More than 50 years ago, the United States began construction of the Panama Canal and in the process, created a new American manufacturing base in the Caribbean.
The United States and Panama became the world’s two largest exporters of goods through the canal, but they were never able to compete with each other in the global market.
Since then, the world has largely shifted towards more international trade.
With the arrival of China and other emerging markets, the US has seen a steady decline in exports of goods to those markets.
“It’s a little like the Old West,” says former US Commerce Secretary Robert Reich, who has also worked in the private sector.
“A little bit like how we built our railroads.
It’s a really difficult place to do business in.”
The Trump administration is attempting to reverse that trend.
In a move that could see the US trade deficit with the rest of the world rise to as much as $2 trillion in 2020, President Donald Trump has announced plans to dramatically increase US tariffs on goods produced by foreign companies, including American firms.
Under the tariffs, the administration hopes to raise the price of American goods to make up for the lost exports.
The tariffs will apply to the manufacturing of all products made in the US, including furniture, apparel, footwear and electronics, according to the White House.
It’s unclear how much of the tariffs will be imposed on imports and how much will be targeted at the domestic market, but it will create an incentive for US companies to make products in the United State.
“The trade deficit is a real problem,” said economist Peter Aldrich at the University of California, Berkeley.
“This is just another attempt to fix it.”
Mr Reich, the former US trade representative, says the tariffs would be a big boon to US companies and the economy.
“They would be an immediate boost to the domestic economy and to manufacturing,” he said.
“We’re going to make sure that they do their job.”
The tariffs, if implemented, would also be a significant blow to American manufacturers, who are already struggling to compete internationally.
“American workers and businesses are going to be very upset,” said Mark Shaffer, the chief economist for the National Federation of Independent Businesses.
“These tariffs will cause tremendous hardship on the domestic industry and hurt the bottom line of the American consumer.”
The move has sparked outrage across the country, including by Democratic politicians and activists who argue that the administration is using trade to advance a pro-business agenda.
But critics say the tariff plans would not actually help American workers or businesses, because they would be imposed only on imports that had already been shipped to the US.
The move could also lead to more tariffs on American goods from other countries, such as Mexico and Canada, and could result in a loss of US jobs, according a recent report from the Cato Institute, a libertarian think tank.
“I don’t think there’s any evidence that the tariffs that Trump is going to impose are going, in fact, going to hurt American companies,” said Michael Tanner, a research fellow at the Mercatus Center at George Mason University.
The president is also reportedly planning to impose a $10-a-day tariff on imports from countries that he deems “unfairly” competitive.
Mr Trump has repeatedly accused China of stealing American jobs and has threatened to impose tariffs of up to 25 per cent on Chinese imports.
The White House has not yet said how many tariffs it is planning to pursue.
The new tariffs come on top of a new US-China trade deal, signed in 2018, that also allows American companies to challenge Chinese products and impose tariffs.
The new tariffs would only apply to goods made in China.
It was unclear how many of the new tariffs will affect imports, but the Commerce Department said the new deals with the US and Canada would create an economic benefit for American businesses.
“Under the new agreement, all imports will be subject to a 20 per cent tariff on goods manufactured in Canada, a 12 per cent tax on imports made from the United Kingdom, a 10 per cent border adjustment tax on goods imported from India and a 10.5 per cent import duty on imports,” a spokesperson said in a statement.