• Home
  • Latest
  • Fortune 500
  • Finance
  • Tech
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia

Trendingnow

1

After forcing workers back to the office, Goldman Sachs and JPMorgan Chase are now letting their staff work remotely—but only for the World Cup

2

Markets tumble worldwide as Fed resets expectations: $400 billion wiped off SpaceX stock

3

Current price of oil as of June 23, 2026

1

After forcing workers back to the office, Goldman Sachs and JPMorgan Chase are now letting their staff work remotely—but only for the World Cup

2

Markets tumble worldwide as Fed resets expectations: $400 billion wiped off SpaceX stock

3

Current price of oil as of June 23, 2026
Finance

What Will Donald Trump’s First Salvo in the Trade War Be?

By
Chris Matthews
Chris Matthews
Down Arrow Button Icon
By
Chris Matthews
Chris Matthews
Down Arrow Button Icon
November 11, 2016, 1:32 PM ET
Photograph by Getty Images
Add Fortune on Google for similar content.

One could argue that Donald Trump did not win the presidency on his compelling policy vision.

But one Trump notion that did captivate the public was the idea that America’s trade deals have sold out the average American.

He promised to rip up trade deals like the North American Free Trade Agreement and get tough on partners like China, who he said are taking advantage of us. But can a president really undue decades of trade policy with a stroke of a pen, and what sort of policy regime will replace it? The answers to those questions are “yes,” and “it’s impossible to know.”

It may seem unlikely given the gridlock we have seen in Washington, but when it comes to trade policy the President of the United States has “enormous powers” to act unilaterally to raise tariffs and otherwise conduct trade policy, according to Gary Hufbauer Senior Fellow at the Peterson Institute for International Economics.

Trump has not been terribly specific in detailing exactly what he wants to do on trade, other than opting out of NAFTA and confronting China regarding unspecified practices he says are responsible for America’s $336 billion trade deficit with the world’s second largest economic power.

In terms of NAFTA, the details of the agreement give the President of the United States the authority to simply withdraw from the pact when ever he wants, after giving Canada and Mexico a six-month warning. After that, NAFTA legislation gives the president vague powers, that could certainly be interpreted broadly, to “proclaim additional duties—following consultations as necessary and appropriate to maintain the general level of reciprocal concession with Canada and Mexico,” according to Hufbauer. But the need to consult Congress does not mean Trump needs its approval, he says. In other words, President Trump’s power to use tariffs and the threat of withdrawal from the agreement is nearly limitless.

 

The same goes for trade relations with China. Throughout the twentieth century, Congress passed trade laws that gave the president broad powers to institute tariffs to protect national security, combat balance of payment deficits, or to combat unfair trade practices abroad. Given China’s role as a geopolitical rival, our massive trade deficits with the country, and the many steps it takes to protect key industries and resist foreign industries, Trump would have plenty of statutory justification for his tough stance on trade.

And that means that corporations would have very difficult time stopping Trump through the court system. “Firms will go to court seeking preliminary injunctions,” says Hufbauer, but he is skeptical that one will be granted, given the laws Trump can point to as justification. The only constraint Trump will face, then, will be Congress, though it’s doubtful that enough opposition can be mustered to override an inevitable veto that would greet efforts to curb his power.

The other big question mark when it comes to Trump and trade is what exactly he hopes to achieve through confronting our trade partners. Trump’s critique of U.S. trade policy during the campaign was crude. He merely pointed to the existence of trade deficits as evidence that our trade deals are bad, but didn’t explain how he thought eliminating them would lead to economic prosperity at home.

It’s true that, in a basic sense, a trade deficit represents U.S. wealth going abroad, and that all else equal, producing the things we consume at home would support domestic employment. But all else is not equal. If Trump’s trade stance leads to lower imports and exports, it won’t lead to significantly more jobs, just higher prices for consumers. The only hope for Trump to be successful, then, is for Trump to use the threat of tariffs to force countries like China to open themselves up to more exports from the U.S. Because China’s economy is more reliant on exports to the U.S. than the U.S. is reliant on exports to China, there is some reason to believe that China would be willing to negotiate on this front to prevent the closing of U.S. markets. But it could also risk an internecine trade war that would create few jobs and harm both economies.

