The Risks of Trump’s Tariff Strategy: A Path to Global Trade Wars

Donald Trump’s aggressive tariff policy may ignite global trade conflicts, tarnishing the US reputation and resulting in widespread economic harm.

LONDON: Throughout his 2024 campaign, Donald Trump frequently emphasized the power of tariffs, declaring them “the most beautiful word in the dictionary.” Upon returning to the Oval Office, Trump swiftly implemented tariffs of 25 percent on all imports from Canada and Mexico, supplemented by an additional 10 percent on products from China. This move triggered immediate reactions from these nations, suggesting potential far-reaching consequences.

Canada’s Strong Retaliatory Measures

Canada swiftly threatened to impose 25 percent tariffs on $155 billion worth of American goods, ranging from orange juice to appliances and car parts. Moreover, Canada has hinted at non-tariff measures related to energy and procurement, indicating a robust response.

Mexico’s Immediate Counterresponse

Mexico’s newly elected President, Claudia Sheinbaum, immediately retaliated with her own set of tariffs on US imports, labeling Trump’s actions a “flagrant violation” of the US-Mexico-Canada Agreement. Given Mexico’s significant reliance on the US market, with exports-to-imports accounting for over $322 billion and $475 billion respectively, these tariffs could have severe economic implications for both countries.

China’s Balanced Approach

China’s response was more measured. Initially silent during Trump’s announcement, Beijing announced an anti-trust investigation into Google, alongside introducing tariffs on specific goods like coal, liquefied natural gas, and crude oil. Simultaneously, China imposed export controls on rare metals vital for electrical products and military装备. Despite the apparent limitations of these measures, experts believe China’s actions were strategically calculated to send a clear message to US audiences.

The Strategic Use of Tariffs as a Policy Tool

Trump’s use of tariffs aligns with his reputation as a dealmaker, emphasizing his determination to negotiate or “win” in international relations. The White House press releases following these decisions portrayed Trump’s actions as decisive steps away from previous administrations’ failed policies, particularly regarding illegal immigration and the fentanyl crisis. This strategy aims to justify the use of tariffs as a tool in US national security.

Previous successes and Premature Celebrations

Trump’s aggressive tactics have already succeeded in securing agreements from other nations. For example, Colombia relented after Trump threatened punitive tariffs, allowing two military planes carrying deported nationals to land. Similarly, both Canada and Mexico received last-minute reprieves from the tariffs following crucial phone calls with Trump. In these agreements, both nations made minor commitments, claiming progress against drug trafficking, while the real winners appear to be Trump’s public statements.

China’s Calculated Restraint

China’s restrained response raises questions about its strategic plans. Although Beijing’s measures are limited, its ownership of $769 billion worth of US Treasury bonds and its ability to shift supply chains to other countries indicate a readiness for significant retaliation. China’s investments in countries like Vietnam, Malaysia, Thailand, and Mexico showcase its ability to mitigate the impact of US tariffs.

The Cost of Strength: Damage to Reputation

The central issue with Trump’s approach is the damage it does to America’s reputation as a reliable trading partner. By disregarding rules and alliances, Trump undermines trust in US foreign policy decisions. Past agreements, such as the 2020 US-Mexico-Canada Agreement, are regularly ignored in favor of Trump’s asserted strength.

A Premature Claim of Victory

Trump’s “too much winning” approach may backfire. Short-term gains from threatening or making concessions often lead to long-term trade wars with far-reaching negative consequences for economies worldwide. Instead of enhancing the US’ position, Trump’s strategy risks destabilizing international trade, harming American consumers and businesses alike.

As the world watches closely, the outcome of these tariffs remains uncertain. What is clear, however, is that Trump’s aggressive approach could escalate global tensions, leading to unintended economic and political consequences.