Trump threatens a global trade war. Europe must unleash a radical alternative | Gabriel Zucman
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Unlike tariffs, a new form of protectionism could target climate-wrecking, untaxed corporations and their billionaire owners. How should Europe respond before Donald Trump’s policies destabilise the global economy? All countries will soon have to take a stand on the new US president’s tariff threats. While a shift away from free trade clearly carries risks, it also presents a valuable opportunity to reimagine our outdated international economic relations – if we can grasp what makes this moment unique.
![[Gabriel Zucman]](https://i.guim.co.uk/img/uploads/2025/01/17/Gabriel_Zucman.png?width=180&dpr=1&s=none&crop=none)
In many ways, Trump’s economic agenda follows the Republican party playbook that dates back to Barry Goldwater’s 1964 presidential run, which launched the party’s enduring mission to dismantle Roosevelt’s New Deal. Trump claims the US was never better off than under William McKinley’s presidency (1897-1901), when the federal government, before income tax existed, was pared down to a minimum.
The free-market fundamentalist Milton Friedman made a similar argument in his time, viewing the introduction of income tax in 1913 and its rise (with a top marginal tax rate that averaged 78% from 1930 to 1980) as a major source of economic decline. Trump is unlikely to achieve it in the next four years, but he is now aiming to completely abolish income taxation.
In trade policy, too, while the rhetoric has evolved, Trump’s mercantilist approach echoes Ronald Reagan’s policies of the 1980s. Reagan imposed a 45% tariff on Japanese motorbikes, 100% tariffs on Japanese computers, televisions and power tools, and 15% tariffs on Canadian lumber. To be sure, China has replaced Japan as the main target of US wrath; Trump also favours tariffs over the import quotas that Reagan frequently used (including against European countries). But the underlying philosophy remains the same, predicated on a worldview in which the aggressive pursuit of self and national interest is the true driver of progress.