Supporters of Trump’s trade stance, like Alan Tonelson, founder of the RealityChek blog, argues that reducing imports is the price we must pay for higher employment at home. “When countries have made and pursued long-standing policies to make their markets closed, it doesn’t matter what promises they make when treaties are signed,” says Tonelson. “They will find ways to keep their markets just as closed.” If this is the case, it is a fool’s errand to believe that we can significantly increase exports to these countries, meaning we might as well focus on bringing whatever production we can back home.

Whichever trade theory you believe in, it’s important to realize that we have very little evidence of what ratcheting up trade barriers would do to a modern economy like America’s. We’ve seen only the steady march toward freer trade in the decades since World War II. For Trump supporters, his experiments are worth running. The rest of us, however, will just be along for the ride.

About the Author
By Chris Matthews
See full bioRight Arrow Button Icon
Add Fortune on Google for similar content.

Latest in Finance

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025

Most Popular

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Fortune Secondary Logo
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • World's Most Admired Companies
  • See All Rankings
  • Lists Calendar
Sections
  • Finance
  • Fortune Crypto
  • Features
  • Leadership
  • Health
  • Commentary
  • Success
  • Retail
  • Mpw
  • Tech
  • Lifestyle
  • CEO Initiative
  • Asia
  • Politics
  • Conferences
  • Europe
  • Newsletters
  • Personal Finance
  • Environment
  • Magazine
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
  • Group Subscriptions
About Us
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • Facebook icon
  • Twitter icon
  • LinkedIn icon
  • Instagram icon
  • Pinterest icon

Latest in Finance

Sarah Youngwood, EVP and CFO at Nasdaq.
C-SuiteFinance
Inside Nasdaq CFO Sarah Youngwood’s AI playbook
By Sheryl EstradaJune 24, 2026
11 minutes ago
Top CD rates today, June 24, 2026: Lock in up to up to 4.40%
Personal FinanceCertificates of Deposit (CDs)
Top CD rates today, June 24, 2026: Lock in up to up to 4.40%
By Glen Luke FlanaganJune 24, 2026
40 minutes ago
Today’s top high-yield savings rates: Up to 5.00% on June 24, 2026
Personal FinanceSavings accounts
Today’s top high-yield savings rates: Up to 5.00% on June 24, 2026
By Glen Luke FlanaganJune 24, 2026
40 minutes ago
You can ignore Trump’s threats to leave NATO: Pimco says they’re a ‘paper tiger’
EconomyMarkets
You can ignore Trump’s threats to leave NATO: Pimco says they’re a ‘paper tiger’
By Jim EdwardsJune 24, 2026
57 minutes ago
Current refi mortgage rates report for June 24, 2026
Personal FinanceReal Estate
Current refi mortgage rates report for June 24, 2026
By Glen Luke FlanaganJune 24, 2026
4 hours ago
Current ARM mortgage rates report for June 24, 2026
Personal FinanceReal Estate
Current ARM mortgage rates report for June 24, 2026
By Glen Luke FlanaganJune 24, 2026
4 hours ago

Most Popular

After forcing workers back to the office, Goldman Sachs and JPMorgan Chase are now letting their staff work remotely—but only for the World Cup
Success
After forcing workers back to the office, Goldman Sachs and JPMorgan Chase are now letting their staff work remotely—but only for the World Cup
By Orianna Rosa RoyleJune 23, 2026
22 hours ago
Markets tumble worldwide as Fed resets expectations: $400 billion wiped off SpaceX stock
Banking
Markets tumble worldwide as Fed resets expectations: $400 billion wiped off SpaceX stock
By Jim EdwardsJune 23, 2026
1 day ago
Current price of oil as of June 23, 2026
Personal Finance
Current price of oil as of June 23, 2026
By Joseph HostetlerJune 23, 2026
22 hours ago
Meet the 2 men putting New York's $300 billion pension fund in play for the first time in 20 years
Investing
Meet the 2 men putting New York's $300 billion pension fund in play for the first time in 20 years
By Nick LichtenbergJune 22, 2026
2 days ago
Former U.S. Secret Service agent says bringing your authentic self to work stifles teamwork: 'You don’t get high performers, you get sloppiness'
Success
Former U.S. Secret Service agent says bringing your authentic self to work stifles teamwork: 'You don’t get high performers, you get sloppiness'
By Sydney LakeJune 21, 2026
3 days ago
Texas and Charlotte used to build huge McMansions—now they're copying the California design tricks they once mocked
Real Estate
Texas and Charlotte used to build huge McMansions—now they're copying the California design tricks they once mocked
By Sydney LakeJune 22, 2026
2 days ago

© 2026 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.