Trump Lost on Tariffs, but Trade Will Never Be the Same

Grep Ip has it right. At the end of the day, Voldemort has killed the NeoCon view of the world and trade. America will be forever demanding that trade be reciprocal and fair. That's new.

Did the Dark Lord get us there along a reasonable, predictable route? No, of course not. He's a maniac...but one who had the right endpoint in mind. We could have done without the skizoid tactics, however.

Trump Lost on Tariffs, but Trade Will Never Be the Same

U.S. trade policy will be less chaotic, but it won’t go back to what prevailed before 2025

By Greg Ip, WSJ

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Feb. 21, 2026 5:30 am ET

American trade has moved in a more protectionist direction. Kyle Grillot/Bloomberg News

President Trump still has three years left in office. Yet the Supreme Court’s ruling Friday that most of his tariffs are illegal has given the world a glimpse of U.S. trade policy long after Trump has gone.

It will be more orderly and less chaotic, less driven by impulse and vendetta, more discriminating between allies and adversaries.

But it won’t be what prevailed before 2025, much less 2017, at the start of Trump’s first term. The pursuit of liberalized trade and high-minded principles that once drove U.S. trade policy is gone. In its place is an unsteady equilibrium of tariffs and transactional deals. American trade has moved in a more durably protectionist direction.

From precision to saturation

In his first term, Trump’s tariffs were targeted. He used one law, Section 232, to impose tariffs on sectors deemed vital to national security such as steel, and another, Section 301, to tariff China for allegedly unfair trade practices. The tariffs survived court challenges and paved the way for the new trade pacts with Japan, South Korea, Mexico and Canada.

In his second term, he went for saturation coverage. First, he imposed tariffs of 10% to 25% on Mexico, Canada and China, supposedly to counter fentanyl. Last April, he sprayed the world with levies as high as 125%.

He did so claiming authority under the International Emergency Economic Powers Act to raise tariffs by any amount for any reason on any country indefinitely so long as he declares an emergency. In his first term, his trade team had rejected that path as too risky legally and politically.

He came up with novel applications almost weekly. He threatened Colombia with tariffs for refusing to take back deported migrants. He imposed tariffs on Brazil for prosecuting his ally, former President Jair Bolsonaro. He threatened tariffs on a group of countries he accused of trying to replace the dollar as a reserve currency.

Still, even before Friday, Trump’s tariff push was reaching its limits. Hammered over affordability, he carved out exemptions for coffee, bananas and other products. In the House of Representatives, a handful of Republicans joined with Democrats in a vote of disapproval on his tariffs on Canada.

Last year European leaders meekly accepted tariffs as the price of trade peace and support for Ukraine. But they snapped when Trump threatened to use tariffs to annex Greenland. Trump soon backed down. His threats kept coming—100% on Canada for doing a deal with China, 25% on any nation that did business with Iran—but the actual tariffs, for the most part, didn’t.

In its ruling, the Supreme Court said Ieepa didn’t give him any authority to impose tariffs, much less without limit. “When Congress has delegated its tariff powers, it has done so in explicit terms and subject to strict limits,” it said.

Henceforth Trump will use those other powers, including Section 232, Section 301 and another called Section 122, which allows a tariff of up to 15% for 150 days to address trade deficits.

Those laws can likely return effective tariff rates to where they were under Ieepa. But they require Trump to provide a clearer economic rationale. This will “curtail the threat or use of tariffs as the president’s preferred form of leverage or punishment outside the trade domain,” Mike Froman, president of the Council on Foreign Relations and U.S. trade representative under Barack Obama, wrote Friday. “Trump will need to find another way to express his pique toward other countries.”

The ruling will likely reinforce the message of Trump’s many domestic opponents to the world that a friendlier America isn’t far away. “Donald Trump is temporary. He’ll be gone in three years,” Gavin Newsom, California governor and likely candidate for the Democratic presidential nomination, said at the Munich Security Conference a little over a week ago.

​“This challenging period is likely to last for one political cycle or less,” Rick Snyder, a former Republican governor of Michigan, told Canadians in an op-ed.

Tariffs’ central place in Trump’s economic philosophy is unique to him, says Josh Lipsky of the Atlantic Council. Nonetheless, “Higher tariff rates from the U.S. are here to stay.”

No president will lightly give up the hundreds of billions of dollars tariffs now generate in annual revenue. Tariffs will almost certainly lead to some jobs and factories over the next three years. That creates a constituency to defend tariffs, especially in key sectors like steel and cars and swing states like Michigan and Pennsylvania.

Meanwhile, both parties have shifted away from free trade. Republicans in Congress are generally for open trade, but less so than during Trump’s first term. In 2018, then-Sen. Pat Toomey of Pennsylvania persuaded most of his Republican colleagues to vote for a bill to curtail Trump’s tariffs. Just four Republican senators voted for a similar resolution last October.

When I ask some establishment Republicans about their future trade policy, they say it won’t have Trump’s impulsiveness, derisive tone or tendency to lump together adversaries and allies. But it will retain the emphasis on reciprocity—that is, punishing countries that mistreat the U.S. with their own tariffs, taxes and regulations. The government will still intervene to support sectors like semiconductors vital to national security.

Democrats, too, are turning against open trade. President Joe Biden kept all of Trump’s tariffs on China, and his subsidies for domestic green tech manufacturing upset Europe and Japan.

The neoliberals who once advocated free trade inside the Democratic Party are in retreat while progressives are ascendant. In Munich, Rep. Alexandria Ocasio-Cortez, a democratic socialist and possible candidate for president, said the North American Free Trade Agreement (since replaced by the U.S.-Mexico-Canada Agreement) was “a failed policy” and that trade had overwhelmingly benefited the wealthy.

Some in the Trump administration wonder if there’s a deal to be done with Democrats to legislate some tariffs.

This all explains why the rest of the world, rather than wait for Trump to leave, is adapting to the new reality. A great power like China or the U.S. “utilizes the dependencies of others and, if need be, takes advantage of them,” German Chancellor Friedrich Merz said in Munich. “We are thus reducing our dependencies and our vulnerability.”

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