance, in May 2022, it launched the Indo-Pacific Economic Framework for Prosperity (IPEF) to counter China and strengthen economic cooperation with allies. However, most of the tariffs imposed on China during the Trump era were maintained. Tariffs on steel and aluminum continued to be applied citing national security, and more sophisticated and targeted restrictive measures were implemented, particularly in the fields of advanced technology and strategic industries. In May 2024, additional tariffs were imposed on $18 billion worth of Chinese goods, and in December of the same year, a plan to strengthen export controls to limit China's production capacity of advanced semiconductors for military use, including High Bandwidth Memory (HBM) for Artificial Intelligence (AI) development, was announced.

This return to an era of 'Restriction' stems from two key factors. First, the economic insecurity of U.S. voters. Recent studies indicate a growing perception that free trade and globalization threaten domestic jobs and economic stability (Essig et al. 2021; Fetzer & Schwarz 2021). The vulnerability of global supply chains and dependence on China experienced during the COVID-19 pandemic, in particular, strengthened support for protectionist trade policies, resonating strongly with voters.

Second, the intensification of the U.S.-China hegemonic competition (Kim, 2024). As the economic and technological gap with China narrows and trade conflicts persist, concerns about China's unfair trade practices have grown among voters and policymakers. This has led to bipartisan consensus on the need for strong protectionist trade policies (Agrawal & Tai 2023), and consequently, the combination of economic insecurity and geopolitical competition has propelled the U.S. into a new era of protectionism.

3. Trade Policy of the Second Trump Administration

The second Trump administration, set to begin on January 20, 2025, has signaled its intention to further strengthen protectionist trade policies. Notably, with the Republican Party securing control of both the presidency and both houses of Congress—a so-called 'Red Sweep'—the conditions are ripe for Trump's trade policies to be pursued without institutional checks from Congress, suggesting a further intensification of U.S.-led protectionism.

The core of the second Trump administration's trade policy is the strengthening of protectionism through tariffs. President-elect Trump has made the utilization of tariffs a key campaign promise, stating, 'Tariffs are the most beautiful word I've ever heard, the most beautiful word.' Specifically, he pledged to impose a uniform tariff of 10-20% on all imports and a high tariff of up to 60% on imports from China. He also expressed an intention to retaliate against other countries' high tariffs under the principle of 'an eye for an eye, a tariff for a tariff.' On November 25, 2024, he declared that starting on his inauguration day, additional tariffs of 25% would be imposed on imports from Mexico and Canada, and 10% on imports from China.

Notably, tariffs are expected to be utilized not only as an economic tool but also as an instrument of foreign and security policy. President-elect Trump has indicated his intention to use tariffs to address issues such as fentanyl trafficking and illegal immigration, and to pressure allies to increase defense burden-sharing and open their markets. Scott Bessent, whom Trump has nominated as Treasury Secretary, has also stated that tariffs are a useful tool for achieving the President's foreign policy objectives. In a similar vein, on November 30, 2024, President-elect Trump threatened to impose a 100% tariff on BRICS nations if they challenged dollar hegemony in any way. This threat is interpreted as a measure to prevent the growing signs of challenge to 'dollar hegemony' by BRICS countries, particularly Russia and China.

Will President-elect Trump be able to implement his promised tariff policies? Institutionally, it is entirely possible. Although the U.S. Constitution grants Congress the authority to impose tariffs, the executive branch can pursue tariff policies through various legal grounds. Specifically, under laws such as Section 338 of the Tariff Act of 1930 (related to public interest), Section 232 of the Trade Expansion Act of 1962 (related to national security), Section 301 of the Trade Act of 1974 (addressing unfair trade practices), and the International Emergency Economic Powers Act (responding to emergencies), the President can raise tariffs under certain conditions or for specific purposes. Robert Lighthizer, U.S. Trade Representative under the first Trump administration, argued that the current trade deficit justifies the use of tariffs based on these legal grounds. Furthermore, if the United States Reciprocal Trade Act, pursued by the Trump administration in 2019, is reintroduced and passed by the Republican-controlled House and Senate, the President's authority to impose tariffs will likely expand.

