Trump’s newly appointed Commerce Secretary, Howard Lutnick, has his work cut out for him. The world is watching with concern. Under Washington’s new consensus on trade—guided by Trump’s America First policy—existing trade relationships may become more costly or, in the worst case, be dismantled and replaced by a less globalist worldview that once placed Asia at the center of the industrial universe. If America is fortunate, it might simply continue to innovate and beta-test breakthrough products like robotic dogs, while collecting intellectual property payments and capital from the foreign flow of dollars into American stocks and bonds. But not everyone is content with that outcome.
Critics argue that Americans are more than just consumers and that the U.S. economy is not just financial and IT services. There is more at stake, even if the rest of the world is left wondering why the U.S. under Trump has suddenly changed its approach. Lutnick’s job will be to explain this new direction to trade ministers around the globe—a role once solely held by Robert Lighthizer at the USTR during Trump’s first term.
Lutnick is on the frontlines of the “trade war”, a war the financial press blamed on Trump back in 2017. Now he’s back with a vengeance. Trump 2.0 has a much bigger team of like minds this time.
Lutnick has faced adversity before. He lost his parents when he was just 18 and later rebuilt Cantor Fitzgerald after the September 11, 2001 terrorist attacks claimed the lives of over 600 staff and key executives, including his own brother. Now, as Commerce Secretary, he must tell trade ministers that the United States is seeking a different kind of relationship.
While many of America’s trading partners are content with the status quo, the Trump administration—and a large swath of the U.S. workforce and industries—demands change. After engaging with new partners from Mexico to China, Lutnick will have to frankly inform some of them that the current trade relationship is not working. We can go on; we want to go on. But we cannot go on like this.
“We are treated horribly by the global trading environment,” Lutnick told the Senate Commerce Committee on January 29. “They all have higher tariffs and non-tariff barriers and we can use tariffs to create reciprocity, fairness and respect.”
Mexico’s Economy Minister Marcelo Ebrard met with Lutnick in Washington on Feb. 20. Another meeting was scheduled for Monday, Feb. 24.
Ebrard summed up the first encounter as a “very good conversation” and that “we opened a dialogue where we can discuss our circumstances. I listened to him. He listened to me. We are building a relationship and I am going to work very hard on this relationship.”
The day before his trip to Washington, Ebrard unveiled a new “Made in Mexico” logo, emblazoned with the Aztec golden eagle in profile. In introducing the logo, he stated that his goal was to boost domestic production and increase the consumption of locally made goods.
We need to grow domestic manufacturing. Michigan is one of the great places where we build things, and the car manufacturing went to Canada. It went to Mexico. It is important that it comes back to Michigan and comes back to Ohio and comes back to the states that can build cars.
That’s what we want, too. We want to boost domestic manufacturing and domestic consumption of American made goods. When the U.S. wants such things, the world panics. Europe panicked (Ex-European Central Banker Mario Draghi said it left the EU with a “significant cost disadvantage”) when Biden signed the Inflation Reduction Act into law, enticing solar and EV manufacturers to set up shop in the U.S. instead of Europe.
Trade benefits some but poses challenges for others. Labor-saving technologies have reduced the number of workers in industry—and globalization has contributed to that decline as well. The most troubling issue is that our trade policies make importing more attractive. As the largest economy in the world, we naturally import more than any other nation, yet our trade deficit continues to grow. It reached a record $1.22 trillion in 2024, an unbalanced scenario that helped trigger the “trade war” in the first place.
Moreover, outsourcing American industry to low-cost, lightly regulated countries has dealt a severe blow to our industrial outlook.
In 2020, the International Trade Commission released a report examining the economic impact of every trade agreement the United States has entered into since 1985. It found that the 16 free trade agreements signed by Washington between 1985 and 2020 produced negligible benefits for the U.S. economy, challenging the consensus that free trade is universally beneficial. The report noted that income inequality often worsened, with particularly detrimental effects on workers without college degrees and American minorities. Moreover, small and medium-sized businesses were harmed, while multinational corporations that spearheaded outsourcing were the main beneficiaries. Poor nations, benefiting from labor arbitrage, gained more than rich nations from these agreements.
