Trump’s trade threats put the world on a precipice and may say a lot about his second term

Analysis by Stephen Collinson, CNN

(CNN) — Global chaos delivered via social media is back.

Between 2017 and 2021, Donald Trump had the world on a precipice, bracing for his next move, gaming out whether his bluster was a bluff, an overture to a deal or a break with history, as he sowed mayhem to push adversaries off balance.

Those days are here again, nearly eight weeks before his second term begins.

The president-elect’s online threats Monday of new trade wars with Canada, Mexico and China turned the United States back into an agent of instability, which can pitch a foreign friend or foe into a crisis in an instant.

Trump said America’s two Western Hemisphere neighbors would be punished if they didn’t stop the flow of undocumented migration and fentanyl across their borders. And he demanded China stop shipments of the drug as well.

His first major global brouhaha since winning reelection posed the following questions that will help define the character of his second term.

Is Trump serious about massive tariff hikes that could increase prices for US consumers as soon as he begins a second presidency, which was won partly because voters were so frustrated with inflation and costs of housing and groceries?

Or is the president-elect indulging his view that life and politics is one big real estate deal? And is he setting out an extreme position to create leverage for agreements that might be modest but polish his dealmaker’s brand?

There’s a third possibility — that Trump feels liberated by his election victory and is determined to drive his America First project further than a first term in which his most volatile instincts were often restrained by establishment aides.

Trump believes he has mandate for huge change

Many of Trump’s voters deeply disdain the political, economic, trading and diplomatic systems that they believe have hurt them financially and serve US and global elites. They want their MAGA hero to tear them down, without much idea what would replace them.

Trump could, therefore, simply be creating headlines to show supporters that he’s already fighting for their interests. Or he could have something more sweeping in mind. The second path could take America and the world into risky territory. The idea that he might go for broke could drag the US into trade wars that wreck the economy and spark dangerous standoffs in a world that is far more volatile since he left office four years ago.

“There are plenty of examples (of) Trump’s verbal threats forcing and compelling action on the part of other parties, particularly when it comes to foreign countries,” Pete Seat, a former spokesman in President George W. Bush’s White House, said on “CNN News Central” on Tuesday. “The real question is what will happen in these next two months?” If all three nations make meaningful moves, Seat said, “Trump may back off on this. Otherwise, we’re all going to see price increases.”

The issue of whether Trump is bluffing or is planning to go all in with a revolutionary presidency is not confined to trade.

He has ambitious plans to gut the federal government with a new effort co-chaired by Elon Musk. But going all in would cause huge political and economic disruption that might backfire. Similarly, Trump vowed a mass deportation of up to 10 million undocumented migrants. But such an operation that would cost billions of dollars could buckle the agricultural sector and would also come with high political costs. This equation is mirrored abroad. Some in the West fear Trump will pull the US out of NATO or refuse to defend an alliance member attacked by Russia. Would the president-elect really blow apart the most successful military alliance in history — or is he just trying to wring more defense spending from some of Europe’s lagging powers?

In other words, does Trump have in mind a presidency driven by spectacle and brinkmanship that succeeds, like his first, in delivering mostly incremental change? Or is he really, as some of his fans want, trying to tear everything down?

A quick start

Trump’s sudden warning on Monday of 25% tariffs on Canadian and Mexican imports, with a further 10% hike above existing tariffs on Chinese goods, was the latest sign that the president-elect plans to quickly throw his muscle around.

It caused a scramble in Ottawa, and Prime Minister Justin Trudeau jumped on the phone with Trump for what he insisted was a “good call.” Within hours, Trump had got the attention of new Mexican President Claudia Sheinbaum, as she warned of like-for-like retaliation of Trump tariffs after January 20.

The president-elect’s gambit has created an immediate yard stick to judge whether his second presidency will be an attempt to push through far deeper disruption.

There’s no guarantee that Canada, Mexico and China will back down immediately.

Still, deaths from overdoses of fentanyl and other synthetic opioids are falling. And Trump’s promises to impose hardline immigration policies are likely to deter many migrants from approaching the US southern border. Therefore, Trump could create an illusion of change to cover a decision to back down if he needs to.

Trump’s trade war rhetoric is a reminder that in his worldview, the United States has few friends — only adversaries against whom it can choose to win or lose. According to this view, it’s fine for a big powerful country like the US to use its natural advantages to push around smaller neighbors, even if they are allies.

But Trump must also size up his opponents both north and south of the border.

Trudeau is politically weakened, and his Liberals are in danger of losing a general election due next year to Conservative Party leader Pierre Poilievre. The prime minister therefore has a huge incentive to avoid a trade war that could cause havoc in the Canadian economy. Both Canada and Mexico are dependent on their trade with the United States because of their geographical realities and may have no choice but to make concessions. But Sheinbaum is new in office, has plenty of political capital and may be keen to stand up to perceived bullying by a new US president.

The case of China is distinct from Trump’s threats to Canada and Mexico. The president-elect significantly stiffened policy toward America’s new superpower rival in his first term. A trade war led to a deal, which again Trump hailed, but that largely dissolved during the pandemic and after China declined to buy the vast quantities of agricultural goods that the then-president said it would.

Trade is only one source of friction between Washington and Beijing, and many of Trump’s team — including Sen. Marco Rubio, his pick for secretary of state — believe that China poses an existential security and economic threat to the United States. This then could be the first salvo in a large and more intense period of confrontation across the Pacific rather than merely a ruse to draw President Xi Jinping to the table.

Other tensions are inevitable

Trump’s early turn against his neighbors will put other allies on notice — especially in Europe, where leaders are bracing for their own trade showdown with Trump, as well as dealing with tensions over how to end the war in Ukraine.

Initial reaction to Trump’s broadside against Canada and Mexico suggests that many observers see his outburst as a negotiating tactic. A Trump transition official told CNN on Tuesday, “We know what works.” In his first term, Trump used the threat of a trade war to force Canada and Mexico to the table to renegotiate the North American Free Trade Agreement. The new US-Mexico-Canada Agreement was touted by Trump as a triumph — but it didn’t fundamentally reshape the global economy or significantly improve a hollowed-out US industrial base that Trump pledged to revive in his 2016 and 2024 campaigns.

It’s a measure of his desire to foment discord that Trump is effectively threatening to tear up one of his own first-term achievements.

“What Donald Trump is proposing as an alpha-disrupter is to disrupt the largest trade market in the world,” Virginia Rep. Gerry Connolly, a Democrat, told CNN on Tuesday.

Is he serious?

Thanks to Trump’s early setting of expectations, the world will soon find out.

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