CDE Insight | Professor Robert Lawrence on Trump, trade and trouble
- During his visit to South Africa in April 2025, Professor Robert Lawrence, Harvard professor and world-renowned trade expert, held a series of high-level discussions with government and business leaders about the ‘Liberation Day’ tariffs imposed by US President Trump and their potential impact on the world and South Africa.
- Donald Trump’s views on trade in general and tariffs in particular can be traced back to the 1980s and appear to be deeply held but ignore basic insights from economic theory.
- Donald Trump does not regard trade as an activity where all parties can gain, but rather as a zero-sum game in which one side loses and the other one wins. He sees America’s large trade deficit as proof that Americans are losing, which must be because foreign competitors are not playing fair.
- Trump’s tariff policy will likely have several distortionary effects on both production and consumption in the US, rendering exports less competitive, raising prices for consumers, making imported inputs more expensive, and reducing productivity enhancements associated with specialisation.
- Trump’s tariffs are unlikely to revitalise US manufacturing or expand domestic employment opportunities, as they are intended to do. Instead, they will cause global upheaval and ultimately strengthen China’s hand in the new world order.
- South Africa should respond by diversifying its exports, increasing its global competitiveness, and forging a new approach to trade characterised by plurilateralism – where a select group of countries within a larger international framework (like the WTO) form agreements on specific issues.
