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Trump's tariff strategy: a proven playbook for quick negotiations

Writer's picture: Ken PhilipsKen Philips

President Donald J. Trump's recent imposition of tariffs on imports from Canada, Mexico, and China has reignited discussions on his distinctive use of economic measures to achieve national security objectives. While tariffs are traditionally tools of economic policy, Trump's approach frames them as instruments of leverage to secure rapid policy concessions, especially in areas beyond trade, such as immigration and drug enforcement.


A strategic tool, not just economic policy

The new tariffs, which include a 25 percent levy on imports from Canada and Mexico and a 10 percent tariff on Chinese goods, are officially justified by national security concerns. The administration cites the ongoing crisis of illegal immigration and the fentanyl epidemic as existential threats to the United States, using these issues to invoke the International Emergency Economic Powers Act (IEEPA).

However, history suggests that these measures are less about long-term economic restructuring and more about creating immediate pressure. The likely goal? Prompting Canada and Mexico to tighten their immigration controls and crack down on drug trafficking networks without escalating into a prolonged trade war.


Historical precedents: a playbook of pressure and concessions

Trump's tariff strategy is not new. It is a repeat of tactics he deployed effectively during his first term.


Tariff threats against Mexico over immigration (2019)

In May 2019, Trump threatened to impose escalating tariffs starting at 5 percent, rising to 25 percent on all Mexican imports, unless Mexico curbed illegal immigration. Within 10 days, Mexico agreed to deploy 6,000 National Guard troops to its southern border and expanded the "Remain in Mexico" policy for asylum seekers. The tariffs were suspended before taking effect, and Trump declared victory, showcasing his ability to force swift policy changes through economic threats.


Trade war with China (2018–2020)

Trump's most prolonged tariff battle was with China, targeting unfair trade practices and intellectual property theft. Despite initial economic turbulence, both nations eventually signed the "Phase One" trade deal in 2020, with China committing to purchase more United States goods and implement reforms. While some tariffs remained, Trump's strategy successfully secured key concessions.


Steel and aluminum tariffs (2018)

In 2018, tariffs on steel (25 percent) and aluminum (10 percent) affected even United States allies like Canada and the European Union. Retaliatory tariffs followed, but negotiations under the USMCA framework led to the removal of these tariffs. Again, the initial economic shock served as leverage to bring parties to the table.


Why the current tariffs will likely be short-lived

Given past patterns, the current tariffs are unlikely to last long. Here is why:

  1. Designed for quick leverage: The tariffs aim to create immediate pressure. Once Canada and Mexico implement stricter immigration controls, the United States can claim a diplomatic win and lift the tariffs.

  2. Economic backlash risks: Prolonged tariffs could harm United States industries reliant on Canadian and Mexican imports, triggering domestic political pressure to reverse the measures.

  3. Diplomatic channels are strong: Both Canada and Mexico have robust diplomatic ties with the United States and mechanisms under the USMCA to resolve disputes swiftly.

  4. Historical consistency: Trump's tariff threats have historically led to quick negotiations and fast resolutions, avoiding drawn-out conflicts.


The expected outcome: pressure, concessions, and resolution


The likely scenario is straightforward:

  • Initial shock: Canada and Mexico respond diplomatically without escalating economically.

  • Behind-the-scenes negotiations: Intense diplomatic efforts result in new immigration enforcement measures.

  • Concessions: Both countries agree to policies that align with United States demands on border security and drug control.

  • Tariff rollback: The United States lifts the tariffs, framing it as a victory for national security.


Tariffs as tactical leverage

While tariffs traditionally serve economic purposes, Trump has redefined their role as a strategic tool for negotiation. The current measures against Canada, Mexico, and China are not isolated economic policies but part of a broader playbook designed to secure quick political and policy wins. Given his track record, it is reasonable to expect that these tariffs will be short-lived, achieving their purpose once diplomatic negotiations yield the desired outcomes.

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© 2024 by Ken Philips

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