Trump's "Reciprocal Tariffs" Stick: The Loyalty and Divergence of the Operators Behind It

On April 2nd, local time, the White House issued a statement saying that U.S. President Trump announced a national emergency to enhance America's competitive advantage, protect U.S. sovereignty, and strengthen national and economic security.

According to CCTV News, the statement said that Trump will impose a 10% "baseline tariff" on all countries, which will take effect at 12:01 AM Eastern Time on April 5th. Additionally, Trump will impose personalized higher "reciprocal tariffs" on the countries with the largest trade deficits with the U.S., which will take effect at 12:01 AM Eastern Time on April 9th, while all other countries will continue to adhere to the original 10% tariff baseline.

Trump has repeatedly referred to April 2nd as "Liberation Day." Since he took office again, the U.S. has frequently wielded the tariff stick, affecting many countries globally, including Mexico, Canada, and China, as well as the European Union. Trump claims that tariffs will help protect U.S. businesses, shift manufacturing back to the U.S., create jobs for American workers, and reduce the U.S. trade deficit. He has also used tariffs to force U.S. trading partners to make political concessions.

However, many economists warn that tariffs are too blunt a tool for protecting the U.S. economy and addressing trade imbalances, potentially raising prices on a range of goods purchased by American consumers and businesses, and indirectly affecting U.S. exporters. Trump's tariffs and threats have already led to a sharp decline in the U.S. stock market, raising concerns that could lead to an economic recession. The S&P 500 index is expected to record its largest quarterly decline since the fall of 2022.

It is worth noting, where did Trump's tariff policy ideas come from? The formulation and implementation of these policies are backed by a complex network of trade representatives, economic advisors, legal experts, and external analysts, involving several key figures, including Secretary of Commerce Howard Lutnick, Secretary of the Treasury Scott Bessent, Senior Advisor for Trade and Manufacturing at the White House Peter Navarro, and Trade Representative Jamieson Greer. These individuals do not necessarily share the same stance.

Secretary of Commerce Lutnick: A Realist?

Lutnick previously served as the CEO of investment firm Cantor Fitzgerald, where he lost hundreds of employees, including his brother, in the 9/11 attacks. Before being appointed as co-chair of the presidential transition team last August, Lutnick was one of the largest donors to Trump's 2020 and 2024 campaigns. Campaign finance records show that during the 2016 presidential campaign, Lutnick donated to Republican presidential candidate Jeb Bush and Democratic presidential candidate Hillary Clinton.

When announcing Lutnick's upcoming cabinet nomination, Trump pointed out that Lutnick would lead the government's "tariff and trade agenda," directly overseeing the Office of the United States Trade Representative (USTR). The USTR is part of the President's Executive Office and is primarily responsible for negotiations with trading partners, with its operations centered around the U.S. Trade Representative After being nominated, Lutnick seems to have become a spokesperson for Trump's tariff policy. He expressed support for imposing comprehensive import taxes "one by one on each country" to force trade partners to lower tariffs on American products. "Tariffs are a way to achieve reciprocity," he stated. He also dismissed the view held by many economists that tariffs lead to inflation, calling it "nonsense."

According to reports from American media, Lutnick does not actually agree with Trump's tariff policy. CNN reported that Lutnick privately told friends that he "doesn't really like" Trump's arbitrary increases in tariffs and believes the new administration should use these tariffs to gain concessions from other countries. Other media have reported that Lutnick strongly advocates using tariffs as a tool of industrial policy and a bargaining chip to rebalance U.S. trade.

Friends and advisors close to Lutnick have indicated that he is neither a tariff zealot nor a free trader. Instead, Lutnick is more of a realist, viewing tariffs as a tool to achieve certain goals and challenge the status quo. "He believes, 'If we have the strength, the advantages, and the full power of the U.S. economy, why shouldn't we use it?'" said an executive who discussed the topic with Lutnick.

This realistic approach has also put Lutnick in a "damned if you do, damned if you don't" situation. Tariff supporters believe that Trump's trade advisors Navarro and trade representative Lighthizer are ideologically purer than Lutnick, while Wall Street financial elites and business figures find Treasury Secretary Basant more credible.

A congressional ally of Trump stated that Lutnick has become the preferred contact for lawmakers on tariff issues, citing Lutnick's approachable personality and the president's trust in him. Additionally, Lutnick is believed to have significant policy influence. He regularly communicates via text with Canadian Finance Minister Dominic LeBlanc, and a senior Canadian government official stated that the Canadian government believes Lutnick "does have a say in imposing tariffs."

Treasury Secretary Basant: Not in favor of "radical increases"

Before serving as Treasury Secretary, Basant was the CEO and Chief Investment Officer of New York hedge fund Key Square Capital Management and had previously served as Chief Investment Officer at Soros Fund Management. He taught courses such as "20th Century Economic Prosperity and Depression" and "History of Hedge Funds" at Yale University and provided economic advice to Trump during the 2024 election.

As Treasury Secretary, Basant is the highest-ranking economic official in the U.S., responsible for taxation, managing the $28.6 trillion national debt market, regulating finance, and handling and preventing market crises.

Unlike many on Wall Street, Basant is a supporter of using tariffs as a tool. In a commentary published in The Economist last October, he pointed out that globalization has exacerbated inequality in the U.S. and widened social and economic gaps. To address these issues, he proposed that taxing goods imported to the U.S. could "increase treasury revenue, encourage companies to restore production, and reduce America's dependence on industrial production from strategic competitors." In addition, Bessent argued in an article for The Wall Street Journal for tax reform and deregulation to stimulate more bank loans and energy production, calling for a reduction in government subsidies, relaxation of economic regulations, and an increase in domestic energy output.

