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Home Politics

Trump’s tariff and trade war: His strategy and how it could go wrong

August 1, 2025
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Four months after President Donald Trump’s “Liberation Day” tariff hikes threw the global economy into chaos, we got a sequel — but there appears to be at least somewhat more of a method to Trump’s tariff madness this time around.

Trump is using the threat of steep tariffs to try to force dozens of countries to agree to make more concessions in bilateral trade agreements — and, specifically, to get them to make somewhat hazy commitments to buy more US goods or products.

If Trump likes your concessions, you get a deal in which you’d stomach a new tariff of 15 percent or so. Alternatively, if Trump isn’t satisfied with your concessions or is mad at you for some other reason, you get squeezed — slapped with tariffs of 30 percent or more, going into effect in a few days, to see if that will make you cave.

Yet, as Trump’s negotiating strategy has become somewhat more coherent than it first appeared, the legal and economic uncertainty around his tariffs has only deepened.

An appellate court hearing Thursday on Trump’s tariffs went poorly for the administration, renewing longstanding questions about whether these tariffs could all be struck down. And a weak jobs report Friday morning heightened concerns that the US economy was slowing — and that Trump’s tariffs were one reason why.

Trump’s tariff negotiating strategy has come into focus

Investors reacted to Liberation Day with terror because Trump’s April tariffs seemed truly chaotic, impulsive, and bizarre — and because it was genuinely unclear what the president was even trying to achieve.

Since then, though, we’ve gotten more clarity on the type of deals that meet Trump’s approval — and generally, they involve commitments to buy US stuff or give the US money.

In the last few days, the European Union, Japan, and South Korea pledged hundreds of billions of dollars toward US investments. Other countries made their own concessions; for example, Pakistan agreed to let US companies develop their oil reserves, and Bangladesh agreed to buy 220,000 tons of US wheat.

We’ve seen that if a country or bloc makes commitments Trump deems sufficient — as in the cases of the European Union, Japan, and South Korea — Trump declares a deal has been reached, and they get spared the worst tariff hikes. (Though they still all got slapped with a 15 percent tariff on their exports to the US, that’s significantly lower than the tariffs Trump is imposing on other countries.)

However, if Trump isn’t happy with the concessions on offer (as in the cases of India, Taiwan, and Switzerland), or if he is mad at countries for some other reason (like with Canada, South Africa, and Brazil), he tries to squeeze them, slapping on big tariffs in hopes they cave.

Most of those big tariffs are set to go into effect on August 7, meaning there are a few days left for further negotiation. (Canada’s 35 percent tariff went into effect today — sorry, Canada.)

Finally, two other countries have gotten a sort of special “kids gloves” treatment from Trump. China has actually won significant policy concessions from the US in recent weeks, while Mexico scored a 90-day extension on its trade deal deadline.

What China and Mexico have in common is that they both have leverage over Trump. China’s restrictions of rare earths exports earlier this year struck terror into the hearts of Trump officials, who faced the prospect of US auto manufacturing plants closing as a result. Mexico, for its part, has major influence on how many migrants make it to the US’s southern border — and if they let up on enforcement, Trump could face a flood of new migrants. So, he’s been treading more carefully with both of late.

Trump’s tariffs remain plagued with legal and economic uncertainty

In narrow terms, Trump’s negotiating strategy on tariffs has been surprisingly successful. He correctly perceived that he had the opportunity to shake down US trading partners and that most countries would simply roll over and take it to avoid being hit with exorbitant tariffs.

One potential flaw in his plan, though, is that his tariffs could well be thrown out by the courts.

Trump officials have insisted that a 1977 law gives the president broad powers to impose tariffs of his choosing so long as he declares there’s a national “emergency.” But judges have been deeply skeptical so far, viewing this as a usurpation of Congress’s power — and an appellate court hearing Thursday reportedly did not go well for the president.

This will eventually end up at the Supreme Court, and it’s possible the Court’s conservative majority will blanche at the prospect of overturning Trump’s entire trade policy agenda and humiliating him on the world stage. Then again, perhaps they will rule on the law without regards to politics. Anything’s possible, right?

Separately, newly revised jobs numbers released by the Department of Labor Friday found that jobs growth was far smaller than previously thought in May and June.

This could point to economic trouble — trouble that Trump’s tariffs would deepen, since they make imports more expensive and slow economic growth.

So, while Trump may be scoring some short-term “wins” with his trade deals, the possibility this all ends in a debacle — either with courts throwing out all his tariffs or with a recession — remains acute.



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