- US President Donald Trump continues to rely on tariffs to put pressure on the world. But that could wear out.
- Because of tariffs, among other things, countries are increasingly turning away from the USA. This reduces their dependence and thus the effect of Trump’s tariff threats.
- On the other hand, the courage to counterattack is growing. For example, a coordinated sell-off of US government bonds could put the United States in distress.
Despite many backtracks, US President Donald Trump continues to swing his tariff club. The original justification based on the trade balance seems to have been pushed into the background. When it came to Greenland or, most recently, Canada, Trump didn’t say a word about the deficit. That doesn’t stop him from continuing to try to use tariffs to change the world according to his will.
“Basically it’s always the same reason,” says Stefan Legge, professor of tax and trade policy at the University of St. Gallen. From Trump’s point of view, it’s about negotiating power. The USA has a large, important sales market for foreign companies. “Trump is trying to take advantage of this to enforce his demands on other countries.” A strategy with which Trump could at some point saw off his own branch.
The all-purpose weapon is running out of targets
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“Trump once named “tariffs” the most beautiful word in the English language. In his eyes it is an all-purpose weapon,” says Legge. But he warns: The effect is limited and diminishes over time. “Many countries, but also companies, now perceive the USA as a less reliable partner.” Accordingly, they looked for alternative trading partners.
Like in Canada. Almost two weeks ago, Prime Minister Mark Carney announced a new strategic partnership with China – much to the anger of the US President. “As soon as appropriate diversification has been made here, Trump’s tariff threats will also lose their effect,” said Legge.
Dependencies on the USA
In order to escape Trump’s tariff pressure, dependence on the USA must be reduced. “For example, it is important to become more confident in the digital world and not just use American solutions.” At the same time, it is important to diversify our own exports, says Legge. Increased cooperation with the countries of South America, but also with India and Vietnam, is advisable. While the trade agreement with India has now reached the final stretch, the Mercosur agreement shows that such attempts are not necessarily easy to achieve even within the EU.
Is it possible to diversify away from the US? “Yes,” says Legge. “But of course only for a limited time, over time and at considerable cost.” This is evident, for example, in Europe’s dependence on cloud solutions from large US tech companies. “This will not be remedied quickly or cheaply.” Globalization does have many advantages. “We are noticing this now that de-globalization is increasingly being considered.”
Or then just the confrontation
In addition to a development away from US dependencies, some politicians are also in favor of a more direct confrontation with the USA. “The EU can take countermeasures, but it must then be prepared for a possible conflict,” says Legge. “This requires economic, military and political strength – in that order.”
While French President Emmanuel Macron spoke of a “trade bazooka” – a far-reaching package of sanctions and tariffs – the Danish pension fund “AkademikerPension” chose a different path last week. It has announced that it will sell all of its US government bonds. A step that, according to Matthias Geissbühler, head of investment at Raiffeisen Switzerland, is “negligible” in size, but could have a signaling effect with serious consequences.
Government bonds and their importance
When the US runs out of money
A coordinated sale by the EU states would result in a significant increase in interest rates in the USA, explains Geissbühler. This means: The USA would have to pay significantly more for its national debt, loans for US companies and private individuals would become massively more expensive and all assets would experience a correction. In addition, the US dollar would continue to weaken. “From a global perspective, the economy would weaken significantly and a recession would probably be unavoidable.”
According to Geissbühler, the USA has little opportunity to defend itself against this because it is absolutely dependent on foreign capital to finance domestic consumption and the growing national debt. As a “lender of last resort”, the US Federal Reserve Bank would ultimately be forced to buy government bonds. “This in turn would further stimulate the already high inflation in the USA.”
How do you see the efforts of many countries to become more economically independent of the USA?
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Jan Janssen (jjn) has been working for 20 minutes since 2023. First in the Zurich department and since 2025 in the News, Business & Video Reports department.
