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Donald Trump’s Tariff Wars Have the World on Edge

Former President of the United States Donald Trump speaking with attendees at the "Rally to Protect Our Elections" hosted by Turning Point Action at Arizona Federal Theatre in Phoenix, Arizona. By Gage Skidmore.
Former President of the United States Donald Trump speaking with attendees at the "Rally to Protect Our Elections" hosted by Turning Point Action at Arizona Federal Theatre in Phoenix, Arizona.

What is happening with US tariff policy under President Donald Trump?  The question isn’t rhetorical; after a week of back and forth from the Trump administration, no one is quite sure where America’s foreign economic policy is or is going. 

Over the weekend, President Trump threatened to impose 25% tariffs on Mexico and Canada, America’s two most important trading partners. Yesterday, the tariffs disappeared like a morning frost, evidently delayed after President Sheinbaum and Prime Minister Trudeau spoke with Trump and made token concessions. 

The tariff threat remains on the book but has been pushed back a month. What, exactly, is going on? 

Economics 101: Tariffs Don’t Work

The economic case against tariff policy is ironclad. 

Tariffs, which are taxes on goods entering the United States, cannot even come close to replacing taxes as a source of revenue. Tariffs do not reduce prices; in fact, they depend on increasing prices in order to shift patterns of production and consumption. But because Mexico and Canada are tightly integrated into the US economy as a consequence of the US-Mexico-Canada Agreement (USMCA, negotiated in Trump’s first term), the supply chains for many industries criss-cross borders multiple times.

This would leave US industry extremely vulnerable to supply chain disruption, a point that industry leaders have made repeatedly to the President. Rather than creating space for industrial revitalization, tariff walls with Mexico and Canada would be deeply and immediately disruptive to US industry, with any positive consequences left to an unclear and uncertain future. 

Although it is challenging to know Trump’s mind, it is perhaps better to think of the tariff threats as coercive diplomacy rather than as foreign economic policy.

Along with its more violent manifestations, coercive diplomacy can involve the idea that trade measures can be used against friends and enemies alike to force them to conform to US policy preferences. 

Part of Trump’s political mandate is to address the fact that a substantial number of Americans (including a considerable number of his rural and exurban supporters) very much enjoy fentanyl, despite the evident risks of addiction and death.

In launching the tariff threat, the President made explicit the argument that neither Canada nor Mexico were working very hard to prevent the smuggling of fentanyl into the United States. 

These claims make a bit of sense (although not too much) with respect to Mexico, and are wholly nonsensical when applied to Canada. Accordingly, both Canada and Mexico agreed to take a series of meaningless steps to curtail fentanyl smuggling, leading to the delay in the implementation of the tariffs. 

So if we do the President and his advisors the courtesy of believing he knows what he’s doing, we have to conclude that the tariff threats have nothing to do with revenue or reindustrialization, and not much to do with fentanyl. That leaves a more general sense of coercive diplomacy, in which the President is simply announcing to the world (North American First!) that the United States will impose its will and use its economic weight to win concessions whenever it pleases.

This effort was on display when Trump threatened Colombia with heavy trade sanctions over a small immigration dispute. The logic is that the United States can win concessions in the future by establishing a reputation for toughness and a willingness to endure pain in order to win a trade dispute. 

Donald Trump speaking with supporters at a campaign rally at the Phoenix Convention Center in Phoenix, Arizona. By Gage Skidmore.

Donald Trump speaking with supporters at a campaign rally at the Phoenix Convention Center in Phoenix, Arizona.

However, suppose the President is attempting to demonstrate that he is willing to impose economy-crushing tariffs upon America’s closest trade partners for trivial and insignificant foreign policy outcomes. In that case, he has thus far failed to do so.

Canada and Mexico were both obviously concerned about the tariff walls, but Trump’s decision to delay the tariffs in return for specious concessions does not raise confidence anywhere that the administration has any idea of what it’s doing. The tariff threats caused deep unhappiness in both countries and served to embolden voices skeptical of a continued commitment to economic integration with the United States. The threat of disruptions and counter-tariffs threw American businesses into a panic, especially in industries particularly dependent upon access to export markets. Certainly, no one on either side of the borders desires an encore of this stage play every month for the rest of Trump’s term, and it is unclear how many times Mexico or Canada or anyone else will take US threats seriously if Trump continues to find ways not to execute them. 

Donald Trump and Tariffs: What Happens Next? 

