Trump’s Tariff Strategy: Traditional U.S. Trade Strategies vs. Trump’s Approach
Since retaking office, President Donald Trump has threatened to impose substantial tariff increases on other countries unless they comply with his demands. After the president of Colombia consented to continue accepting Colombian deportees from the United States, he backed off from his tariff threat. Trump decided to hold on to his 25% tariffs on Canada and Mexico for at least a month after the leaders of those nations committed to doing more to rein in the flow of migrants and fentanyl, after all, they were already carrying out many of their assurances.
Additionally, Trump levied extra 10% tariffs on China, on the face in retaliation for the nation’s failure to take more action to pull up the flow of fentanyl into the US. (Of course, China responded with tariffs of its own.)
In case that self-described “Tariff Man” will pose comparable risks to many other nations. In line with reports, Trump’s next aim is Europe. Even if Trump now and then points to pro-tariff President William McKinley of the 19th century as a divine influence, his handling of tariffs differs greatly from those of the majority of past American presidents and other foreign leaders. Tariffs are usually set up to safeguard home businesses from foreign contests or to increase revenue. In contrary to, Trump is employing tariffs as a coercive tool of statecraft to achieve non-trade-related goals.
If economist Douglas Irwin of Dartmouth, the author of the classic history of U.S. trade policy, could think of any U.S. antecedents, he would say so. He cited President Gerald Ford‘s signing of the Jackson-Vanik Amendment in 1975, which tied the Kremlin’s willingness to permit Jewish emigration to most-favored-nation trade status with the Soviet Union, and President Richard M. Nixon‘s covert 1969 agreement with Japan to return Okinawa to Japanese control in exchange for restrictions on Japanese textile exports to the United States.
“Trade has been linked to intellectual property protection (patents, copyrights, etc.), to environmental protection of all sorts (including the current debates over carbon border taxes), and labor rights, especially in Mexico,” said Edward Alden, a trade expert at the Council on Foreign Relations. Unlike this, Trump’s actions are altogether distinct from all of this.
Initially, Alden clarified that in place of “threatening unilateral tariffs,” the US has commonly strived for the goal of these strategic aims by engaging in talks, i.e., by giving access to the US market in exchange for other nations meeting US requests. Second, “trade is logically related to all those other issues.” However, “trade is completely unrelated to the issues Trump chose, which include fentanyl and illegal immigration.”
However, this does not imply that Trump’s use of tariffs is unprecedented globally, even though it is new for the US. China’s well-known use of economic pressure on nations that don’t comply with its demands is the closest analogy to his trade policy I can find in the modern world.
Notable Examples of China’s Trade Retaliation
In 2010, China imposed restrictions on salmon imports from Norway as part of its punitive actions following the Nobel Peace Prize acceptance of Chinese dissident Liu Xiaobo. Beijing banned the import of Philippine bananas and pineapples in 2012 in response to the Philippines’ attempt to detain Chinese fishing crews in a disputed region of the South China Sea.
Beijing organized a boycott of Korean businesses and a restriction on Chinese travel to South Korea in 2016 after the country agreed to install a U.S. missile defense system. Lotte, a South Korean chain of department shops, was forced to close all of its locations in China. After Lithuania consented to allow Taiwan to establish a representative office using the name Taiwan (instead of Chinese Taipei) in 2021, Beijing applied trade restrictions that caused Lithuanian exports to China to drop by 80%.
Australia: The Prime Target of Chinese Economic Coercion
From 2017 to 2020, Australia was the target of what is arguably the most severe instance of Chinese economic pressure. Australia drew Beijing’s ire by trying to limit foreign meddling in its politics, preventing the Chinese company Huawei from building 5G mobile infrastructure and pushing for an independent study of the origins of the coronavirus pandemic. In response, China imposed stringent import restrictions on Australian goods, including timber, wine, and meat.
Trump’s Trade Tactics Resemble China’s Playbook
To put it briefly, Trump’s America is behaving a lot like President Xi Jinping’s China. For a liberal democracy that has always supported the rule of law and an international order founded on rules, this is an unacceptable stance. Even so, Trump may still contend with practical concerns even if he has no moral objections to imitating China’s oppressive measures. China’s economic pressure is “not very effective,” according to a 2023 assessment from the Center for Strategic and International Studies.
The majority of Beijing-bullied nations have turned against China and sought out other markets. According to a Pew Research Center survey conducted last year, 71 percent of South Koreans and 85 percent of Australians had negative opinions of China. Compared to roughly ten years ago, when China started waging trade wars against those nations, that represents a significant change. According to a 2015 Pew survey, 61 percent of South Koreans and 57 percent of Australians had a positive opinion of China.
The Impact of China’s Trade Retaliation on Global Alliances
South Korea’s commerce with China has drastically decreased in the years after China’s economic assault, while it has increased with the US and Japan. In addition, Seoul signed a trilateral agreement with the US and Japan and declined to withdraw the US ballistic missile defense system. In response to the Chinese threat, Australia crafted a deal with the US and the UK to develop its nuclear submarines.
Trump’s Trade Threats May Backfire Like China’s Strategy
It’s unlikely that Trump’s attempts to employ economic pressure will be any more effective than China’s. Given that Russia sends a bit minimal to the US, Russian President Vladimir Putin is undoubtedly not going to feel intimidated by Trump’s tariff threats. Given that his threats constantly fuel a nationalist hostile response, Trump may find it easier to push for nations that rely largely on U.S. trade, like Canada and Mexico, but even in such cases, the potential rewards are severely limited.
About Trump’s “continually going up to the brink, threatening to impose tariffs, then going back, and returning to the brink again,” Irwin forecast that “countries will get tired of this very quickly.” It “raises uncertainty for business, and business doesn’t like uncertainty,” Irwin noted. Companies will eventually look to other markets, and nations will look to other trading partners. China is likely to be the inheritor of Trump’s tariff tamper tantrums, which will make believe many countries that the United States is no more reliable than Beijing as a trade partner.