A 2017 IMF report titled “Making Trade an Engine of Growth for All” reviewed economic literature on the pitfalls of outsourcing to low-income countries. Although the report was optimistic about global trade at the time, it acknowledged that labor adjustments in advanced economies like the U.S. can take workers up to 10 years to recover economically—reducing the gains from trade by as much as 30 percent.
The IMF also noted that as developing nations—led by China—assumed a greater role in global manufacturing, multiple labor market studies showed that regions in the U.S. most exposed to competition from Chinese manufacturers experienced significant and persistent job and earnings losses, with blue-collar workers bearing the brunt. This decline was driven primarily by those who left the manufacturing sector to switch to service occupations.
Many in Europe have tried to argue that the U.S. has a services trade surplus with them, and so Lutnick and the Trump team should go easy on them. Last year saw a record breaking $235 billion goods deficit with the EU. The services surplus is mostly intellectual property fees, financial services, and business and leisure travel.
“Howard Lutnick understands that America’s trade policies must put U.S. producers, workers, and national security first,” said Zach Mottl, Chairman of CPA. Mottl has skin in the game—he runs a 107-year-old family business, Atlas Tool Works in Illinois, which employs 79 people. “His leadership at the Commerce Department will be crucial in ensuring President Trump’s America First Trade Policy is fully implemented.”
The USMCA trade agreement may prove to be an even bigger source of drama for Lutnick—perhaps more so than issues with China, whose geopolitical risks have become more predictable, or the increasingly strained relationship with the European Union over tariffs and America’s evolving foreign policy. The USMCA is set for its 30-year review in July 2026.
The America First Trade Policy memo, published in January, asks Commerce to “assess the impact of the USMCA on American workers, farmers, ranchers, service providers, and other businesses and make recommendations regarding the United States’ participation in the agreement.”
Lutnick told the Commerce Committee that “thoughtful tariff policy that drives domestic manufacturing is fundamental to American workers, especially (auto) workers in Michigan.”
US Percentage of Global Manufacturing to be Halved by 2030
According to a UN report in October, China is forecast to account for 45% of the world’s global industrial production by 2030. That growth comes at the expense of the U.S., which is projected to drop to 11% of global production in the next five years from 25% in 2000.
“The way a country gets rich is by producing goods,” said Jeff Ferry, CPA’s chief economist emeritus in a tariff debate on Perspectives Matter, a YouTube channel debating hot button political issues of the day. “For years, we have imported trillions of dollars worth of goods, increasing our credit with foreign lenders so we can continue to consume. And in the meantime, we have worn down our manufacturing sector. So the question is how do you rebuild production? There are a number of tools, and tariffs are a tool because they build a bridge and can bring significant revenue to the Treasury which will allow Congress to cut taxes and return that money to Americans.”
Lutnick has spoken about tariffs as revenue source, but in most of his conversations about the subject he has stuck to his themes of “reciprocity” and “fair trade”, suggesting the Trump administration could remove tariffs as quickly as imposing them if “reciprocity” and “fairness” goals were reached.
This strategy might open new markets for American goods that have had a hard time gaining access to key trading partners like Canada. Most of this has to do with foreigners wanting to protect their agriculture market.Mottl said that on-again, off-again tariffs will not entice any company to invest long term. Either tariffs have to be consistent; or other industry-friendly policies need to be in place. Industrial policies tend to be sectoral, like the CHIPS Act for semiconductors.
“For this to work, companies need to know that tariffs are here to stay. Business makes plans based on long-term expectations. They crave certainty and will build their operations around it. It’s also important that we get large companies - Apple, Ford, GM, Palantir, Micron – to start sourcing domestically from smaller suppliers. The ecosystem of small companies supplying large ones is what we lost here in the U.S.. Tariffs, quotas and other forms of industrial policy, including tax and regulation relief, need to be long-term and need to drive large companies to not only do the final assembly of their products here, but also source parts and pieces here, as well.”
Tariffs will raise the cost of imports for a number of sectors. The goal will be to reshore and rebalance trade. Most price increases will be a one time rise, as the Boston Federal Reserve recently said in a report. Lutnick does not believe tariffs will be inflationary.
