Recent developments in the Trump administration’s handling of tariff negotiations point to a deeper concern – not just for trade policy, but for the exercise of U.S. power more broadly. By not having a full, clear, and certain trade negotiation strategy, Washington risks diminishing the one resource a superpower cannot afford to lose: credibility.
The administration’s theory of the case for tariffs was clear. Tariffs, used aggressively and unapologetically, were to serve as economic shock therapy, jolting allies and adversaries alike into “fairer” trade deals, under the weight of the United States’ economic might, that would help rebalance international trade and reinvigorate U.S. industry.
The U.S. economy, robust and resilient, was the cornerstone of this gamble. President Donald Trump’s bet was that Washington could absorb more economic pain than Beijing, Brussels, or Ottawa. Tariffs were not merely punitive; they were a signal. The United States had the stamina, the grit, and the stomach for a sustained trade war.
But in the span of just a few weeks, through public reversals, shifting deadlines, and contradictory signals, U.S. credibility to negotiate itself out of this self-created dilemma has all but eroded.
We’ve seen this dynamic before. In 2013, when the United States declared a “red line” over Syria’s use of chemical weapons, the subsequent failure to enforce that line had consequences far beyond the Middle East. It was not a question of military strength, but of perceived will. As the saying goes, “superpowers don’t bluff.” But when they do, the consequences ripple across every region and issue. Today, the United States faces a similar moment, this time on the economic front.
The Trump administration has drawn multiple red lines with tariffs, against China, Europe, Mexico, Japan, Canada, South Korea, and strategic partners in Southeast Asia. It’s hard to know precisely what those red lines are for each country – but we do know what the consequences are.
The bond market and foreign exchange markets have done what no foreign adversary could: they’ve exposed the vulnerability of not having credibility. A falling dollar and rising yields signaled investors’ concerns not just with global uncertainty, but with U.S. economic predictability and resolve. The decision to pull back tariffs – supposedly for a 90-day “pause” – may have been framed as a strategic adjustment, but it has been perceived globally as a retreat.
This shift has done more than weaken the credibility of tariffs as a negotiating tool. It has inverted the balance of leverage. Where once foreign capitals believed the United States was willing to escalate a trade war and endure pain in service of long-term structural change, they now see a U.S. government hesitant to bear the political and economic costs – and increasingly eager to secure any deal that can be presented as a “win.”
Negotiators in Beijing are astute students of power. Xi Jinping’s strategy is not one of panic; it is one of attrition, patience, and strength through endurance. Yet after attempting to punish China severely for daring to implement retaliatory economic measures, Trump did an abrupt about-face, promising that the sky-high 145 percent tariffs on Chinese imports will “come down substantially” in the near future. By signaling uncertainty now, without securing meaningful concessions or a coherent long-term strategy, Washington risks encouraging Beijing to hold out and bleed away U.S. leverage over time. Why concede anything when patience appears to be paying off?
The impact of these shifts has diminished the perception that the United States is prepared to stay the course on the tariffs. This perceived vulnerability risks emboldening competitors who now see hesitation where there was once resolve.
The result is a strategic nightmare. The United States now finds itself in the worst of all possible worlds: it faces a weakened economic position, diminished global trust, and adversaries who now believe they can extract more by simply waiting out the turbulence. Deals made under such conditions will be agreements born of political urgency, not national strength.
This moment is not just about tariffs. It’s about how power is wielded in a multipolar world. Credibility is a perishable commodity. Once lost, it’s hard to regain.
The next chapter in U.S. trade relations – with China, the EU, and beyond – will not be shaped by economic fundamentals alone, but by whether others believe the United States is willing to match its words with endurance. It will be shaped by whether other countries believe U.S. leaders mean what they say, and are willing to endure what they demand of others. At this moment, that belief is faltering. And that’s not just a problem for trade – it’s a defining test for U.S. power.
But within this moment of diminished credibility lies an opportunity. The disruption has already happened; the chaos is priced in. If the United States can learn from this inflection point, rebuild trust, and forge a coherent strategy alongside its allies, Washington can still shape the next era of global leadership.
Credibility, once lost, is hard to regain – but not impossible. What matters now is whether U.S. leaders can summon the discipline, the vision, and the patience to rebuild it. In crisis lies the chance for renewal – if we have the courage to seize it.
