Trump just dinged India with a 25% tariff rate — higher than many other Asian nations, though he’s leaving the door open for last-minute haggling. He cited New Delhi’s own trade barriers, but rebuked Prime Minister Narendra Modi’s government over lots of other things too – including its BRICS membership, and close ties with Russia. “They can take their dead economies down together, for all I care,” he posted on social media.
Trump is taking punitive tariff threats beyond the realm of trade and into other arenas – ramping up pressure on countries to bend to America’s will, on matters from war to energy supplies. Trump road-tested the hardball tactic in his first term. Now he’s taken it to new levels.
The US spent years accusing its chief superpower rival China of practicing “economic coercion” – a label that precisely describes what Trump is doing now. And from his perspective, it’s working – especially with allies that depend on the US for military protection. He’s gotten the European Union, Japan and South Korea to meekly accept lopsided tariff terms, and customs revenue is pouring in.
Whether all this will deliver a “golden age” for the US economy – which has slowed since Trump took office – remains to be seen. So does the longer-term fallout for America’s relationships with partners.
India is far from the only case where Trump is wielding trade weapons for unrelated issues. He fired a shot across Mark Carney’s bow after the Canadian premier said Wednesday that Canada plans to recognize a Palestinian state – in defiance of Israel and its chief backer, the US.“Wow!” Trump responded on social media. “That will make it very hard for us to make a Trade Deal with them.”
‘Full Power’
While they call it leverage rather than coercion, Trump’s team hasn’t been shy about using America’s economic and military might to extract concessions from allies and adversaries alike.
“We’ve never had a president who wields the full power of the United States to negotiate good deals for our country,” White House Press Secretary Karoline Leavitt told reporters Thursday. “This is what maximum leverage looks like.” Stephen Miran, one of Trump’s top economic aides, said earlier this month that since the US has the world’s biggest consumer market, it can force other countries to accept the cost of tariffs.
Trump has backed away from some of his harsher tariff threats, and at other times he’s set deadlines only to extend them — like he just did with Mexico — or indicate that bargaining can stretch past the cutoff date.
Perhaps his most brazen intervention came during the BRICS summit in Brazil earlier this month. Trump first blasted the 10-member group’s “anti-American policies” and threatened additional tariffs on any country aligning themselves with BRICS. Then he singled out the host nation, without so much as the pretense of addressing trade issues.
Trump said he’d impose 50% tariffs on Brazil after demanding that it cease a “Witch Hunt” against his ally, former President Jair Bolsonaro, and criticizing steps taken against US social media companies — matters that are the prerogative of Brazil’s judiciary, not its government. He backtracked somewhat this week, allowing multiple exemptions and giving Brazil an extra week before the maximum tariff rate kicks in.
Trump has given most US partners until Aug. 1 to cough up or suffer additional tariffs, and there’s been a flurry of trade agreements – often barely more than frameworks – hashed out ahead of the deadline.
Under Trump’s pressure, the European Union declined to use its trade heft and signed up to terms that were subsequently denounced by German and French industry. The Europeans were acutely aware that they still depend on the US for weapons and security in the face of Russia’s aggression in Ukraine.
The pressure was there for British Prime Minister Keir Starmer too, when he traveled to not one but two Trump golf courses in Scotland last weekend to try and pin down the details of the UK’s framework deal of a few weeks earlier. He instead got a lecture on how British immigration was too lax, North Sea oil taxes were too high, and the UK was misguided to seek clean energy.
Popular Resistance
To be sure, the US has been applying economic pressures to get its diplomatic way since long before Trump entered politics. Successive presidents have piled on thousands of sanctions over the last couple of decades.
Still, there’s something new in Trump’s approach. He’s questioned the utility of sanctions — which can cut access to dollar-based finance, but risk a backlash against the greenback’s global status, something Trump vows to protect. Instead, his weapon of choice is essentially the US consumer. He’s betting that other countries can’t get by without selling stuff into the world’s biggest economy.
So far he can point to some significant successes. His tariffs are bringing in billions for the US Treasury. Despite dire warnings from critics, the US economy hasn’t tanked – though there’s been a marked slowdown this year – and the stock market, Trump’s preferred gauge of sentiment, is setting fresh records.
Meanwhile, only China has retaliated to tariffs in hardball style so far. Mexico has also pushed back to an extent, and got a reward on Thursday when Trump postponed tariff hikes for 90 days.
There’s been some resistance from Brazil and Canada too – and it’s proved popular at home in both cases.
President Luiz Inacio Lula da Silva appears to be reaping the benefit of holding firm. He got a polling boost ahead of elections, while the US exempted key Brazilian goods from the tariffs. Carney enjoys wide support for his opposition to the more egregious of Trump’s charges.
A broad if provisional conclusion from the upheavals of the past few months might be that Trump-style coercion gets results within the US-led bloc, the jury’s still out when it comes to large neutral countries like India and Brazil, and it may be less effective with adversaries.
China, for instance, hit back hard with curbs on its sales of rare-earth elements – which are vital to advanced US industries. Trump rapidly dialed back his highest China tariffs, as well as some export restrictions, and the countries have reached a kind of truce with talks ongoing.
Equally, Trump’s demands for a ceasefire in Ukraine haven’t had much impact on Vladimir Putin. Trump’s given him a deadline of Aug. 8 to strike a deal or face more economic pressure. There’s no sign that this is affecting Moscow’s conduct of the war, and the Russian army continues to advance.