“I can commit that the economy of the United States of America will be much, much better,” Lutnick said in his hearing last month. “A particular product price may go up, but this is not inflationary. The two top countries with tariffs, India and China, have the highest tariffs and no inflation. It is nonsense that tariffs cause inflation.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Commerce Secretary Lutnick on the Frontline of the “Trade War”
Trump’s newly appointed Commerce Secretary, Howard Lutnick, has his work cut out for him. The world is watching with concern. Under Washington’s new consensus on trade—guided by Trump’s America First policy—existing trade relationships may become more costly or, in the worst case, be dismantled and replaced by a less globalist worldview that once placed Asia at the center of the industrial universe. If America is fortunate, it might simply continue to innovate and beta-test breakthrough products like robotic dogs, while collecting intellectual property payments and capital from the foreign flow of dollars into American stocks and bonds. But not everyone is content with that outcome.
Critics argue that Americans are more than just consumers and that the U.S. economy is not just financial and IT services. There is more at stake, even if the rest of the world is left wondering why the U.S. under Trump has suddenly changed its approach. Lutnick’s job will be to explain this new direction to trade ministers around the globe—a role once solely held by Robert Lighthizer at the USTR during Trump’s first term.
Lutnick is on the frontlines of the “trade war”, a war the financial press blamed on Trump back in 2017. Now he’s back with a vengeance. Trump 2.0 has a much bigger team of like minds this time.
Lutnick has faced adversity before. He lost his parents when he was just 18 and later rebuilt Cantor Fitzgerald after the September 11, 2001 terrorist attacks claimed the lives of over 600 staff and key executives, including his own brother. Now, as Commerce Secretary, he must tell trade ministers that the United States is seeking a different kind of relationship.
While many of America’s trading partners are content with the status quo, the Trump administration—and a large swath of the U.S. workforce and industries—demands change. After engaging with new partners from Mexico to China, Lutnick will have to frankly inform some of them that the current trade relationship is not working. We can go on; we want to go on. But we cannot go on like this.
“We are treated horribly by the global trading environment,” Lutnick told the Senate Commerce Committee on January 29. “They all have higher tariffs and non-tariff barriers and we can use tariffs to create reciprocity, fairness and respect.”
Mexico’s Economy Minister Marcelo Ebrard met with Lutnick in Washington on Feb. 20. Another meeting was scheduled for Monday, Feb. 24.
Ebrard summed up the first encounter as a “very good conversation” and that “we opened a dialogue where we can discuss our circumstances. I listened to him. He listened to me. We are building a relationship and I am going to work very hard on this relationship.”
The day before his trip to Washington, Ebrard unveiled a new “Made in Mexico” logo, emblazoned with the Aztec golden eagle in profile. In introducing the logo, he stated that his goal was to boost domestic production and increase the consumption of locally made goods.
That’s what we want, too. We want to boost domestic manufacturing and domestic consumption of American made goods. When the U.S. wants such things, the world panics. Europe panicked (Ex-European Central Banker Mario Draghi said it left the EU with a “significant cost disadvantage”) when Biden signed the Inflation Reduction Act into law, enticing solar and EV manufacturers to set up shop in the U.S. instead of Europe.
Trade benefits some but poses challenges for others. Labor-saving technologies have reduced the number of workers in industry—and globalization has contributed to that decline as well. The most troubling issue is that our trade policies make importing more attractive. As the largest economy in the world, we naturally import more than any other nation, yet our trade deficit continues to grow. It reached a record $1.22 trillion in 2024, an unbalanced scenario that helped trigger the “trade war” in the first place.
Moreover, outsourcing American industry to low-cost, lightly regulated countries has dealt a severe blow to our industrial outlook.
In 2020, the International Trade Commission released a report examining the economic impact of every trade agreement the United States has entered into since 1985. It found that the 16 free trade agreements signed by Washington between 1985 and 2020 produced negligible benefits for the U.S. economy, challenging the consensus that free trade is universally beneficial. The report noted that income inequality often worsened, with particularly detrimental effects on workers without college degrees and American minorities. Moreover, small and medium-sized businesses were harmed, while multinational corporations that spearheaded outsourcing were the main beneficiaries. Poor nations, benefiting from labor arbitrage, gained more than rich nations from these agreements.
