US tariff policy: Peter Navarro – Trump’s radical trade warrior

When the financial markets crashed on the morning of April 9, US Treasury Secretary Scott Bessent and US Commerce Secretary Howard Lutnick had only one goal: to wait for the right moment. A week earlier, on "Liberation Day," Donald Trump had announced the largest US tariff increase since the 1930s. The stock markets experienced one of the biggest crashes since World War II. Investors fled the dollar and US Treasury bonds. Bessent and Lutnick wanted to persuade Trump to at least temporarily suspend the tariff war. There was just one problem: Peter Navarro, who had encouraged Trump to launch the attack, simply wouldn't leave his side.

According to the Wall Street Journal, the president's top trade advisor lingered in front of the Oval Office that morning. Ever since Trump launched the global trade war, it seemed almost as if the economist was trying to keep watch over the president, preventing him from giving him contrary advice. Bessent and Lutnick waited patiently until Navarro left because Trump was leaving for a meeting in another part of the White House. Then they stormed the Oval Office.

There wasn't much time because they didn't have an official appointment for their intervention with the world's most powerful man. But in the end, they convinced Trump to temporarily suspend the tariff war with the rest of the world to control the panic in the markets. According to Lutnick, he and Bessent stayed by Trump's side until the president finished typing the Truth Social post announcing his sudden about-face.

The episode demonstrates the power Peter Navarro wields as Trump's chief trade advisor. And how determined he is to fight the tariff war against all odds. "Trump has no economic theory behind what he's doing," says Nobel laureate economist Joseph Stiglitz. That's not entirely true: Trump is following Peter Navarro's plan. He was already Trump's most important influencer on trade issues during his first term in office and is now once again the chief theorist of his economic war with the rest of the world. Even if his theory bears no relation to reality in many respects.

Even some of Trump's closest allies have little enthusiasm for Navarro's ideas. Elon Musk has called him "dumber than a sack of bricks" and "a real idiot" on X. Less because that describes his actual intelligence, but more out of frustration that Navarro is shaping Trump's thinking so strongly that even the richest man in the world can't dissuade him from the tariff hara-kiri that is causing serious damage to Tesla and Musk's other international corporations.

Nobel laureate in economics Joseph Stiglitz considers Trump's trade policy to be demagoguery and a social policy own goal. And Germany? He says it must now act wisely.

Navarro is a fervent advocate of protectionism. For years, he has advocated a move away from globalization and the post-war order, which relied on open borders and free trade as lessons from the Great Depression and World War II. With exorbitant tariffs, he wants to force Americans to buy less from China and more at home in order to reduce the trade deficit with Beijing. This is precisely the plan Trump is now implementing.

Many other economists rightly denounce China's unfair trade practices. But with his radical proposals, the 75-year-old Navarro stands largely alone. Since the British economist David Ricardo developed the theory of comparative advantage in the 19th century, renowned economic researchers have repeatedly confirmed that trade and the global division of labor increase the overall prosperity of nations. This is because each country specializes in what it can produce with the lowest opportunity cost—even if some industries and employees lose out in the process.

Navarro rejects this consensus: "Ricardo is dead," he thundered at the audience during a lecture at his alma mater, Harvard, in 2019. His theory, he argues, fails to take into account that in the real world of trade, other countries "lie, spy, cheat, or steal." For Navarro, trade is not a win-win, zero-sum game in which only one person ever loses: "America, the piggy bank, will continue to be plundered by a trade deficit that transfers more than half a trillion dollars of American wealth into foreign hands every year."

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For decades, Navarro taught economics at the University of San Diego, ran unsuccessfully for the Democrats for mayor of the Southern Californian city and for the U.S. Congress. His penchant for the extreme, which also shapes his trade theory, was already evident as an activist in the 1990s, denouncing the rampant urban sprawl of the city of millions by real estate sharks, property developers, and immigrants: "Both are fundamentally populist messages based on the assumption that someone is out to rip us off and that we must do something drastic to correct this injustice," the U.S. portal "Axios" quoted one of Navarro's opponents at the time as saying.

Yet there was little indication that Navarro would one day become the MAGA movement's most important trade warrior. Ten years ago, he was still a little-known professor nearing retirement. Then, by chance, he catapulted him into Trump's orbit: In 2016, Trump was desperately looking for experts for his campaign team. Trump's son-in-law, Jared Kushner, reportedly simply searched Amazon for suitable books and came across Navarro's work: "Death by China." It was his ticket to the White House.

Navarro fit the profile perfectly: degrees from Harvard, high credibility as a professor, and rock-solid convictions. He confirmed Trump in all his views on China. And provided him with a semi-scientific foundation to stoke the anger of his supporters. In his book, Navarro rants about the need to "face the dragon" that is stealing millions of jobs from the US by trampling on environmental protections and workers' rights, suppressing wages, stealing patents, hacking US technology, sealing off its markets, and "strangling our babies in their beds" with harmful and counterfeit cheap crap.

Beyond his hatred of China, Navarro's relationship with Trump has now grown into a personal connection. According to the WSJ, Trump is said to have repeatedly praised Navarro for going to prison for him. In the investigations into Trump's failed coup attempt and the storming of the Capitol by his supporters on January 6, 2021, the US Congress subpoenaed Navarro as a witness. But Navarro steadfastly refused to testify – and spent four months in prison as a result. He had previously spread the lie on television that Trump had won the election.

Bending the truth is nothing new for Navarro. In his books, Trump's chief advisor cites a supposed expert more than a dozen times to support his theories: Ron Vara, a military veteran, investor, and Harvard economist like Navarro himself. To publicize Navarro's ideas about the tariff war, Vara sent memos in Washington and created a dedicated email address. His name is derived from a shake-up of Navarro's last name to create a new anagram.

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When an Australian professor became suspicious and investigated, Navarro was forced to admit that he had simply made up "Ron Vara." Navarro succinctly dismissed the academic fraud to the US media as an "inside joke." "As Ron Vara would say: Relax and enjoy reading the books."

With Navarro as his advisor, Trump will continue to shape the trade world as he sees fit. The US president clearly has no problem with this. After all, he himself used the pseudonym "John Baron" to make phone calls to the financial press in the 1980s to polish his tarnished reputation. But reality may soon catch up with Trump and his trade warrior.

China is no longer the developing country that Navarro described in his books 15 years ago. While the People's Republic may have cheated its way to global leadership through product piracy and technology theft, writes Tom Friedman in the "New York Times." However, in many industries, the People's Republic is now technologically superior: "What makes China's manufacturing machine so powerful today isn't that it simply makes things cheaper. It makes them cheaper, faster, better, smarter, and increasingly with AI." It's therefore quite possible that the trade war unleashed by Trump and Navarro will end in a way they couldn't imagine: with a US defeat.

This article first appeared on ntv.de. The news portal, like Capital, is owned by RTL Deutschland.