In a year, we’ll have a better perspective on what’s going on with the Trump administration’s tariff policy

We may eventually find out whether the most disconcerting story is true, that the administration has no firm understanding of where it is or where it is going and that Donald Trump does not understand foreign economic policy and does not understand why so many parts of his coalition have reacted negatively to the threat of tariffs. 

His joy in the idea that foreign leaders are afraid of him may have overwhelmed any sense of how to maintain and preserve leverage. We may find that Trump’s advisors are so scared to explain reality to him, both because of the towering rage that the President regularly vomits forth on social media and because they know that bootlickers and, yes, men will replace them if they contradict him too aggressively. 

Cowardice and ignorance are a terrible combination in a leader-advisor relationship, but it may well have been a combination that the American voter has chosen. 

Perhaps we will find that there is some overarching logic to the President’s threats and that he does have a long-term plan for American foreign economic policy. If that is the case, it would be helpful if the President could lay it out earlier rather than later. The United States is an enormously important economic partner, and other countries will make concessions in order to retain access to US technology and US markets. 

However, they need to know that such concessions will be rewarded and are not dependent upon the whims of an increasingly mercurial and out-of-touch White House. 

About the Author: Dr. Robert Farley 

Dr. Robert Farley has taught security and diplomacy courses at the Patterson School since 2005. He received his BS from the University of Oregon in 1997, and his Ph. D. from the University of Washington in 2004. Dr. Farley is the author of Grounded: The Case for Abolishing the United States Air Force (University Press of Kentucky, 2014), the Battleship Book (Wildside, 2016), Patents for Power: Intellectual Property Law and the Diffusion of Military Technology (University of Chicago, 2020), and most recently Waging War with Gold: National Security and the Finance Domain Across the Ages (Lynne Rienner, 2023). He has contributed extensively to a number of journals and magazines, including the National Interest, the Diplomat: APAC, World Politics Review, and the American Prospect. Dr. Farley is also a founder and senior editor of Lawyers, Guns and Money.

Written By

Dr. Robert Farley has taught security and diplomacy courses at the Patterson School since 2005. He received his BS from the University of Oregon in 1997, and his Ph.D. from the University of Washington in 2004. Dr. Farley is the author of Grounded: The Case for Abolishing the United States Air Force (University Press of Kentucky, 2014), the Battleship Book (Wildside, 2016), and Patents for Power: Intellectual Property Law and the Diffusion of Military Technology (University of Chicago, 2020). He has contributed extensively to a number of journals and magazines, including the National Interest, the Diplomat: APAC, World Politics Review, and the American Prospect. Dr. Farley is also a founder and senior editor of Lawyers, Guns and Money.

3 Comments

3 Comments

  1. One-World-Order

    February 4, 2025 at 12:48 pm

    Not very true. Actually, not true at all. Some markets were up like the nikkei index.

    But many global media outlets ranging from al jazeera to reuters to BBC have been going on overdrive and sounding like ww3 is about to erupt.

    Due to one man. Tariff man.

    The world was tiptoeing on the brink of all-out nuclear war when joe biden was busily waltzing around in the white house and dreaming of pearl nelson.

    But the very same global media never made even a sound and instead focused on the paris games and world swimming sensations and gymnasts.

    While russia was doing nuclear drills and western missiles and ATACMS were being unfurled in donbass.

    Never trust the global media.

  2. Jim

    February 4, 2025 at 1:27 pm

    The author confidently asserts: “Economics 101: Tariffs Don’t Work”

    That can be true if it starts an upward cycle of ‘escalation’ with neither side willing to negotiate in good faith to resolve the dispute, but instead each side defiantly matches each upward cycle of the other.

    And, indeed, that has happened… it ultimately dampens trade and causes an impasse with trading partners in what otherwise would be robust trade.

    Human nature and national pride being what they are… too many times, tariff wars fail to achieve what they were intended to do: balance and reduce or eliminate various unfair practices such as labor arbitrage which gives an unfair advantage, or subsidy arbitrage not available to home country businesses or outright discrimination or hidden barriers to imports from one country to another.

    Free trade (which generally I support) can be a rhetorical cloak designed to ignore unfair practices… which are real enough, but often are intentionally overlooked by ‘free traders’ because it goes against their ideology… free traders are often ideological to the point of willful blindness.

    So, what about here?

    It depends on the parties’ willingness to engage in good faith negotiations. The policy is not an end in itself, but rather a starting point… the tariffs are designed to get the trading partner’s attention to the need to resolve various practices unwanted by the tariff imposing country. (There is a national interest in home manufacturing and protecting vital industries, and the jobs that go with it…free traders are loath to acknowledge such realities.)

