Global Politics

CWA # 21
Global Politics
Trump’s Tariff Strategy: Targetting Adversaries and Allies

Harini Madhusudan
9 June 2018
Photo Source:

What is Trump’s Endgame? Why is he alienating the allies, when the US could benefit from their (G7) shared complaints against China’s trade behaviour? Or is he catering to the big corporations and lobby interests?

Project Associate, NIAS
 
In March 2018, the Trump administration announced new tariffs on Chinese goods, leading to a war of words on the nature and extent of tariffs. Despite analysts calling it as a bluff game and expected it to be resolved, the situation has escalated today. 
 
What is Trump’s Endgame? Why is he alienating the allies, when the US could benefit from their (G7) shared complaints against China’s trade behaviour? Or is he catering to the big corporations and lobby interests?
 
From China to G-7: What is Trump’s Endgame
In May 2018, an American delegation led by US Commerce Secretary Wilbur Ross had a discussion with the Vice Premier Liu He.. At the outset, Ross said that the two sides had discussed specific American export goods that China could purchase and wrapped up the talks with China’s ‘pledge’ to narrow its trade surplus. However, there was no joint statement.  The tensions of a “trade war” were temporarily eased after China promised to, ‘significantly increase’ its purchases of US energy, farm and other products. The US Treasury Secretary also announced that the US tariffs were suspended and the possibility of a trade war was put on hold. 
 
A White House statement read: "The United States will impose a 25 per cent tariff on USD 50 billion of goods imported from China containing industrially significant technology, including those related to the 'Made in China 2025' programme," barely ten days into the truce.  The Xinhua News Agency quoted a Chinese government statement: “if the US introduces trade sanctions including tariff increase, all the economic and trade achievements negotiated by the two parties will not take effect,” emphasising that the negotiating process should be ‘based on the premise’ of not fighting a trade war. 
 
US complaints against China remain the same; multibillion-dollar trade deficit and Chinese technology policy steal US Intellectual property. 
 
Concurrently, Trump has displeased America’s closest allies, the six other G7 members, by imposing 25% tariffs on their steel and 10% tariffs on aluminium. After the three-day meeting held in Canada, among the finance ministers of the G7 industrial countries ended, the Canadian finance minister Bill Morneau announced that the other members want Trump to hear their message of concern and disappointment over the US trade actions. European Union and Canada have already gone ahead and announced a series of American goods that they would likely impose retaliatory tariffs on. One thing is certain and that is, the fear is that the US action will damage business confidence around the world at a time when growth is slowing. Or will it? 
 
According to the Dutch bank ING, “exports of steel and aluminium to the US makeup just 0.3% of worldwide goods exports from the EU and represent a tiny 0.05% of the bloc’s GDP. The US has a trade in goods deficit with the EU of about $38bn, with about $78bn exported to Europe from the US, and $116bn going the other way. Should the tariffs be raised by 10% above proposed levels, the OECD has estimated it would reduce global trade by about 6%. But should the situation escalate, the consequences could be dire. Should the US and EU ramp up various tariffs, including on cars, the impact could knock 0.4% from US growth and 0.3% from the EU.”
 
Deciphering Trump’s Intentions
At this point, many assume that Trump continues to stress the tariffs in order to gain better trade terms out of China and the EU and additionally, to put pressure on Canada and Mexico to reform NAFTA. It continues to remain Trumps riskiest bets. His trade approach is entirely different from his predecessors who saw trade liberalisation as a better option.  In defence of the interests of US big industries, Trump is willing to cross US’ major trading partners and rivals alike and this is worrisome to not just the parties involved but for the world market on the whole. 
 
The Americans may not benefit from these trade actions. And this is first because these deals privilege investors over the workers as the US corporations and investors stand to gain the most from such trade restrictions. Secondly, there does not seem to be any plan in place for the potential retaliatory policies from the other countries. The new tariffs may help in making it easier for US companies to outsource to China without having to worry about intellectual property.  
 
On the surface, it seems as if President Donald Trump is over-playing his cards and it may not be about jobs at all. Even if everything goes in favour of US policies, these tariffs may never “lead to a net change in national employment levels once equilibrium is reached.” It is likely to cost more jobs than it may claim to create.
 
Interests of big corporations 
The industries’ intentions might be plain, and they have gained this benefit under other Presidents as well. Under the Obama administration, US TPP negotiations carry water for drug makers who demanded extraordinary trade protections for their intellectual property trying to feed their extraordinary high-tech medical businesses. These rules were left out of the TPP when it was adopted by 11 nations excluding the US. 
 
In the past, cigarette companies under the TPP negotiators have avoided labelling restrictions imposed by local lawmakers and created exceptions in public health, which was conveniently designed to prevent their abuse in that pact. This time around the US representatives are pushing to prevent countries from putting warning signs on the labels of food with high sugar and fat content. It is heavily backed by US corporations that do not want its consumers to be informed and do not want to alter their recipes or packaging for export. The countries however and Mexican officials in particular, see these processed foods that come with NAFTA as a public health concern.   
 
