Economic Reality

Rarely has an economic policy been repudiated as soundly, and as quickly, as President Trump's Liberation Day tariffs -- and by Mr. Trump's own hand.  Witness the agreement Monday morning to scale back his punitive tariffs on China -- his second major retreat in less than a week.  This is a win for economic reality, and for American prosperity.

One tragedy of Mr. Trump's shoot-America-in-the-foot-first approach is that he's hurt his chances of rallying a united front of countries against Beijing's mercantilism.  By targeting allies with tariffs, Mr. Trump has eroded trust in America's economic and political reliability.

Beijing now also has the benefit of concrete experience to reassure the Communist Party that Washington would struggle to impose economic sanctions in a crisis such as a Chinese blockade or invasion of Taiwan.  

If there's a silver lining to this turmoil, it is that markets have forced Mr. Trump to back down from his fever dream that high tariff walls will usher in a new "golden age."  The age didn't last two months, and it was more leaden than golden.  White House aide Peter Navarro, the main architect with Mr. Trump of the Liberation Day fiasco, has been repudiated.

Mr. Trump will not want to admit it, but he started a trade war with Adam Smith and lost.  He's not the first President to learn that lesson.

-- The Editorial Board of the Wall Street Journal, "The Great Trump Tariff Rollback" (12 May 2025)