    Will it work as intended this time?

    So far, it seems to with enough concessions to warrant delaying the tariffs for 30 days… good.

    The point is to resolve the dispute, not turn a trading partner into a hostile opponent. Although, that has happened.

    Let’s hope cooler heads prevail and substantive negotiations do take place, issues are resolved and the threatened tariffs never are imposed.

    But if intransigence reigns, we will see what happens.

  3. Swamplaw Yankee

    February 5, 2025 at 5:55 am

    Hoily smoke. “What exactly is going on”. Then “Cowardice and ignorance”, another image that Farley throws out in his Potemkin Village panel show that the article paints above.

    Farley sees a mercurial and out of touch white house in his smoker session as well.

    Farley must be smoking with Hulio back of the school house.

    What about the forced move of millions of Gog to a real nice penthouse and neighbourhood theory?

    So, Bibi suddenly understands in a biblical way what it is to have a “problem” even with red wolf and blue wolf in full tech overdrive.

    Ok: Farley, lets count? Can we get the toes uncovered? How many millions of Ukrainians has the orc muscovite elite moved out of their ancient home villages/towns? How many units has the orc muscovite elite destroyed in the Ukraine? Can we do a comparison with this other region? Hmmm. Just cant see that Farley wiggling his toes fast enough!

    The Yankee did a big geopolitical idiocy when idiots were allowed to force Ukraine to give up its nuclear armed missiles in 1989. The Yankee signaled that it wanted to disrupt the balance in the middle east in a very terrible direction. The Yankee could not trust those Ukrainians. The orc muscovite elite took the Yank on a ride thru their Potemkin Village and showed those “mercan” intelligence brains all those freshly re-painted czarist agit-prop panels.

    Do we all notice how the Yankee just has no ability to open up a history book. Say, when the Yankee did zip when the orc muscovite elite had a genocide party in Ukraine. There were too many Ukrainians hanging around their villages from the old days. So, lets starve 20 or so million Ukrainians and ship huge numbers to dig out uranium in Siberia. So, what did the USA do in 1932-33? Well exactly what the USA did in Smyrna when the Gog butchered Christians to steal their ancient Anatolia for an illegally occupied Turkiye. American military listened closely as the women and children wailed in death spasms. Nothing else, the record shows, was done to stop the orc muscovite genocide elite killing Ukrainians.

    Oh, and the orc muscovite elite did order a lot of trade goods in the 30’s from the US. Millions of US citizens poured into the orc muscovite lands for jobs and a new commie style life. A few survivor american citizen children managed to survive siberia + exit orc land 50 plus slave years later. Yeah, the US state department permanently closed their eyes as millions of Americans were killed off by the orc muscovite elite.

    Farley just painted a panel of bootlickers and yes men flooding the beltway. Come on, Farley. Where is the Hollywood movie? No movie! Then that Potemkin Village panel claiming bootlickers can’t be real.

    In 2013-14 the USA allowed the orc muscovite elite to invade the Ukraine in a free no-cost to the muscovite deal. The deep state covertly kept a secret strategic silence on their collusion with the commie enemy and also silence of the Western MSM (WMSM).

    The orc muscovite elite freely moved, at zero cost, into ancient Ukrainian soil taking over Crimea, Sevastopol and the whole industrial Donbas. The geopolitical balance was sifted by the USA in favour of the enemy of the USA. Pretty clear history.

    Today, Trump must clean up this historic treason in the middle east. But, not with secret meetings, hiding with the orc muscovite elite. With a bit of “maskarada” the orc muscovite can have Trump eating out of their hand. One can fear a lot in that but, iter alia, Trump may not appreciate that the orc muscovite has lost to the EU + Ukraine and the muscovite hardware + vanishing orc troops are exhausted.

    Trump must demand in public the immediate 100% return of ancient Ukrainian land such as Crimea, Sevastopol and Donbas. If Trump had geostrategic chess-smart advisors, the USA would additionally demand the return of Ukrainian land stolen over the last 2 centuries by the imperialistic and irredentist orc muscovite empire.

    Trump must seize this ephemeral yet historic moment of Victory by saving the WEST + Ukraine in a geostrategic manner. That public, personal move will make Trump a world wide winner of a historic nature. Fiddling about and very high risk gambling with a vicious, enraged Gog on that pencil top called Israel, that Trump so graphically illustrated, will make ensure him a permanent mantle of hatred and defeat. -30-

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