Donald Trump’s immediate, aggressive use of import tariffs has revealed a fundamental difference between his first and second term. Far from a mere negotiating strategy, the goal this time is to replace a global rules-based system of managed economic integration with coerced decoupling.
NEW YORK – Donald Trump’s return to the White House has ushered in a new era of American trade policy, one that represents a fundamental break from the past – including from his first term. Trump is significantly less deterred by consequences than last time. The “tariff wall” that he wants to build around the United States is not just a more aggressive version of his transactional first-term policies. Rather, it represents an effort to reshape the global economic order and America’s place in it.
The wall’s first bricks were laid on March 4, when Trump imposed 25% tariffs on imports from Canada and Mexico, and doubled the 10% tariffs on Chinese goods, pushing the cumulative rate on Chinese imports above 30%. Canada and Mexico immediately announced retaliatory measures targeting politically sensitive US industries and congressional districts. After two days of furious lobbying and market turmoil (for which Trump blamed “globalists”), the US granted a one-month reprieve for cars from Mexico and Canada and products compliant with the US-Mexico-Canada Agreement (USMCA).
But these temporary exemptions should not be taken as a sign that Trump is backing away from imposing tariffs on America’s closest trading partners. Trump has vowed to levy 25% tariffs on steel and aluminum imports by March 12, which will hit Canada especially hard. A tariff on global auto imports is supposed to follow on April 2, harming not only in Japan, South Korea, and Germany, but also Mexico and Canada, where US carmakers have built complex cross-border supply chains.
The administration also plans to unveil worldwide “reciprocal” tariffs, designed to match the tariffs that other countries place on the US, in early April. Officials will be scrutinizing all non-tariff practices (taxes, subsidies, currency manipulation, regulations) that the administration considers to be “unfair.” Countries such as India, Argentina, South Korea, and Brazil could face the stiffest measures.
But the difference between Trump’s immediate, aggressive use of tariffs and what we saw during his first term is not just a matter of degree. Gone are the days when tariffs were used principally as leverage to be bargained away in negotiations. Instead, the administration’s 2025 Trade Policy Agenda frames them as critical tools to reshore supply chains, revitalize the US manufacturing base, and replace tax revenue. The goal is not to address bilateral trade deficits or punish unfair practices, but rather to protect “the soul” of America and charge a sufficiently high premium on US market access. Negotiating the tariffs away would mean sacrificing these core policy objectives.
This shift reflects Trump’s conviction that the postwar liberal economic order was not the foundation of American prosperity, but its undoing. As he sees it, the US surrendered its economic sovereignty after World War II by reducing tariffs and allowing unrestricted capital outflows.
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Trump began to challenge the bipartisan consensus supporting market liberalization and global integration during his first term, but now he is forcing the issue. His solution is to leverage America’s economic, military, and technological dominance to reshape global trade flows to its advantage and correct decades of misguided policy. That’s what the “reciprocal” tariffs are intended to do: not to create negotiating leverage, but to restructure global trading relationships.
At its core, however, the tariff-wall strategy has an audience of one: China. As indifferent as Trump has been to negotiating off-ramps for Canada and Mexico, he has shown even less interest in engaging with the Chinese government. The two rounds of 10% tariffs were not preceded by specific demands, nor have they been followed by attempts to start a bargaining process. Although China’s retaliation has been measured so far, the average US tariff rate on Chinese imports is rapidly approaching the danger zone where China’s leaders will soon feel that they must push back harder, lest they look weak domestically.
Even if some in the Trump administration see room for compromise with China, the preference is for containment – or even confrontation. As it starts building its tariff wall, the US will force allies to make a stark choice: purge Chinese components and capital from your supply chains – at least in the growing number of sectors deemed critical to national security (such as semiconductors, critical minerals, steel, and aluminum) – or you will be shut out of US markets altogether.
The risk of a new cold war is real, and the potential for escalation is high. A breakdown in US-China relations would have catastrophic consequences for the global economy and its two largest players. But the likely long-term impact of Trump’s trade strategy on the global economic architecture is even more consequential. With no grand bargain in the works vis-à-vis China or anyone else, we are witnessing a transition from a rules-based system of managed economic integration to one of coerced decoupling, chaotic fragmentation, and economic self-reliance.
Trump is likely to stay the course even in the face of severe economic dislocation. Of course, the administration is hoping that American consumers and businesses will feel the benefits of its strategy sooner rather than later. But Trump has already accepted that tariffs may cause “a little disturbance” for the US. “Will there be some pain?” he asked in February. “Maybe (and maybe not!) But we will make America great again, and it will all be worth the price that must be paid.”
Trump’s political support among Republican voters is durable enough to withstand economic fallout, at least for a while. And unlike during his first term, he faces no restraining voices within his cabinet or in Congress. As a lame-duck president largely concerned about his legacy, he has a significantly higher tolerance for pain than last time, both politically and in terms of market impact. That means his tariff wall is likely to endure.
The world is entering a period of heightened economic uncertainty not because tariffs will cause some inflation and supply-chain disruptions, but because the US is actively dismantling the economic order it created. Whether Trump’s effort to recreate American hegemony succeeds or fails, it represents the most significant challenge to the global trading system since its inception.
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Donald Trump’s immediate, aggressive use of import tariffs has revealed a fundamental difference between his first and second term. Far from a mere negotiating strategy, the goal this time is to replace a global rules-based system of managed economic integration with coerced decoupling.
emphasizes a fundamental difference between the US trade agenda now and during the president’s first term.
