Trump announced on Friday that the U.S. will enforce reciprocal trade tariffs with other nations – meaning Trump will lift American tariffs to the rates those other nations charge us.

For all the self-righteous indignation by the Chinese, Germans and the huffy European Union bureaucrats, the U.S. has virtually the lowest tariffs of any major trading partner in the world (and these numbers don’t even include the VAT taxes that are rebated on exports and zing imports).

We are also (by far) the richest country in the world with half of the world’s wealth, which contradicts the argument by some of our protectionist friends that our free trade policy hurts our economy.

But as the hub of the global economy, we are the one nation that every other country MUST trade with.  Trump’s strategy is to use this leverage to force other nations to lower their tariffs on our goods.

If Germany or China or Japan want to stop Trump from raising our tariff rates, all they will have to do is lower theirs.

Period.

Could this escalate into a trade war that nobody wins?  Perhaps. Germany and China have threatened to counter Trump’s 15% tariff with higher tariffs on us.

That’s a tit for tat game they can’t win. China MUST have access to America’s vast consumer market or they risk a depression. So it’s in their strong self-interest to lower their tariffs, not raise them.

If Trump’s strategy works – EVERY nation we trade with will soon lower their tariffs. Trade will be freer and fairer and everyone wins. (Click on the chart to see full size version)