After announcing Liberation Day - stiff "retaliatory" tariffs on every country and penguin-inhabited island in the world - US President Donald Trump rescinded the vast majority of tariffs eight days later when stock and bond markets crashed.
Author
- Lester Munson
Non-Resident Fellow, United States Studies Centre, University of Sydney
He followed that with more exemptions for phones, computers and computer chips two days later. Ten percent tariffs remain across the board, along with rates up to 145% on China.
Is Trump aligned with previous Reagan on tariffs?
As with anything related to Trump, perceptions overwhelm reality. Trump's showmanship - call him a carnival barker if you must - obfuscates what is really happening.
Trump is seen as a protectionist and a populist. By comparison, former president Ronald Reagan was seen as a principled free trader and more ideologically conservative. Both images are misleading.
Reagan slapped tariffs on cars, steel, lumber, computers, computer chips, motorcycles, machine tools, even clothes pins. The great guru of free markets, Milton Friedman, is reported to have said that the Reagan administration has been "making Smoot-Hawley look positively benign." (Smoot-Hawley was an infamous tariff law enacted in 1930 at the beginning of the Great Depression.)
Reagan went back and forth on tariffs, even attacking them in a radio address when Japan tried to impose them. At the end of the day, his record on the issue was as mixed as that of any American president.
Trump's politics, if not his showmanship, look a lot more like traditional Republican approaches in the cold light of day. The showmanship - provocative statements, grand exaggerations, outright falsehoods and even stand-up-comic-like aspects - is purposeful.
Keeping Republicans united
The main goal of Trump's tariff showmanship, largely unreported in the press, is keeping congressional Republicans unified as he pushes his domestic policy agenda of lower taxes, budget cuts, expanded energy production and tougher immigration policies.
Congressional Republicans have been working for months on legislating this agenda through the complex budget reconciliation process. This legislative process is difficult and involves passing budget resolutions through the Senate and the House on a specific schedule. This process is required because it allows for a path around the 60-vote filibuster in the Senate. With only 53 Republican senators and a Democratic Party that is committed to resisting Trump on almost every policy choice, Trump needs the reconciliation process to work this year.
In one sense, all of Trump's activities since his inauguration - the "waste"-cutting DOGE, spending cuts, ending foreign aid programs, laying off federal workers - have given him the political space with congressional Republicans, particularly fiscal conservatives, to advance his legislative agenda. It is important to know that Congressional Republicans have been ungovernable for quite some time.
Over the past ten years, there have been five Republican Speakers of the House - John Boehner, Paul Ryan, Kevin McCarthy, Patrick McHenry (acting) and now Mike Johnson. This unprecedented turnover is caused by a virtually unmanageable Republican coalition of mainstream business-oriented conservatives and the fiscal hawks who generally populate the Freedom Caucus . The Freedom Caucus is more than willing to vote against other Republicans - indeed they are proud of it. Because of this, speaker after speaker has had to reach out to Democrats for votes to pass legislation, ultimately dooming their time in the position.
Trump has managed to keep this ungovernable group of House Republicans united, and this may be his true political gift.
To achieve this, he has engaged in a comprehensive campaign of maximum pressure on just about everything: Canada, Greenland, NATO, Europe, China, Ukraine, American universities, federal workers, illegal immigrants, big law firms and even paper straws .
Congressional Republicans, in appreciation of this shock and awe campaign, have stayed united. This means Trump's legislative agenda can move forward.
With his global tariff plan, Trump saw Republicans beginning to defect. In one Senate vote in April, four Republicans sided with Democrats against tariffs on Canada. Senator Ted Cruz warned that Republicans might lose the 2026 election because of tariffs. Chuck Grassley of Iowa, the oldest senator and one of the most conservative, indicated he would support bringing tariff authority back to Congress and away from the president.
Trump can read a room as well as anyone. When he saw Republican unity was at risk because of his tariff plan, he quickly pivoted to a much more moderate version. While Trump's grandiosity is often highly criticised, it is that quality that gives him the ability to keep his party together, and therefore to govern.
Sparking panic among Democrats
The other major effect of Trump's tariffs strategy is to sow discord among his opponents.
Democrats, who want to criticise Trump but know their own party has often endorsed tariffs in the past, are reeling. Democratic Michigan Governor Gretchen Whitmer said she understood Trump's "motivation behind the tariffs" and even agreed with Trump that we "need to make more stuff in America". She was immediately criticised by fellow Democrats.
Hakeem Jeffries, the top Democrat in the House of Representatives, tried a slightly more aggressive anti-Trump approach. He said :
Tariffs, when properly utilized, have a role to play in trying to make sure that you have a competitive environment for our workers and our businesses. That's not what's going on right now. This is a reckless economic sledgehammer that Donald Trump and compliant Republicans in the Congress are taking to the economy, and the American people are being hurt enough.
This response won't help Democrats climb out of their deep hole of unpopularity, measured last month at an historic low.
Lester Munson receives funding from the U.S. Studies Centre at the University of Sydney.
