The 'Three-Legged Stool' Economic Philosophy of the Trump Administration (Part 1) | In-depth Analysis of Protectionist and Tariff Policies

- 8월 21, 2025

[Economic Analysis] The 'Three-Legged Stool' Economic Philosophy of the Trump Administration (Part 1) | In-depth Analysis of Protectionist and Tariff Policies

[Economic Analysis] The 'Three-Legged Stool' Economic Philosophy of the Trump Administration

The 'Three-Legged Stool', a metaphorical representation of the Trump administration's economic policy, symbolizes his core national agendas: Tariffs, Tax Cuts, and Deregulation. In this three-part series, we will conduct an in-depth analysis of the first leg, the protectionist tariff policy, and explore its economic effects and limitations from various angles.

The 'Three-Legged Stool' Economic Philosophy of the Trump Administration (Part 1)

The three pillars of Trump's economic philosophy, a three-legged stool representing tariffs, tax cuts, and deregulation

The Trump administration's economic policy, heralded by the slogan "America First," is composed of three core pillars: protectionism, tax cuts, and deregulation. These three policies were planned to balance each other like the three legs of a stool, with the intention of promoting America's economic stability. In this article, we will conduct an in-depth analysis of the first leg, the protectionist tariffs policy, and examine the economic consequences and implications from various perspectives.

1. Background and Key Measures of the Protectionist Tariff Policy

For the Trump administration, tariffs were not merely an economic barrier but a strategic tool to revive American manufacturing, resolve structural trade deficits, and gain an advantage in international trade negotiations. Treasury Secretary Steven Mnuchin referred to tariffs as a lever to be used in negotiations with other countries. This approach is consistent with Trump's "Transactionalism" foreign policy philosophy, which stems from his business background.

In the second Trump administration, much broader and higher tariff measures were implemented than in his first term. Key examples include:

Super-high Tariffs and Trade War against China: The second Trump administration imposed cumulative tariffs of 145% on Chinese imports, to which China retaliated with 125% tariffs, triggering a global trade war. This trade conflict resulted in negative impacts such as a decrease in Chinese exports and a slowdown in macroeconomic indicators.
Universal Tariffs and Reciprocal Tariff Concept: Trump announced a plan to impose a universal tariff of 10% on all imports and ordered the development of customized 'reciprocal tariffs' for specific countries and items, taking into account existing tariffs, exchange rates, and trade balances. This measure also raised the possibility of a 25% tariff being applied to 56.6 billion dollars worth of imports from Korea.
Targeting Specific Industries: The tariff rate on steel and aluminum products was doubled from 25% to 50%, and a 25% tariff was also imposed on all imported cars and parts. These measures were justified as a means to protect American manufacturing.

These comprehensive tariff measures were specified in the following table.

Item	Target Country/Region	Tariff Rate	Notes
Universal Tariff	All products imported into the U.S.	10%	-
Automobiles	All imported vehicles	25%	Additional application to vehicles and parts not complying with USMCA
Steel·Aluminum	Foreign products	25% → 50%	Effective at 00:01 Eastern Time
Specific Products	Korea	25%	Applied to 56.6 billion dollars worth of imports
Specific Products	China	Existing 20% + Reciprocal Tariff 84% = 104%	-
Specific Products	Canada	25%	Steel·Aluminum, etc.
Specific Products	Mexico	25%	Partially implemented on products not complying with USMCA

2. Economic Effects and Critical Evaluation of the Tariff Policy

Contrary to the Trump administration's intentions, the tariff policy received criticism for potentially causing complex and negative consequences. Tariffs can raise the prices of imported goods, leading to consumer price increases (inflation), and can lead to an economic slowdown if exports shrink due to retaliatory tariffs from other countries. This raised concerns about a potential Stagflation, where inflation and economic stagnation occur simultaneously. Leading economists agree that such protectionism hinders economic growth and negatively affects long-term social welfare.

The tariff war ultimately resulted in a 'truce' rather than a 'victory', exposing the policy's limitations. Trump intended to use the tariff barrage against China as a tool for 'victory,' but the two countries ultimately reached an agreement in the form of a 'truce' to simultaneously lower the tariffs they had imposed on each other. A notable point is that when the news of the tariff war truce broke, the New York stock market surged. This suggests that the market viewed the tariff policy not positively but as a factor of uncertainty and risk, and that the easing of tariffs acted as a positive signal for the economy.

3. Conclusion: The 'Three-Legged Stool,' the First Leg, the Duality of Tariff Policy

While the Trump administration's protectionist tariff policy was theoretically presented as an effective means to protect American manufacturing and resolve trade deficits, in reality, it acted as a double-edged sword, increasing the risk of stagflation and causing market instability. In the upcoming Part 2, we will delve into the other two pillars supporting Trump's economic policy: his aggressive tax cuts and comprehensive deregulation.

Key Summary:
The U.S.'s aggressive tariff policy threatens the global trade order and deepens the unpredictability of the dollar's value, ultimately increasing the possibility of a currency war.

The contents of this blog are for informational purposes only and should not be considered investment advice. Investment decisions should be made based on individual judgment and responsibility. Under no circumstances can the information in this blog be used as evidence for legal liability for investment outcomes.

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