In fact, due to Bessent's close relationship with Wall Street, analysts have pointed out that Bessent has always opposed "aggressively raising tariffs" and believes he could potentially block Trump from imposing excessively high tariffs. Regarding Trump's threat to impose a "global benchmark tariff" on all imported goods, Bessent described this step as the "most extreme" threat in negotiations with trading partners, which would be downgraded during negotiations.

Media reports indicate that in terms of monetary policy and exchange rates, Bessent has consistently supported adjustments to U.S. monetary policy but has not supported strategies aimed at devaluing the dollar. During Trump's first term, the president pointed out that the appreciation of the dollar would harm U.S. manufacturers' interests and even considered managing the dollar's exchange rate through government intervention. However, Bessent has stated that he supports the traditional Treasury view, including the importance of the dollar as a global reserve currency.

In March of this year, while defending the Trump administration's tariff policy, Bessent stated, "Tariffs may lead to a one-time price adjustment but will not trigger long-term inflation." He pointed out that the trade system built around the U.S. absorbing global exports for decades has collapsed and is unsustainable, and tariffs would help address this issue.

Senior Advisor Navarro: "Chemical Reaction" with Trump

Regarded as a "trade hawk," Navarro has long been known for his protectionist tendencies and inciting hostility towards China, currently serving as the White House Senior Trade and Manufacturing Advisor. The New York Times has analyzed that although Trump appointed billionaires from Wall Street to the positions of Secretary of the Treasury and Secretary of Commerce, Navarro's inclusion in his cabinet will ensure the presence of economic populism in the White House.

Navarro officially joined Trump's campaign team in 2016 as an economic and trade advisor and is seen as one of the most radical trade protectionists close to Trump, influencing the tariffs imposed on China during Trump's first term and the revision of the North American Free Trade Agreement.

During Trump's first term, Navarro served as the Chairman of the White House Trade Council and Trade and Industrial Policy Director, while also taking on responsibilities such as combating counterfeit goods online and streamlining the distribution of medical equipment during the pandemic. During this time, Navarro suggested imposing tariffs to protect U.S. domestic industries, reverse imbalanced trade agreements, and increase revenue.

Navarro is also known for his loyal following of Trump and was convicted of two counts of contempt of Congress for refusing to comply with a subpoena from the committee investigating the Capitol incident, receiving a four-month prison sentence in January 2024. Trump stated, "During my first term, few have been as effective or as persistent as Peter in executing my two sacred rules: buy American products, hire Americans."

"I have seen him interact with the president multiple times, and the personal chemistry between them is something that Trump's other advisors do not have," said Michael Pillsbury, who served as the chief external advisor on China during Trump's first term Some analysts believe that due to the presence of former Treasury Secretary Steven Mnuchin and former National Economic Council Director Gary Cohn, who are more free-market oriented economic officials, Navarro's ideas could not be fully implemented during Trump's first term. However, it is clear that Navarro faces fewer constraints in the Trump 2.0 era.

Regarding this historic "reciprocal tariff" policy, Navarro has been appearing in major media outlets, insisting that the comprehensive tariffs on foreign goods should not be viewed as import taxes, but rather as "the largest tax cut in American history." "Just from the auto tariffs alone, we can raise about $100 billion. In the tax legislation that must be passed—absolutely must be passed—we will provide tax incentives and credits for those who purchase American cars."

Media reports indicate that this statement contradicts the views of nearly all economists and has faced unanimous criticism from politicians, including many conservatives. Conservative National Review contributor Pradeep J. Shanker stated that Navarro's remarks are "very foolish."

Trade Representative Greer: Lighthizer's Protégé

Greer is a long-time protégé and deputy of Robert Lighthizer, the first U.S. Trade Representative under Trump and a representative of the protectionist hawks. During Trump's first term, Greer participated in trade negotiations with China and helped facilitate the United States-Mexico-Canada Agreement (USMCA). Additionally, Greer has served as a partner at King & Spalding law firm and as an Air Force lawyer.

Lighthizer stated in his 2023 book "No Free Trade" that Greer performed excellently during his three years in the position, saying, "He is very organized, very patient, and always in the office." When Trump announced Greer's nomination as U.S. Trade Representative last November, he stated on "Truth Social": "Jamison will lead the U.S. Trade Representative's office to control America's massive trade deficit, defend American manufacturing, agriculture, and services, and open export markets everywhere."

The U.S. Trade Representative is an ambassador-level cabinet official, directly accountable to the President and Congress, responsible for negotiating trade with other countries, resolving economic disputes, and collaborating with lawmakers, farmers, and business owners to develop trade policies. The U.S. Trade Representative leads an agency with over 200 staff members and has offices in Washington, Geneva, and Brussels.

Adams Lee, a senior attorney at Harris Sliwoski law firm, analyzed for the media that Besant and Lutnik both have Wall Street backgrounds, and people would hope they take a more cautious and business-friendly approach to handling tariff issues; however, Greer is a clear supporter of tariff policies and an expert in international trade law.

Like his mentor Lighthizer, Greer also aims to reduce the trade deficit. In February of this year, Greer stated during his Senate confirmation hearing that universal tariffs "are something that should be studied and considered." He also believes that the growing trade deficit with certain countries that have high tariffs and non-tariff trade barriers has become "a huge problem," and he promised to assess "unfair trade practices" as soon as he takes office. "Trade policy plays an important role in ensuring the economic security of the United States, and economic security brings strong national security. We have only a relatively short time to restructure the international trade system to better serve the interests of the United States," Greer said.

Author of this article: Huang Yuehan, Source: The Paper, Original title: "Behind Trump's 'Reciprocal Tariffs': The Loyalty and Divisions of the Operators"

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