Industries that do not benefit
The steel and aluminium tariffs announced on the 29 May aimed at US allies, would directly affect specific industries in the US, some businesses include construction and architecture firms, car dealers, auto manufacturers, boat manufacturers, the beer industry, retailers and machinery manufacturers. The tariffs would put the American steel and aluminium industry to the fore, which is expensive compared to what was being imported.  In the long-run, these companies themselves may not benefit from this deal. And as they popularly say, “In a trade war, there are only losers,” the world may potentially be headed towards protectionism in a scale similar to the one before the great depression of the 1930’s. 
 
Trump does not seem worried- “trade wars are good” he tweeted when he sent shocks throughout the world markets and many calling it “the biggest policy blunder.” While his intentions are clear as crystal, his methods seem under-planned. Is Trump going to be the next Smoot and Hawley of America? Or will an alliance of all affected nations and WTO be able to handle this situation? 
 
Also read: 
Hey Desai, "Trump-Kim Summit: Three Likely Outcomes"
CWA # 20, 9 June 2018
 


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July 2025 | CWA # 1744

Chittrothu Vaihali

EU-Canada Summit 2025
What is security and defence partnership all about?
Conflict Weekly
July 2025 | CWA # 1742

IPRI Team

Conflict Weekly # 287-88
The 12 Day War and the Congo-Rwanda Peace Deal
Global Politics Explainer
July 2025 | CWA # 1738

Fleur Elizabeth Philip

Thailand and Cambodia
What was the phone call between PM Shinawatra and President of Senate Hun Sen? What is the border dispute between the two? Why has this become an issue?
TWTW Note
June 2025 | CWA # 1735

Padmashree Anandhan

NATO Summit 2025:
Trump making Europe great again
The World This Week
June 2025 | CWA # 1734

GP Team

The World This Week #317
NATO Summit 2025 and Russia-Mali bilateral agreements
Global Politics Explainer
June 2025 | CWA # 1733

Ananya Dinesh

China and the Pacific Islands 
What was the recent China-PIC joint statement about? What it says, and what it means?
TWTW Note
June 2025 | CWA # 1728

M Kejia

G7 Summit 2025:
The Focus on the Middle East and Trade negotiations
The World This Week
June 2025 | CWA # 1726

GP Team

The World This Week #316
China-Central Asia Summit in Kazakhstan, and the G7 Summit in Canada
Global Politics Explainer
June 2025 | CWA # 1725

Brighty Ann Sarah, R Preetha, Santhiya M, Aparna A Nair & M Kejia

Operation Midnight Hammer: US bombs three nuclear sites in Iran
What were the three Iranian nuclear sites that were targeted? What are the B2 Bombers and Bunker Buster Bombs? What do these attacks mean? What Next?
Conflict Weekly
June 2025 | CWA # 1724

IPRI Team

Conflict Weekly #286
The Spiralling Israel-Iran Crisis, and the Dangerous Hunger Hotspots
Global Politics Explainer
June 2025 | CWA # 1721

Rizwana Banu S and Santhiya M

Who are the Afrikaners?
Why is Trump interested in the Afrikaner question in South Africa?
Global Politics Explainer
June 2025 | CWA # 1720

Lekshmi MK

New WMO Report on Arctic Warming
What are the social, economic and environmental implications of Arctic warming
Global Politics Explainer
June 2025 | CWA # 1719

J Yamini  

China’s EV Surge
What contributes to the rise of BYD
Global Politics Explainer
June 2025 | CWA # 1717

J Yamini

Gender Violence in Pakistan:
What are the larger issues in the Noor Mukadam case?
TWTW Note
June 2025 | CWA # 1715

Femy Francis

The US-China:
On Tariffs, Rare Earths and Visas
The World This Week
June 2025 | CWA # 1713

GP Team

The World This Week #315
The UN Ocean Conference in France and the US-China Meeting in London
CW Note
June 2025 | CWA # 1712

R Preetha

The World This Week
June 2025 | CWA # 1705

GP Team

The World This Week #314
Elections in South Korea and Poland I China and the Pacific Island Countries I Bangladesh Election Announcement 2026
Global Politics Explainer
June 2025 | CWA # 1703

M Kejia 

Sagarmatha Sambaad in Nepal
Kathmandu’s Global Agenda for the Himalayas
Global Politics Explainer
June 2025 | CWA # 1700

R Preetha

Ethiopia bans the TPLF
What does the TPLF ban mean for the Pretoria agreement? What next for Ethiopia?
TWTW Note
June 2025 | CWA # 1694

Aashish Ganeshan

The US:
Harvard vs Trump Administration
The World This Week
June 2025 | CWA # 1691

GP Team

The World This Week #313
China-ASEAN-GCC Summit I President Macron's visit to South East Asia I Trump Vs Harvard
The World This Week
May 2025 | CWA # 1690

GP Team

The World This Week #312
Elections in Romania, Portugal & Poland I UK-EU Summit
CW Note
May 2025 | CWA # 1689

Padmashree Anandhan

Ukraine
Continuing Russia’s Aerial Attacks, despite exchange of prisoners
CW Note
May 2025 | CWA # 1688

