“Ah tariffs. It’s the most beautiful word in the dictionary”, Donald Trump has told us many times. Faced with criticism on both his left and right, Trump announced his ‘Liberation Day’ plan yesterday, claiming that his global reciprocal tariffs will ‘Make America Wealthy Again’. Readers of Political Strategy can get their economic analysis elsewhere. What really matters is the underlying reasons Trump may have for slapping tariffs on virtually every country in the world. It should not be a surprise that it is yet another angle on making America great again.
Why tariffs?
To understand Donald Trump’s political career, one must understand his political motivations: restoring the US as the global hegemon. Trump spent his business career making money and building influence. Claims that his political ambitions have been a path to power and wealth are baseless. Few would argue that Trump’s chances of headbutting a bullet were much lower as Chairman of the Trump Organization. Trump believes that the US should reclaim its status as the global hegemon, the lynchpin every other country relies upon.
In recent decades – particularly during the Biden Administration – proponents of this view see a decline in America’s global status. Military defeats, a rise in socialist policy, and a growing disregard for the US as a superpower have directly led to Trump’s insurgent platform. While other countries gain wealth through trade with the US, America seems to lose it. For those who believe that the US should be the global hegemon, it must hurt to see that it quickly ceases to be so.
Tariffs make deals
Trump wrote the book on dealmaking. It is core to his identity. After a reasonably successful first term waging economic wars with tariffs, Trump is a true believer in applying business to politics – and with great effect. Tariffs led to the USMCA, the first phase of the China Trade Agreement, and concessions on KORUS. Past success has given Trump reason to believe that tariffs are the silver bullet to restoring US hegemony.
The resource-rich US has the capability to be a self-sufficient country. In reality, it likely never will be, as international alternatives to many products will always be preferable to consumers. Kerrygold simply does not taste the same with American cows. But perfect self-sufficiency is not the aim of tariffs. The aim is leverage. The aim is to create ‘shih’.
Shih-talking
‘Shih’ is a term used by Sun Tzu to describe strategic advantage that works with minimal effort. In the same way a drawn crossbow requires little effort to shoot, strategists with ‘shih’ just need to set a plan into motion and let the momentum carry the victory. Europe’s failure to be effective during the Ukraine War is down to its lack of ‘shih’. Europe relies on Russia for energy and there’s no military power to protect the continent from any sort of attack. A militarized, energy-independent Europe would have prevented the 2022 invasion simply by having ‘shih’. In the context of tariffs, the US will have ‘shih’ if it minimizes its reliance on other countries. No country would dare to attack the US if it knows the US has no downside for retaliating. By putting up economic borders with every country in the world, Trump is forcing the US towards self-sufficiency.
Positioning
Furthermore, tariffs are about America’s positioning. With a resounding record with small-to-medium size countries like Colombia and Canada, imposing tariffs sends a clear message to even the bigger adversaries. The US sees every country as small enough to take on. In other words, the US is positioning itself as the hegemon by treating everyone broadly the same. Even Israel is not immune, despite its last-minute attempt to remove all tariffs on Tuesday. By imposing tariffs on every country indiscriminately, the US expects every country to bend, just like Gustavo Petro did in January.
Tariffs timing
The timing of tariffs is important, too. Despite Trump’s resounding victory in November Trump knows next year’s midterms will be a make-or-break moment for the rest of his term. The expected economic fallout from these tariffs would spell disaster for the Republicans during an election. It is unlikely, however, to last into the mid-term campaigns next year. Hitting every country hard and early increases the chances of major economic gains next year as the market corrects, giving further momentum to House and Senate candidates in the GOP, especially as the effects of increased self-sustenance (read: more US jobs) will start to be felt.
Over promise, under deliver
Trump’s delivery of the tariffs was also quite deliberate. Since he took office in January, Trump has hyped up Liberation Day. Without giving any confirmation on specific figures, he spent two months heavily hinting that ‘reciprocal’ meant like-for-like. His ultimate plan of like-for-like halved necessarily shows him as the “kind” trade warmonger he considers himself to be. Critically, his detractors are focused on criticizing his methods of calculation – a criticism that simply does not land. As they say, when you’re explaining, you’re losing.
Responding to tariffs
So how should countries respond to these tariffs? Countries need to understand that it is not, in fact, a trade war. Liberation Day is a positioning maneuvre with economic fallout. Small countries, therefore, must realize they have no shih. Come to the table and negotiate in order to minimize the downside. In fact, early and effective negotiation could give a small country leverage with other larger countries, depending on the carve-outs they can achieve. Larger countries and blocs need to weigh their options. That economic difficulties are not a downside – but rather a temporary side effect – for the US, renders escalation pointless. It may be disastrous for those larger countries, however.
The tariffs are temporary. Before long, most countries will come to the table and for those that don’t, Trump will probably focus on his victories over the ones that do. Negotiators and policy makers need to remember one thing when dealing with Trump. When it comes to negotiating, he wants to be able to hold up a deal and say, “I did this”.
