By Tom Fowdy
August has arrived.
Acting on a self-imposed deadline, US President Donald Trump announced a slew of tariff deals with various countries, ranging from 15-35% respectively. The President did not take any prisoners and willingly imposed punitive measures on some friendly states too, including Canada (35%), Taiwan region (20%), as well as India (25%). Many South East Asian nations got what can be noted as the standard playbook offer, where they get 19-20% tariffs but with a 40% transshipment penalty designed to target China in the background.
Regardless of the specifics of each deal, and what may yet still emerge, the pattern is clear: Donald Trump was not bluffing when he said he would impose a tariff boundary on imports from across the entire world and stick to it. Embodying the more radical and abrasive stance of his second term, the President seeks to permanently shift the Overton window on America's trade with the world and is not backing down on it.
Although it was assumed Trump would quickly back down or act favourably towards countries who were deemed more "strategic" to the US containment of China at large, he has not done this instead seems happy to penalize countries who he deems long-term threats to American goods by being cheap, emerging markets, such as India, Vietnam, Indonesia, etc. While the Biden administration might have moved strategically with the view to confronting China, Trump must be praised at the least for acting out of principle and not shifting from that position, even if arguably some of the deals are coercive and one-sided.
So where does this leave us now? American protectionism is here to stay. It has, even since his first term, become a new orthodoxy. Donald Trump is deadly serious about the hope to revive manufacturing in the United States, and it isn't merely a ruse to contain Beijing, even if some Washington D.C blob thinkers utilised it in such a way. Thus, because of this, countries around the world must fundamentally break their fantasies that the United States is the market they must rely on and aspire to. It has to say the least, surprised me, how many countries have bent over backwards precisely to give Trump what he wants, moves which I went as far as describing as appeasement, even when America is not their largest trading partners.
While of course it is instinctive to mitigate damage and economic fallout, countries need to start thinking in the long term about the sources of their economic prosperity lie, as the President willingly dismantles the global trading order. This is where China comes in. While the United States is burning bridges, closing doors, and building walls (literally), Beijing must be prepared to exert the political will and ambition to open up its markets further and more readily integrate itself into the global economy as the alternative. If Vietnam, for example, is being priced out of the United States, where will it turn to? Or, whilst Canada is being hit with US tariffs, which can reasonably be described as bullying, was it the right decision for them to burn their relationship with China from 2019 to 2024 the way they did?
Considering it all, China has a golden opportunity to engage in good-faith, ambitious, and positive diplomacy with the right range of countries to show that it is the alternative to Trump's tariff rampage. For example, even though the US lauded India as a strategic partner, the White House has made it clear it will not tolerate India's rise as a manufacturing and economic power. As such, New Delhi should reinterpret its relations with China, and recognise that the two countries have more to gain working together than being enemies, ditto for everyone else. This is China's window to become the true leader of "global free trade," and it should be prepared to make strategic and smart concessions to maintain this position. America is a closed shop; what began as arguably an anti-China agenda has become globalized now. Trump is taking a stand for American jobs, yet the move is arguably un-strategic, self-defeating, and there is no actual guarantee it's going to work. He might have put up a wall, but he's left a geopolitical goal open in the process. It's up to China to take the ball and score, before the US realises the mistake they've made and changes their mind.
The views do not necessarily reflect those of DotDotNews.
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