The president of United States, Donald Trump, has made it clear that its preferred method of gaining leverage over adversary countries on the other side of the negotiating table is to increase tariffs. It doesn’t matter whether the issue is trade-related or not.
If there was any doubt (and I doubt there was), it was eliminated when because he didn’t like an anti-tariff commercial that Ontario aired in the United States.
Ontario Premier Doug Ford’s announcement cited the late former president Ronald Reagan, who in 1987 criticized the use of blanket tariffs as a weapon of trade policy.
It may seem obvious that there is no direct causal relationship between the action of Ontario, and by extension Canada, and Trump’s threat to increase Canadian tariffs by 10%. However, Trump’s response was hardly a surprise.
The Canadian incident shows that countries on the other side of the negotiating table with the United States face an almost impossible situation.
First, they must negotiate trade deals by going to Washington with a transactional mindset: “What can we offer?”
Second, they must be prepared for, at the last minute, the US president to want more — so they better have something extra saved up that they can offer in return.
And there’s a third complication: Forget about reciprocal tariffs — the United States is in the business of retaliatory tariffs for seemingly unrelated issues. That means no country can know what decision, policy or indiscretion will offend Trump, who could retaliate at virtually any time with more tariffs.
This is uncharted territory and not the normal way of doing business. Traditionally, tariffs have been used to correct a perceived trade imbalance and protect the domestic market by making imports more expensive.
What seems clear is that Trump’s fondness for tariffs will ensure they remain at the center of US economic policy. I see no scenario in which the president, even after having negotiated a trade agreement, does not reserve the right to unilaterally change his mind, threaten and then launch a new tariff.
Some of Trump’s tariffs contain at least a spark of geopolitical logic. For example, its occurred because the country is still buying oil from Russia.
One could argue – with some effort – that the tariff was supporting some broader strategic objective to stop the Russia-Ukraine war.
In other cases, it remains difficult or impossible to understand the commercial purpose of tariffs. Take the case of Brazil: Trump considers it wrong to sue former Brazilian president Jair Bolsonaro for allegedly planning to overturn an election.
“in part due to Brazil’s insidious attacks on Free Elections and Americans’ fundamental Free Speech rights.” (The previous tariff was about 10%.)
According to the Brazilian Specialty Coffee Association, the IMF is warning that a tariff weapon has hit its target.
Then there is Colombia. After Colombian President Gustavo Petro criticized Trump’s bombings of suspected drug traffickers on the Caribbean coast, Trump called Petro “a drug trafficking leader” who is “poorly judged” and very unpopular.
For a country where democracy is often fragile at best, the
Trump also imposed high tariffs on South Africa for its alleged poor treatment of white farmers and land reforms.
The list goes on. Last week’s threat against Canada only confirmed the trend.
After the last few weeks and months, countries have been alerted. No one should be surprised if and when the gun is fired.
So far, the only country that has faced Trump and won is China. Xi Jinping has mastered the careful art of letting Trump appear victorious while quietly proclaiming victory at home. Xi played his cards perfectly and emerged from this week’s meeting with a reduction in tariffs.
But there is one last detail: A as an instrument of pressure within its emergency powers.
If the Supreme Court upholds these rulings, Trump’s favorite tool could be significantly weakened.
