Key Takeaways:

- In 2025, the U.S. imposed a sweeping 10% baseline tariff on nearly all imports, signaling a shift toward protectionist trade policy.

- Peter Navarro’s “economic sovereignty” doctrine revives Alexander Hamilton’s industrial strategy, challenging the long-dominant Ricardian free-trade model.

- Navarro argues global trade is structurally rigged—pointing to VAT regimes, state subsidies, and currency suppression by foreign competitors.

- Critics warn these tariffs could raise prices, invite retaliation, and weaken U.S. competitiveness over time.

- The U.S. is blending statecraft with markets once again—reshaping trade not just around efficiency, but around national resilience and strategic priorities.

In 2025, the United States imposed a sweeping 10% baseline tariff on virtually all imported goods [1]. At the center is Peter Navarro, the long-time trade advisor to Donald Trump and one of the few economists in public life who openly and unapologetically champions protectionism [2].

To many, the move signaled a retreat from global integration. To Navarro, it was a strategic correction—one he’s advocated for decades. His worldview, articulated in books like Death by China and The Coming China Wars, treats trade not as a neutral exchange but as a battleground for national power. In his telling, the U.S. has played by the rules while others have bent or rewritten them.

At the core of his argument is the belief that the architecture of global trade is structurally skewed. Countries with value-added tax regimes impose implicit tariffs on U.S. exports while rebating their own [3]. China and others engage in industrial dumping, use state subsidies to dominate key sectors, and suppress currencies to maintain cost advantages [4]. Meanwhile, U.S. industries, Navarro argues, have been left exposed in the name of ideological orthodoxy.

In response, he advocates for tariffs not as ad hoc retaliation, but as instruments of industrial strategy. The baseline tariff is only one piece. Reciprocal duties, targeted levies on China, and crackdowns on transshipment schemes are all part of a broader effort to reshore production, rebuild strategic sectors, and restore what he calls “economic sovereignty” [5].

Navarro’s approach echoes an older American tradition: Hamiltonianism. In his 1791 Report on Manufactures, Alexander Hamilton argued that a young United States must actively shape its industrial base through tariffs, subsidies, and public support [6]. For Hamilton, economic independence was inseparable from national strength. Today, Navarro channels that logic—casting the U.S. not as a participant in a frictionless global marketplace, but as a sovereign nation defending its productive core.

This stands in contrast to the Ricardian view that still dominates modern trade theory. David Ricardo’s early 19th-century theory of comparative advantage holds that countries grow wealthier by specializing in what they produce most efficiently and trading for the rest [7]. Milton Friedman echoed this logic, writing: “The case for free trade is not based on nationalism but on the simple proposition that exchange is mutually beneficial. It increases total output, lowers costs, and raises the standard of living” [8].

The divide between these traditions runs through American history. After World War II, the U.S. helped build the General Agreement on Tariffs and Trade—later the WTO—embedding Ricardo’s vision in global institutions. Free trade was seen not just as economically sound, but geopolitically stabilizing. The liberal order depended on open markets, even when they came at a domestic cost [9].

But there were always deviations. In the 1980s, facing Japanese dominance in semiconductors and automobiles, the Reagan administration embraced selective protectionism. “Voluntary” export restraints, subsidies for U.S. chipmakers, and concern over industrial hollowing-out all reflected a temporary return to strategic trade [10].

Critics of today’s tariffs invoke another historical precedent: the Smoot-Hawley Tariff of 1930. Passed in the early days of the Great Depression, it raised duties on over 20,000 imports and triggered a wave of retaliation that deepened the global downturn. While Navarro argues the context today is fundamentally different, the cautionary tale lingers [11].

There’s also the Bretton Woods era to consider. In the mid-20th century, the U.S. held a dominant position in global manufacturing, allowing it to champion open trade from a position of strength. That world no longer exists. In Navarro’s view, global competition has become zero-sum, demanding new tools to defend domestic capacity [12].

From this perspective, tariffs are no longer ideological. They’re strategic. Yet critics argue they protect inefficiencies, raise prices for consumers and producers alike, and dampen innovation by reducing competitive pressure. The backlash risks retaliation, strains alliances, and may ultimately erode U.S. competitiveness [13].

Still, Navarro’s resurgence reflects more than policy—it reflects a change in how trade is framed. After decades of global shocks, supply chain fragility, and rising strategic competition with China, the Ricardian assumption of seamless, mutual gains from trade is no longer taken for granted. Navarro’s model, once fringe, now speaks to a world where resilience rivals efficiency in strategic importance.

This isn’t the first turn toward industrial strategy in U.S. history. The 1980s saw selective protectionism during the rise of Japanese tech. Today, policies like the CHIPS Act and the Inflation Reduction Act signal a new Hamiltonianism—where public investment and strategic autonomy are back in vogue [14]. Meanwhile, modern Ricardians continue to champion multilateralism, rules-based trade, and adaptive supply chains as the best route to long-term prosperity.

The choice between these frameworks isn’t binary. The U.S. has historically blended both: open markets with selective protections, innovation with statecraft. But the pendulum is swinging again. Whether Peter Navarro’s doctrine marks a necessary correction or a costly retreat remains to be seen.

What’s clear is that the terms of the debate have changed. We’re no longer simply asking what we trade—but why, and for whom.

 

Sources:

[1] Associated Press, “Trump administration implements 10% baseline tariff on all imports,” AP News, April 5, 2025.
[2] Reuters, “Navarro defends sweeping tariffs as strategic policy shift,” Reuters, April 2025.
[3] Peter Navarro, The Coming China Wars, 2006.
[4] U.S. Trade Representative, 2024 Report to Congress on China’s WTO Compliance.
[5] Reuters, “Trump imposes reciprocal tariffs, targets Chinese transshipment,” Reuters, April 2025.
[6] Alexander Hamilton, Report on Manufactures, 1791.
[7] David Ricardo, On the Principles of Political Economy and Taxation, 1817.[8] Milton Friedman, “Free Trade: The Case Against Protectionism,” Newsweek, 1978.
[9] Irwin, Douglas A., Clashing over Commerce: A History of U.S. Trade Policy, University of Chicago Press, 2017.
[10] Tyson, Laura D'Andrea, “Managed Trade and Strategic Trade Policy: The U.S.-Japan Semiconductor Agreement,” Harvard Business Review, 1989.
[11] Eichengreen, Barry, Globalizing Capital, 2008; Smoot-Hawley analysis, Brookings Institution archives.
[12] Helleiner, Eric, The Status Quo Crisis: Global Financial Governance After the 2008 Meltdown, Oxford University Press, 2014.
[13] Brookings Institution, “The Risks of Retaliatory Trade Policy,” 2024.
[14] White House Briefing on CHIPS and Science Act Implementation, 2023.