A 2017 IMF report titled “Making Trade an Engine of Growth for All” reviewed economic literature on the pitfalls of outsourcing to low-income countries. Although the report was optimistic about global trade at the time, it acknowledged that labor adjustments in advanced economies like the U.S. can take workers up to 10 years to recover economically—reducing the gains from trade by as much as 30 percent.
The IMF also noted that as developing nations—led by China—assumed a greater role in global manufacturing, multiple labor market studies showed that regions in the U.S. most exposed to competition from Chinese manufacturers experienced significant and persistent job and earnings losses, with blue-collar workers bearing the brunt. This decline was driven primarily by those who left the manufacturing sector to switch to service occupations.
Many in Europe have tried to argue that the U.S. has a services trade surplus with them, and so Lutnick and the Trump team should go easy on them. Last year saw a record breaking $235 billion goods deficit with the EU. The services surplus is mostly intellectual property fees, financial services, and business and leisure travel.
“Howard Lutnick understands that America’s trade policies must put U.S. producers, workers, and national security first,” said Zach Mottl, Chairman of CPA. Mottl has skin in the game—he runs a 107-year-old family business, Atlas Tool Works in Illinois, which employs 79 people. “His leadership at the Commerce Department will be crucial in ensuring President Trump’s America First Trade Policy is fully implemented.”
The USMCA trade agreement may prove to be an even bigger source of drama for Lutnick—perhaps more so than issues with China, whose geopolitical risks have become more predictable, or the increasingly strained relationship with the European Union over tariffs and America’s evolving foreign policy. The USMCA is set for its 30-year review in July 2026.
The America First Trade Policy memo, published in January, asks Commerce to “assess the impact of the USMCA on American workers, farmers, ranchers, service providers, and other businesses and make recommendations regarding the United States’ participation in the agreement.”
Lutnick told the Commerce Committee that “thoughtful tariff policy that drives domestic manufacturing is fundamental to American workers, especially (auto) workers in Michigan.”
US Percentage of Global Manufacturing to be Halved by 2030
According to a UN report in October, China is forecast to account for 45% of the world’s global industrial production by 2030. That growth comes at the expense of the U.S., which is projected to drop to 11% of global production in the next five years from 25% in 2000.
“The way a country gets rich is by producing goods,” said Jeff Ferry, CPA’s chief economist emeritus in a tariff debate on Perspectives Matter, a YouTube channel debating hot button political issues of the day. “For years, we have imported trillions of dollars worth of goods, increasing our credit with foreign lenders so we can continue to consume. And in the meantime, we have worn down our manufacturing sector. So the question is how do you rebuild production? There are a number of tools, and tariffs are a tool because they build a bridge and can bring significant revenue to the Treasury which will allow Congress to cut taxes and return that money to Americans.”
Lutnick has spoken about tariffs as revenue source, but in most of his conversations about the subject he has stuck to his themes of “reciprocity” and “fair trade”, suggesting the Trump administration could remove tariffs as quickly as imposing them if “reciprocity” and “fairness” goals were reached.
This strategy might open new markets for American goods that have had a hard time gaining access to key trading partners like Canada. Most of this has to do with foreigners wanting to protect their agriculture market.Mottl said that on-again, off-again tariffs will not entice any company to invest long term. Either tariffs have to be consistent; or other industry-friendly policies need to be in place. Industrial policies tend to be sectoral, like the CHIPS Act for semiconductors.
Tariffs will raise the cost of imports for a number of sectors. The goal will be to reshore and rebalance trade. Most price increases will be a one time rise, as the Boston Federal Reserve recently said in a report. Lutnick does not believe tariffs will be inflationary.
“I can commit that the economy of the United States of America will be much, much better,” Lutnick said in his hearing last month. “A particular product price may go up, but this is not inflationary. The two top countries with tariffs, India and China, have the highest tariffs and no inflation. It is nonsense that tariffs cause inflation.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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