What Reagan’s 1987 Tariffs Can Teach Us About Trump’s Trade Policy

From Tokyo to Toronto: the long shadow of Reagan’s tariff diplomacy.

If all you have is a hammer, everything looks like a nail

President Donald Trump announced he’s adding an extra 10% tariff on Canadian imports after a Canadian TV commercial used President Ronald Reagan’s voice to criticize his trade policies.

The ad aired during the first game of the World Series between Toronto and Los Angeles and featured excerpts from Reagan’s 1987 “Radio Address to the Nation on Free and Fair Trade.” At that time, Reagan was responding to Japan’s trade practices by imposing tariffs on certain Japanese products.

Trump argued the ad was misleading and accused Canada of trying to influence the U.S. Supreme Court, which is set to review his sweeping tariff policy this term. The Ronald Reagan Presidential Foundation and Institute quickly pushed back, stating that the commercial “misrepresents the ‘Presidential Radio Address to the Nation on Free and Fair Trade’ dated April 25, 1987.”

To understand what the ad was referencing, and what Reagan actually said, I revisited the original 1987 speech. You can find the full speech at the end of this newsletter. But first, let’s unpack what Reagan’s tariffs were really about and how his economic philosophy differed from Trump’s.

Reagan’s Tariffs: A Case Study in Fair Trade

In 1987, Reagan imposed tariffs on Japan because Japanese companies were violating a semiconductor trade agreement with the United States, a key component in electronics such as computers and cars.

Here’s why he took that step:

1. Unfair Trade Practices: U.S. officials found that Japanese firms were dumping semiconductors (selling them below market value) in foreign markets, undermining American producers and breaking a 1986 U.S.–Japan agreement designed to prevent that behavior.

2. Failure to Enforce the Deal: The Japanese government wasn’t holding its firms accountable, and Japan’s domestic market remained largely closed to American companies.

3. Protecting a Strategic Industry: Semiconductors were viewed as critical to national competitiveness. The tariffs were intended to enforce fairness, not to start a trade war.

4. Targeted, Not Broad: Reagan emphasized that these were temporary, specific measures, not a shift toward protectionism.

Reagan’s tariffs were a limited response to unfair trade practices in a vital industry. He remained a strong advocate for free trade but believed fairness had to be enforced.

Reagan vs. Trump: Two Visions of Trade

While both presidents promised to protect American workers, their philosophies and methods diverged sharply.

Core Philosophy

Ronald Reagan and Donald Trump approached trade with fundamentally different economic worldviews.

Reagan saw free trade as a driver of global prosperity and innovation. He believed open markets encouraged competition, efficiency, and consumer choice. For Reagan, tariffs were a last resort, used only to enforce fairness rather than protect domestic industries. He viewed open markets as a reflection of America’s economic strength and moral leadership in the world. He believed that protectionism made American industries weaker in the long run.

Trump, in contrast, prioritizes economic nationalism under the banner of “America First.” He views trade primarily through the lens of deficits and surpluses, arguing that if the United States buys more from a country than it sells to that country, it is losing. For Trump, tariffs are not a policy of last resort but a central instrument of leverage and protection for American workers and industries.

Use of Tariffs

Their application of tariffs reflected their philosophies.

Reagan used tariffs sparingly and with precision, as in the 1987 semiconductor case with Japan. He framed them as temporary enforcement tools that upheld a broader commitment to free trade.

Trump, on the other hand, imposed sweeping tariffs on steel, aluminum, and Chinese goods. He uses tariffs as strategic weapons to renegotiate trade relationships and to assert U.S. power in global markets.

Global Strategy

Reagan believed in cooperation through alliances and multilateral systems. He worked within institutions such as the General Agreement on Tariffs and Trade (GATT), the forerunner of today’s World Trade Organization (WTO). Free trade, in Reagan’s view, was central to Cold War strategy, strengthening capitalist allies and promoting global stability.

Trump prefers one-on-one negotiations and bilateral deals. He often criticizes multilateral institutions and threatens to withdraw from long-standing agreements such as the WTO and the Trans-Pacific Partnership (TPP). His goal is to reassert national control over trade policy and reduce dependence on global frameworks.

Economic Framing

Their public statements captured their differing outlooks.

