Trump’s unusual tariff strategy puts America’s allies in a near-impossible situation

By Richard Quest, CNN

(CNN) — President Donald Trump has made it clear that his favorite method to gain leverage over opponent countries on the other side of a negotiating table is to raise tariffs. It doesn’t matter whether the offense is trade-related or not.

If there had been any lingering doubt (and I doubt there was), it was erased when Trump announced last week that he was increasing tariffs on Canada by 10% because he didn’t like an anti-tariff commercial Ontario aired across the United States. Ontario Premier Doug Ford’s TV ad quoted the late former President Ronald Reagan, who in 1987 criticized the use of general tariffs as a weapon of trade policy.

It might seem obvious that there is no direct causal trade link between Ontario’s and, by extension Canada’s, action and Trump’s threat of raising Canada’s tariffs by 10%. Nevertheless, Trump’s response was hardly a surprise.

The Canadian incident shows countries on the other side of the negotiating table with the United States face a near-impossible situation.

First, they must negotiate trade deals by coming to Washington with a transactional mindset: “What can we offer up?”

Second, they must, at the last minute, be prepared for the US president to want more — so they better have something else up their sleeve they can give as an offering.

And there’s a third wrinkle: Never mind reciprocal tariffs — the United States is in the business of retaliatory tariffs for seemingly unrelated issues. It means no country can know what decision, policy or indiscretion will offend Trump, who may retaliate at virtually any time with further tariffs.

This is uncharted territory, and it is not the normal way of doing business. Traditionally, tariffs have been used to correct a perceived trade imbalance and to protect the home market by making imports more expensive.

What seems clear is that Trump’s love of tariffs will ensure they remain at the heart of US economic policy. I see no scenario in which the president, even after having negotiated a trade deal, doesn’t reserve to himself the right unilaterally to change his mind, threaten and then launch a fresh tariff.

Some of Trump’s tariffs contain at least a scintilla of geo-political logic. For example, his decision to punish India with 50% tariffs came because the country is still buying oil from Russia. One could – just about – argue the tariff was supporting some wider, strategic goal in halting the Russia-Ukraine war.

With others, it remains difficult or impossible to understand the trade purpose of tariffs. Take Brazil’s case: Trump thinks it’s wrong to prosecute the former Brazilian President Jair Bolsonaro for allegedly plotting to overturn an election. Describing the prosecution as “a witch hunt that should end immediately,” Trump raised the tariff to 50% due “in part to Brazil’s insidious attacks on Free Elections, and the fundamental Free Speech Rights of Americans.” (The previous tariff had been around 10%.)

According to the Brazilian Specialty Coffee Association, exports of special coffees are now down 70% and the IMF is warning of a more general slowdown in Brazil’s economy because of the tariffs. The tariff weapon has hit its mark.

Then there’s Colombia. After Colombian President Gustavo Petro criticized Trump’s bombings of alleged drug smugglers off the Caribbean coast, Trump called Petro “an illegal drug leader” who is “low rated” and very unpopular. The punishment: cutting off foreign aid and an unspecified increase in tariffs.

For a country where democracy is often fragile at best, the economic disruption from increased tariffs could have devastating political effects.

Trump also imposed steep tariffs on South Africa for its perceived ill treatment of White farmers and land reforms.

The list goes on. Last week’s threat against Canada only confirmed the trend.

After the last few weeks and months, countries have been warned. No one should be surprised if and when the weapon is fired.

So far, the only country that has stood up to Trump and won is China. Xi Jinping has mastered the careful art of letting Trump appear to win while quietly claiming victory at home. Xi played his hand perfectly and came away from their meeting this past week with a reduction in tariffs.

But there’s one final wrinkle: The US Supreme Court next week will hear Trump’s appeal of two lower court rulings that found his use of tariffs as leverage to be an illegal use of his emergency powers. If the Supreme Court upholds those rulings, Trump’s favorite tool could be significantly blunted.

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