As Donald Trump prepares for possibly a second term in office, his economic policies have seen renewed interest—specifically his tough stance on trade. While much attention was directed toward China, observers point out that U.S. allies also have much at stake as Trump ups the ante on tariffs and uses his new unilateralist international trade tactics.
The Return of Tariffs: A Weapon Against Allies?
His first term was largely defined by his trade war against China, slapping levies on billions of dollars in traded goods. But latest rhetoric and emerging analyses indicate the second round—”Trump 2.0″—could portend similar tactics against not only adversaries like China but also friends of old, trusted America in Europe and Asia.
Experts argue that Trump is opposed to the protection of trade imbalances focused on countries such as Japan, South Korea, and even the European Union. He classified India as a “tariff king” due to the heavy tariffs it charged on US goods.
This is where international politics will be witnessed within a new spectrum. Diplomat Report: U.S. allies like Japan and South Korea, with humongous trade surpluses too, are on the list to face the brunt of Trump. For example, such think tanks that subscribe to MAGA ideologies that lately drove the Trump trade policy are now unveiling a “U.S. Reciprocal Trade Act.”
Such a bill would give the U.S. more authority to institute tariffs on countries that yet maintain higher tariffs on U.S. goods with the potential to create a tit-for-tat in trade and thus strain the alliance relationship. To a greater extent, this can also be traced beyond the bilateral Sino-U.S. Trade relationship: what the Trump administration seemingly looks to do is decouple the U.S. economy from that of China with considerably significant disruptions to supply chains in the Indo-Pacific region as regional allies are forced into tough choices regarding their economic alignment.
The Phase One Agreement: Unfinished Business
Revisiting another highlight of Trump’s trade policy is the so-called “Phase One” trade agreement between the U.S. and China, negotiated under his first administration. Behind the fanfare, many of those promises–China’s promise to better protect intellectual property and open up its agricultural markets, to name two examples–have either been delayed or never fully implemented. A second term would elevate enforcement and expansion of those commitments and noncompliance would mean higher tariffs. But watching the Chinese bear the brunt of America’s newfound frustrations does not necessarily mean that America’s other trading partners will be let off the hook.
According to the *Hinrich Foundation*, Trump’s most senior trade advisers, including Robert Lighthizer, have been saying that retaliatory tariffs would be applied to both China and to the European and Asian economies.
Lighthizer argues that these tariffs are being used to rectify what he says are unfair imbalances in international trade, and the U.S. market can act as a forcing function to push trading partners to open their markets more. For example, already, Trump has floated the idea of raising tariffs on European cars, which would cause serious setbacks for automotive industries in Germany and France.
Impact on the Global Economy and U.S. Allies
The ripples from Trump’s tariff talk extend far and wide. At his first term, his tariffs on Chinese imports caused a ripple effect in the rest of the world by forcing some firms to move their production to other nations like Vietnam and India. However, this meant that favoring these nations meant disadvantages to some of America’s allies with the second wave of tariffs.
Vietnam, among others that are beneficiaries of the trade war with China, might also be more willing to conclude their own alliances as Trump moves to chip away at trade surpluses of all types – and not just those of the People’s Republic of China.
As reported by *Foreign Affairs*, Trump’s return also means further withdrawal from multilateral trade agreements. In his first term, Trump withdrew the US from the Trans-Pacific Partnership, a trade agreement aimed at reinforcing economic ties with Asia. Trump in his second term, seems to have hinted at the possibility of withdrawing the US from the Biden administration’s Indo-Pacific Economic Framework designed to counterbalance China’s economic power in the region. It will then be left to tackle this situation for the allies of the region, out of which Japan, South Korea, and Australia would take a terrible licking without US backstop potentially moving closer to Beijing.
Risks for Europe
The European nations are also not immune to Trump’s tariff threats. In addition to lambasting China, Trump has repeatedly grieved over the trade relationship between the U.S. and the European Union. He claims that European nations fleece the U.S. for hefty sums of tariffs imposed on American goods, especially automobiles and farm products.
If he were to retaliate against Europe with reciprocal tariffs, that would actually send the shockwaves from which a serious downturn in transatlantic trade would be born, long a bedrock of the global economy.
As Politico says, “Trump’s transactional approach to foreign policy could open new fissures between the U.S. and its European allies.” His antagonism toward multilateral organizations in the form of the World Trade Organization and NATO has already strained the relationship; imposition of tariffs would add to that. European leaders have further suffered the brunt of unpredictability at Trump’s hands because his decisions often seem to be based on hurt personal issues rather than a larger, long-term strategy. Such uncertainty makes the future very unprojatable, especially in sectors like energy and defense, which are more essential to the security of European countries.
Uncertain Future for US Trade Relations
Many US allies are on the edge of their seats regarding the prospects of a Trump 2.0 presidency. His hardline tariffs combined with his America First agenda suggest both adversaries and partners will face a more protectionist U.S. trade policy. As much as Trump has talked about moving on from the major target China, European and Asian nations with significant trade surpluses will still have to confront Trump’s tariff threat. The implications could be deep and make future uncertainty and economic instability even deeper in global supply chains and trade relationships.
As Trump digs in on his tariff talk, it will be interesting to see how the world waits for reaction from the U.S. allies. For now, though, it appears pretty plain the return of Trump to the White House might result in headaches not only for adversaries but some of America’s closest partners as well.