Reagan famously said, “Our commitment to free trade is also a commitment to fair trade.” He believed open markets fostered innovation and consumer benefit, with fairness achieved through rules and cooperation.

Trump, by contrast, believes that “Trade wars are good, and easy to win.” He frames trade as a zero-sum contest in which the United States can only gain at others' expense.

The Bottom Line

Reagan used tariffs as a scalpel; Trump uses them as a hammer.
Both aimed to defend American workers, but Reagan trusted competition to strengthen prosperity, while Trump is leveraging protectionism.

I will leave you with this quote from Reagan’s speech below.

…there’s a growing realization that the way to prosperity for all nations is rejecting protectionist legislation and promoting fair and free competition

Reagan’s 1987 Speech

Prime Minister Nakasone of Japan will be visiting me here at the White House next week. It’s an important visit because, while I expect to take up our relations with our good friend Japan—which overall remain excellent—recent disagreements between our two countries on the issue of trade will also be high on our agenda. As perhaps you’ve heard, last week I placed new duties on some Japanese products in response to Japan’s inability to enforce their trade agreement with us on electronic devices called semiconductors.

Now, imposing such tariffs or trade barriers and restrictions of any kind are steps that I am loath to take. And in a moment I’ll mention the sound economic reasons for this—that over the long run such trade barriers hurt every American worker and consumer. But the Japanese semiconductors were a special case. We had clear evidence that Japanese companies were engaging in unfair trade practices that violated an agreement between Japan and the United States. We expect our trading partners to live up to their agreements. As I’ve often said, our commitment to free trade is also a commitment to fair trade. But, you know, in imposing these tariffs, we were just trying to deal with a particular problem, not begin a trade war. So next week I’ll be giving Prime Minister Nakasone this same message: we want to continue to work cooperatively on trade problems and want very much to lift these trade restrictions as soon as evidence permits. We want to do this because we feel both Japan and the United States have an obligation to promote the prosperity and economic development that only free trade can bring.

Now, that message of free trade is one I conveyed to Canada’s leaders a few weeks ago, and it was warmly received there. Indeed, throughout the world there’s a growing realization that the way to prosperity for all nations is rejecting protectionist legislation and promoting fair and free competition. There are sound historical reasons for this. For those of us who lived through the Great Depression, the memory of the suffering it caused is deep and searing. And today, many economic analysts and historians argue that high tariff legislation passed back in that period—called the Smoot-Hawley Tariff—greatly deepened the Depression and prevented economic recovery.

You see, at first when someone says, “Let’s impose tariffs on foreign imports,” it looks like they’re doing the patriotic thing by protecting American products and jobs. And sometimes, for a short while, it works—but only for a short time. What eventually occurs is that homegrown industries start relying on government protection in the form of high tariffs. They stop competing and stop making the innovative management and technological changes they need to succeed in world markets. And then, while all this is going on, something even worse occurs. High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. The result is more and more tariffs, higher and higher trade barriers, and less and less competition.

Soon, because of prices made artificially high by tariffs that subsidize inefficiency and poor management, people stop buying. Then the worst happens—markets shrink and collapse, businesses and industries shut down, and millions of people lose their jobs. The memory of all this occurring back in the 1930s made me determined, when I came to Washington, to spare the American people the protectionist legislation that destroys prosperity.

Now, it hasn’t always been easy. There are those in the Congress, just as there were back in the 1930s, who want to go for the quick political advantage—who risk America’s prosperity for the sake of a short-term appeal to some special interest group—who forget that more than five million American jobs are directly tied to the foreign export business, and additional millions are tied to imports. Well, I’ve never forgotten those jobs. And on trade issues, by and large, we’ve done well. In certain select cases, like the Japanese semiconductors, we’ve taken steps to stop unfair practices against American products, but we’ve still maintained our basic long-term commitment to free trade and economic growth.

So, with my meeting with Prime Minister Nakasone and the Venice Economic Summit coming up, it’s terribly important not to restrict a president’s options in such trade dealings with foreign governments. Unfortunately, some in the Congress are trying to do exactly that. I’ll keep you informed on this dangerous legislation, because it’s just another form of protectionism—and I may need your help to stop it. Remember, America’s jobs and growth are at stake. Until next week, thanks for listening, and God bless you.

Watch the 1987 Speech