Recent actions by the United States may foreshadow its withdrawal from the world’s foremost multilateral institution. Paradoxically, however, the breakdown of the multilateral order the US helped establish nearly eight decades ago could serve as a catalyst for greater international cooperation.
thinks the paradigm shift in US foreign policy could end up strengthening global solidarity.
NEW YORK – Donald Trump’s return to the White House has ushered in a new era of American trade policy, one that represents a fundamental break from the past – including from his first term. Trump is significantly less deterred by consequences than last time. The “tariff wall” that he wants to build around the United States is not just a more aggressive version of his transactional first-term policies. Rather, it represents an effort to reshape the global economic order and America’s place in it.
The wall’s first bricks were laid on March 4, when Trump imposed 25% tariffs on imports from Canada and Mexico, and doubled the 10% tariffs on Chinese goods, pushing the cumulative rate on Chinese imports above 30%. Canada and Mexico immediately announced retaliatory measures targeting politically sensitive US industries and congressional districts. After two days of furious lobbying and market turmoil (for which Trump blamed “globalists”), the US granted a one-month reprieve for cars from Mexico and Canada and products compliant with the US-Mexico-Canada Agreement (USMCA).
But these temporary exemptions should not be taken as a sign that Trump is backing away from imposing tariffs on America’s closest trading partners. Trump has vowed to levy 25% tariffs on steel and aluminum imports by March 12, which will hit Canada especially hard. A tariff on global auto imports is supposed to follow on April 2, harming not only in Japan, South Korea, and Germany, but also Mexico and Canada, where US carmakers have built complex cross-border supply chains.
The administration also plans to unveil worldwide “reciprocal” tariffs, designed to match the tariffs that other countries place on the US, in early April. Officials will be scrutinizing all non-tariff practices (taxes, subsidies, currency manipulation, regulations) that the administration considers to be “unfair.” Countries such as India, Argentina, South Korea, and Brazil could face the stiffest measures.
But the difference between Trump’s immediate, aggressive use of tariffs and what we saw during his first term is not just a matter of degree. Gone are the days when tariffs were used principally as leverage to be bargained away in negotiations. Instead, the administration’s 2025 Trade Policy Agenda frames them as critical tools to reshore supply chains, revitalize the US manufacturing base, and replace tax revenue. The goal is not to address bilateral trade deficits or punish unfair practices, but rather to protect “the soul” of America and charge a sufficiently high premium on US market access. Negotiating the tariffs away would mean sacrificing these core policy objectives.
This shift reflects Trump’s conviction that the postwar liberal economic order was not the foundation of American prosperity, but its undoing. As he sees it, the US surrendered its economic sovereignty after World War II by reducing tariffs and allowing unrestricted capital outflows.
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At a time of escalating global turmoil, there is an urgent need for incisive, informed analysis of the issues and questions driving the news – just what PS has always provided.
Subscribe to Digital or Digital Plus now to secure your discount.
Subscribe Now
Trump began to challenge the bipartisan consensus supporting market liberalization and global integration during his first term, but now he is forcing the issue. His solution is to leverage America’s economic, military, and technological dominance to reshape global trade flows to its advantage and correct decades of misguided policy. That’s what the “reciprocal” tariffs are intended to do: not to create negotiating leverage, but to restructure global trading relationships.
At its core, however, the tariff-wall strategy has an audience of one: China. As indifferent as Trump has been to negotiating off-ramps for Canada and Mexico, he has shown even less interest in engaging with the Chinese government. The two rounds of 10% tariffs were not preceded by specific demands, nor have they been followed by attempts to start a bargaining process. Although China’s retaliation has been measured so far, the average US tariff rate on Chinese imports is rapidly approaching the danger zone where China’s leaders will soon feel that they must push back harder, lest they look weak domestically.
Even if some in the Trump administration see room for compromise with China, the preference is for containment – or even confrontation. As it starts building its tariff wall, the US will force allies to make a stark choice: purge Chinese components and capital from your supply chains – at least in the growing number of sectors deemed critical to national security (such as semiconductors, critical minerals, steel, and aluminum) – or you will be shut out of US markets altogether.
The risk of a new cold war is real, and the potential for escalation is high. A breakdown in US-China relations would have catastrophic consequences for the global economy and its two largest players. But the likely long-term impact of Trump’s trade strategy on the global economic architecture is even more consequential. With no grand bargain in the works vis-à-vis China or anyone else, we are witnessing a transition from a rules-based system of managed economic integration to one of coerced decoupling, chaotic fragmentation, and economic self-reliance.
Trump is likely to stay the course even in the face of severe economic dislocation. Of course, the administration is hoping that American consumers and businesses will feel the benefits of its strategy sooner rather than later. But Trump has already accepted that tariffs may cause “a little disturbance” for the US. “Will there be some pain?” he asked in February. “Maybe (and maybe not!) But we will make America great again, and it will all be worth the price that must be paid.”
Trump’s political support among Republican voters is durable enough to withstand economic fallout, at least for a while. And unlike during his first term, he faces no restraining voices within his cabinet or in Congress. As a lame-duck president largely concerned about his legacy, he has a significantly higher tolerance for pain than last time, both politically and in terms of market impact. That means his tariff wall is likely to endure.
The world is entering a period of heightened economic uncertainty not because tariffs will cause some inflation and supply-chain disruptions, but because the US is actively dismantling the economic order it created. Whether Trump’s effort to recreate American hegemony succeeds or fails, it represents the most significant challenge to the global trading system since its inception.