Moreover, the second Trump administration is expected to reject multilateral trade agreements and pursue renegotiations, similar to its first term. The renegotiation of the USMCA is considered a top priority. Taking advantage of the first review of the USMCA scheduled for 2026, efforts are likely to be made to strengthen rules of origin in the automotive sector and amend labor provisions. Subsequently, other trade agreements may also become subject to renegotiation. In particular, with the electric vehicle (EV) industry designated as a critical sector for U.S. national security, there is a high probability of pursuing amendments to agreements, focusing on strengthening related rules of origin. For South Korea, which is the U.S.'s eighth-largest trading deficit country, and given that President-elect Trump emphasized the renegotiation of the Korea-U.S. FTA as a major achievement in 2018, further pressure for amendment is possible.

III. The Future of U.S. Trade Policy

1. Short-Term Outlook for the Second Trump Administration's Trade Policy

The intensity and nature of the second Trump administration's trade policy are expected to shift around the 2026 midterm elections. For Trump, who has no opportunity for re-election, winning the midterm elections is a crucial task to avoid becoming a lame duck, and trade policy is likely to be conducted with domestic political considerations in mind.

Tariff policy is expected to follow a pattern of 'aggressive implementation followed by strategic easing.' In the initial phase of his term, strong tariff policies will likely be pursued as promised, but as the midterm elections approach, there is a high probability that the intensity will be gradually adjusted. To ensure electoral victory, the support of business groups, including multinational corporations, is essential. Therefore, to minimize the potential direct and indirect harm to these groups from tariff policies, there is a high likelihood of seeking benefits by refining non-tariff barriers, which are less visible to voters, or by creating exceptions. Above all, given the anticipated retaliatory measures from major trading partners such as the EU and China, there will likely be significant negative effects on the U.S. economy, which could become a detriment in the midterm elections, making tariff easing not just an option but a necessity. Indeed, research suggests that retaliatory tariffs from major trading partners played a decisive role in the Democratic Party's acquisition of a majority in the House of Representatives in the 2018 midterm elections during Trump's first term (Blanchard et al. 2019). Specifically, Chinese retaliatory tariffs systematically targeted U.S. goods produced in regions with closely contested congressional elections, leading to frequent losses for Republican candidates in those areas (Kim & Margalit 2021). Furthermore, tariff increases will inevitably lead to higher prices for imported goods and raw materials, exacerbating inflation, and thus, it is highly probable that a situation will arise where tariffs must be eased again as the midterm elections approach.

Meanwhile, Trump has ample room to leverage 'tariff easing' just before the midterm elections, citing concessions from other countries or the growth of U.S. manufacturing, to showcase his policy achievements and mitigate criticism regarding negative economic effects. This pattern was also observed during the U.S.-China trade war in Trump's first term. Amidst the escalating trade war, Trump lowered the intensity of the trade war on January 15, 2020, ahead of the presidential election, through the 'Phase One Deal,' and framed this as a result of his aggressive trade policy eliciting concessions from China.

Regarding trade agreement renegotiations, Trump can actively use the renegotiation of the USMCA, which he has consistently proposed since his 2024 campaign, as a card for the midterm elections. This policy offers a direct and effective message to voters as a tangible measure to resolve the U.S. trade deficit. Simultaneously, by holding the USMCA renegotiation hostage, he will likely seek continuous concessions from Canada and Mexico on key domestic issues such as immigration and drug trafficking.

2. Will U.S. Protectionist Trade Policy Continue?

While the second Trump administration may adjust the intensity of its tariff policies as the midterm elections approach, it is unlikely that the protectionist trade policy platform will be abandoned. Therefore, will U.S. protectionist trade policy continue for some time after the second Trump administration?

