President Donald Trump asks Robert Lighthizer to run US trade policy

Donald Trump wants Robert Lighthizer back to take charge of US trade. The man who led Trump’s trade war against China during his first term is being tapped to make a return as U.S. Trade Representative (USTR).

Lighthizer wanted a different role in the administration though, something more like Commerce Secretary or maybe even Treasury Secretary. But Trump isn’t offering Lighthizer options. It’s the top trade job or nothing.

And for those familiar with Trump’s economic style, that means a return to the same aggressive, “America First” trade policy that put allies and rivals on edge. 

Lighthizer’s comeback story – But on Trump’s terms

Lighthizer has a reputation. He’s a heavyweight, a straight-shooter, and no fan of compromise when it comes to “protecting American industry.” The fact that he’s even being considered is making US trading partners nervous, especially China and Russia.

Trump, who ran his campaign on promises to protect American jobs and crack down on foreign trade imbalances, has a history with Lighthizer that dates back to the first round of tariffs on China.

And he’s not just bringing him back as a nod to the past; Trump wants to ramp things up, starting with higher tariffs on imports, which is sure to send shockwaves through the global economy.

For Commerce Secretary, Trump’s eyeing Linda McMahon, the billionaire co-chair of his transition team, while Treasury could end up with a financier like Scott Bessent or John Paulson, two hedge fund managers rumored to be in the running.

Now people who’ve worked with Lighthizer say he’s a tough, pragmatic negotiator, someone who won’t back down, even if the room’s stacked against him.

Philadelphia Congressman Brendan Boyle, a top Democrat on the House budget committee, shared his two cents, saying, “When Bob Lighthizer was USTR, I worked with him on the USMCA [US-Mexico-Canada Agreement]. He was bipartisan in his approach and is well respected on both sides of the aisle.”

No warm welcome from China and the WTO

As a former lawyer for the US steel industry, Lighthizer is as tough as they come when defending American industry. He even went head-to-head with the World Trade Organization (WTO), calling it a “mess” that’s “failed America.” Not exactly a fan of global trade regulations, Lighthizer threw his weight around when it came to defending the US, ignoring critics who called for diplomacy.

For Nippon Steel, Japan’s biggest steelmaker, Lighthizer’s potential comeback is straight-up bad news. The company recently proposed a $15 billion acquisition of US Steel, and Trump’s not exactly thrilled. He’s already signaled his opposition to the deal, and Lighthizer would undoubtedly back him up.

He spent 30 years as an attorney at Skadden Arps, a Wall Street law firm, where he represented American steel companies against foreign competitors, including China. In the early 2000s, he played a major role in convincing George W. Bush to impose steel tariffs, an early preview of the type of policies he’d later implement under Trump.

During his previous tenure as trade representative, he focused less on striking new trade deals and more on bringing manufacturing back to the US. Even so, he struck limited deals with China and Japan and updated the US’s trade terms with Canada and Mexico under the USMCA. Lighthizer sees trade as a battlefield, one where America can’t afford to play nice.

What’s in store with Trump and Lighthizer back in charge?

Donald Trump’s unexpected election win over Kamala Harris is already shaking up the markets, and with Lighthizer back on board, it looks like a second Trump administration will go all-in on trade war tactics. Speaking to a crowd of supporters in Florida, Trump called his victory an “unprecedented and powerful mandate” that would bring about a “golden age of America.”

He’s lining up steep tariffs, tax cuts, deregulation, and an “America First” agenda that doesn’t exactly leave room for compromise. Analysts are already scrambling to figure out how far Trump will push his agenda, especially in trade.

Political economist Lizzy Galbraith from asset manager Abrdn laid it out clearly, saying Trump’s unified control of Congress would give him the latitude to push his economic plans. “Congress has a really big part to play in this,” she said in an interview with CNBC’s Squawk Box Europe.

“If Trump has control of Congress, as is looking very likely and is what we expect to happen over the next few weeks, then he’ll have more freedom to roll out his tax-cutting agenda, his deregulatory agenda, for example, but we are also likely to see elements of his trade policy sitting alongside that.”

Trump has called “tariff” his favorite word, even referring to it as “the most beautiful word in the dictionary.” He’s talked about a 20% blanket tariff on all imports, with an insane 60% tariff on Chinese goods and a whopping 2,000% tariff on cars made in Mexico. For the European Union, Trump says the 27-nation bloc will face a “big price” for not buying enough American exports.

Galbraith added that while Trump’s main target is China, European goods could also take a hit, though maybe not to the same extreme. Analysts warn that Trump’s universal tariff plan would likely raise prices for American consumers, who would feel the impact on everyday goods.

Europe and Asia brace for impact

Ben May, director of global macro research at Oxford Economics, predicts that Trump’s return could have limited immediate effects on economic growth. However, he says the bigger picture hides “major implications for trade and financial markets.”

He suggested that in a scenario where Trump implements the more radical parts of his trade agenda, especially on tariffs, the global impact will be “very sizable.”

For Europe, this isn’t looking good. Analysts at Signum Global Advisors put it bluntly, saying, “the magnitude of that truth remains underappreciated.” They think the EU is in for a rough time in a second Trump era, pointing to ongoing trade tensions, and frustration with European policies.

Across the globe, Asia is preparing for a similar blow. Analysts at Macquarie Group didn’t sugarcoat it, calling Trump’s win “bad news for Asia.” While Asia might be more prepared this time than in 2016, the threat of higher tariffs still looms large, especially for China.

A key point in Trump’s campaign was hiking tariffs on Chinese imports, and analysts expect this to stir up volatility across Asian markets. The Chinese government, however, might not take it lying down; they’re already preparing stimulus measures aimed at hitting 5% economic growth.

Mitchell Reiss, a fellow at the Royal United Services Institute, thinks Trump’s playbook could have some new surprises. He suggests Trump might go after different targets, but the core approach is likely to stay the same—no compromises, just hard lines.