Ayan Datta

Gaza
The Humanitarian Crisis and Israel’s Renewed Offensive
TWTW Note
May 2025 | CWA # 1685

Aparna A Nair

UK-EU Summit:
First step towards a reset
TWTW Note
May 2025 | CWA # 1683

Aashish Ganeshan

Elections in Portugal:
The Rise of Chega Party and the Search for Political Stability
TWTW Note
May 2025 | CWA # 1679

Aashish Ganeshan

US in the Middle Easr
Trump’s visit to Saudi Arabia, Qatar and UAE
TWTW Note
May 2025 | CWA # 1678

Gauri Gupta

China in Latin America
China-CELAC forum: Strengthening ties with Latin America and Caribbean
The World This Week
May 2025 | CWA # 1677

GP Team

The World This Week #310-311
China in Latin America and the Carribbean I Trump's Middle East Visit I Denmark as the new Arctic Chair
CW Note
May 2025 | CWA # 1675

Lekshmi MK

Turkey:
PKK disbands after 40 years of armed insurgency
CW Note
May 2025 | CWA # 1673

Padmashree Anandhan

Ukraine:
The Discussion in Turkiye and the Elusive Ceasefire
CW Note
May 2025 | CWA # 1671

Abhiruchi Chowdhury

US, Ukraine and Russia:
Air attacks amidst a Minerals deal and Ceasefire Proposals
Global Politics Early Bird
May 2025 | CWA # 1670

Fleur Elizabeth Philip

Singapore Elections in 2025:
People’s Action Party (PAP) Wins, Again
TWTW Note
May 2025 | CWA # 1667

R Preetha and Brighty Ann Sarah

East Asia:
Tough Tariff Negotiations with the US
TWTW Note
May 2025 | CWA # 1666

Padmashree Anandhan

The US-Ukraine
The mineral deal with the US
Conflict Weekly
May 2025 | CWA # 1665
Conflict Weekly # 280-81
India-Pakistan De-escalation I Ukraine Discussion in Istanbul I The Battle over Port Sudan I Disbanding of PKK in Turkiye I France-Algeria Diplomatic Tensions
Global Politics Early Bird
May 2025 | CWA # 1663

R Preetha

Canada Elections 2025:
What do the results convey? What next for Mark Carney?
Conflict Weekly 250th Issue
October 2024 | CWA # 1480

IPRI Team

This Week in History
July 2024 | CWA # 1413

Ramya B

Global Politics Early Bird
May 2024 | CWA # 1336

Femy Francis

This Week in History
April 2024 | CWA # 1275

Ramya B

NIAS Global Politics Database
March 2024 | CWA # 1251

NIAS Africa Team

Africa This Week
This Week in History
March 2024 | CWA # 1246

Sivasubramanian K

NIAS Global Politics Database
February 2024 | CWA # 1226

NIAS Africa Team

Africa This Week
The World This Week
November 2023 | CWA # 1148

GP Team

The War in Ukraine
October 2023 | CWA # 1091

Annem Naga Bindhu Madhuri

Issues for Europe
NIAS Pakistan Weekly
October 2023 | CWA # 1087

PR Team

The World This Week
October 2023 | CWA # 1083

GP Team

Conflict Weekly
August 2023 | CWA # 1049

IPRI Team

IPRI Quarterly Forecasts I Triggers, Trends, and Trajectories
July 2023 | CWA # 1012

Bibhu Prasad Routray

Myanmar continues to burn
The World This Week
July 2023 | CWA # 1009

GP Team

2022: The World This Year
December 2022 | CWA # 879

Padmashree Anandhan

The Ukraine War
2022: The World This Year
December 2022 | CWA # 872

Sapna Elsa Abraham

Europe: Heatwaves, Wildfires, Droughts, and Ice Melt in Alps
November 2022 | CWA # 838

Rishma Banerjee

Tracing Europe's droughts
NIAS Africa Weekly
March 2022 | CWA # 705

NIAS Africa Team

In Focus: Libya
The World This Week: 150th Issue
December 2021 | CWA # 630

GP Team

Europe in 2021
Pakistan Reader
October 2021 | CWA # 588

Abigail Miriam Fernandez

TLP is back again
NIAS Fortnightly on Science, Technology & International Relations
August 2021 | CWA # 528

STIR Team

Space Tourism
GLOBAL PROTEST MOVEMENTS
September 2020 | CWA # 337

Anju Annie Mammen

The FATF Meeting, February 2020
February 2020 | CWA # 235

Lakshmi V Menon

Science, Technology and International Relations
September 2019 | CWA # 162

Lakshman Chakravarthy N

5G: A Primer
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 71

Mahesh Bhatta

Nepal
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 70

Nasima Khatoon

The Maldives
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 69

Harini Madhusudan

India
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 68

Sourina Bej

Bangladesh
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 67

Seetha Lakshmi Dinesh Iyer

Afghanistan
United States
July 2018 | CWA # 47

Rahul Arockiaraj

East Asia
June 2018 | CWA # 26

Siddhatti Mehta