The two driving forces behind U.S. protectionism mentioned earlier—economic insecurity among U.S. voters and the U.S.-China competition—are unlikely to disappear easily. Although U.S. voters have long perceived globalization as primarily beneficial to the U.S., they now increasingly prefer decoupling supply chains from competitor nations, even at the cost of higher prices. According to a Pew Research Center survey, 59% of Americans believe that trade with other countries has harmed the U.S. more than it has benefited it (Gracia 2024). For this perception to change, voters must recognize that protectionist trade policies, rather than economic globalization, could lead to economic stagnation and job losses in the U.S. Recent research by the Tax Foundation indicates that, as many economists have feared, U.S. protectionist trade policies are negatively impacting macroeconomic indicators such as long-term GDP outlook, capital accumulation, and job creation (York 2024). Furthermore, a recent study by Autor et al. (2024) found that U.S. protectionist policies, initiated during the first Trump administration, have had a negative impact on employment, particularly in the agricultural sector, and have not positively affected real incomes. As voters are increasingly exposed to news of these negative economic consequences, support for protectionist policies is likely to gradually decline.

However, regardless of how evident the losses from protectionist trade are in objective economic indicators, voter perceptions are slow to change once protectionist ideas become 'politicized.' Despite the negative economic repercussions, U.S. voters are increasingly showing more support for politicians who pursue protectionist trade policies (Autor et al. 2024). Notably, public support for policies rises when a target country is designated, compared to when it is not, and these so-called 'target effects' tend to persist even when information about the economic losses from protectionism is provided (Kim et al. 2023). In the U.S. context, recent research indicates that voters are more supportive of a leader's protectionist policies when provided with information about the trade partner's 'unfair trade practices' during the U.S.-China trade war, and even show lower trust in leaders who do not pursue protectionist policies (Cho & Yang 2024).

The dynamics of U.S.-China competition are also expected to intensify further, and consequently, the perception of China as a threat will not diminish. The ongoing trade conflicts and strategic competition with China have already led to bipartisan consensus on the need for a tough stance on trade issues (Carothers & Sun 2023; Wang 2019). The view of China as a strategic competitor is likely to continue fueling protectionist sentiment, and both parties in Congress are expected to persist in their efforts to protect U.S. economic interests from what they perceive as China's unfair practices.

IV. Conclusion

This study analyzed the recent resurgence of protectionism in the historical context of U.S. trade policy and projected the direction of trade policy under the second Trump administration. The analysis indicates that while the intensity of U.S. protectionist trade policy will be adjusted around the 2026 midterm elections in the short term, it is expected to persist in the long term.

Specifically, the second Trump administration is expected to implement aggressive protectionist measures in trade policy early in its term, including significant tariff increases and trade agreement renegotiations. However, as the 2026 midterm elections approach, there is a high likelihood that the intensity of these policies will be moderated to minimize the negative economic impacts stemming from price increases due to tariffs and retaliatory measures from trading partners. In particular, similar to the 'Phase One Deal' with China during the first Trump administration, it is anticipated that tariff reductions will be used to showcase policy achievements and offset criticism regarding economic side effects as the midterm elections draw near.

From a long-term perspective, the U.S.'s protectionist trade policy stance is expected to continue for the foreseeable future. This is driven by two structural factors. First, the negative perception of globalization and free trade among U.S. voters is unlikely to change easily. Despite evidence of economic losses resulting from protectionism, public support for protectionism is actually strengthening as it becomes politicized. Second, as U.S.-China strategic competition intensifies, trade policy is increasingly being utilized as a strategic tool rather than merely an economic one. The perception of China as a strategic competitor has achieved bipartisan consensus, which will continue to fuel protectionist sentiment. In particular, as competition in advanced technology sectors intensifies, trade policy is expected to be employed even more strategically.

In conclusion, the signs are clear that U.S. protectionist trade policy represents a structural shift rather than a temporary phenomenon. This policy direction by the world's largest economy will continue to bring about significant changes in the global trade order, and countries worldwide will need to adapt to the new trade environment. Particularly, countries with high dependence on foreign trade, such as South Korea, must promptly develop mid- to long-term response strategies, including diversifying export markets, reorganizing supply chains, and upgrading industrial structures, in preparation for the strengthening of U.S. protectionism. Furthermore, in the face of the rising tide of protectionism in various regions centered around the U.S., it is time to consider accelerating accession to existing economic cooperation frameworks, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to establish cooperative systems capable of responding on a 'bloc' basis. ■

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■ Yang, Joonseok_Professor, Department of Political Science and International Relations, Sungkyunkwan University.

■ Contact and Editing:Lee, So-young, EAI Research Assistant

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