INTERVIEW - «Trumps Zölle sind toxisch geworden»

In an interview, Professor Richard Baldwin explains why Republicans suffered such a significant loss in the Midterm elections. He attributes this to American voters hating inflation. When asked if Trump's claim that he would have won the elections if he had been on the ballot had any merit, Baldwin replied that voters had clearly dealt with Trumpism.

Despite promising to lower prices and inflation, Trump's policies led to the opposite outcome through tariffs, the Iran war, and the deportation of foreign workers. Baldwin points out that Trump consistently denied the existence of a cost-of-living crisis, despite people feeling it daily, and made statements that ordinary voters could easily see as wrong.

This combination of his apparent disinterest in the crisis and his own policies causing it led to many Americans from various socio-economic groups voting against him. Trump's trade war played a role but was a slow process that became more apparent in the fall of 2025, with import duties increasing consumer costs. The hatred towards tariffs then boiled over, culminating in the Iran war.

Trump used tariffs as political theater, which is now politically toxic. The majority of Americans now believe that tariffs increase prices, so they are no longer a great political tool, as Trump once believed. It's also worth noting that Trump, a populist, sees himself as someone helping the average citizen. Therefore, he is unlikely to engage in aggressive tariff hikes again.

My analyses also show that Trump has been gradually reducing effective tariffs as early as 2026 through exemptions. The Swiss Economic Department is less optimistic and emphasizes that the election result does not change what Trump can do legally. They stress that the Democratic control of Congress will not give them an easy way to abolish these tariffs, unless they pass a law, to which Trump could veto again.

So, the legal basis remains unchanged. Tariffs are unpopular, and Trump wants to be popular. The Democrats, with their majority in Congress, will likely act in a way that politically embarrasses the Republicans. For example, they might promise to remove all tariffs on goods from Canada, putting the Republicans on the spot in Congress.

The Democrats will therefore drive up the political costs of further tariff increases. Hence, I don't believe Trump will raise tariffs. They have stopped Trump's trade war. While the U.S. won't completely reverse all tariffs, we are in a much more stable situation now. The long-term damage Trump has caused to global trade is significant.

Trade is now being used as a weapon, something that has never happened in peacetime. This instrumentization doesn't change with the Midterms. However, I remain optimistic that we can rebuild the global trade system. Regional trade agreements are replacing multilateral trade agreements, and global trade is currently even doing quite well.

Trump will likely pressure Chinese President Xi Jinping into further tariff reductions at their meeting in November, and he will probably comply. Since the first deal with Beijing in May 2025, the U.S. has significantly reduced tariffs on Chinese goods. However, China has driven rare earths and magnets into a corner with its export controls, which has forced Trump to make many concessions to China.

As trade partners know, Trump's threats are no longer credible, leading foreign governments to resist American protectionism even more. Long-term, the U.S. and China, or the G-7 and China, will find a way to coexist. This has happened before, such as with Japan in the 1970s and 1980s, when Japan was in China's current position. Japanese cars, steel, and other products were crucial to global trade then, and they are still important today.