On April 2nd, Trump launched a full-scale trade war by imposing universal tariffs. They included a 10% base rate, with variations depending on the country and its trade deficit with the United States, reaching in some cases as high as 74%. This prompted immediate retaliatory measures from China and uncertainty among other countries, torn between the idea of imposing retaliatory tariffs or opening negotiations.
Then, on April 9th, in a surprising move, Trump suspended the application of the additional tariffs for 90 days, for all countries but China. However, the base 10% universal tariffs remained untouched.
Trump Tariffs: The Economic Perspective
Trump claimed that the imposition of tariffs was necessary to address the excessive trade deficit and protect domestic competitiveness. Yet, the United States has been running a trade deficit since 1977 enjoys a large surplus in its services balance.
On April 9th the real economic motive behind this erratic foreign policy may actually have been revealed. Following a Treasury auction that ended with an exceptionally strong demand Trump abruptly suspended the additional tariffs for every country except China.
China, on the other hand, appeared to have acted to raise the yields on U.S. Treasuries. In fact, during the Asian trading session, a large volume of sales led to a drop in bond prices and a spike in yields (which climbed from 3.9% to as high as 4.5%).
This suggests that Trump’s real aim might be to lift tariffs for countries willing to buy U.S. debt in 2025, a year that will see an extraordinary level of debt rollover, following a general decline in foreign holdings of U.S. Treasuries in recent years.
In this context, Trump could be using the trade war threat to gain various concessions, including public debt financing.
Trump Tariffs: The Geopolitical Perspective
The USA is the sea power of our time, and its global dominance is based on a strategy of peace. Although, as great strategists like Mackinder and Spykman have argued, threats to sea power come either from the heartland (the Eurasian landmass, primarily Russia) or the rimland (the coastal fringe between sea and inland territory, essentially China).
The main goal is not to contain both powers at once but to rebalance the global order and prevent them from consolidating against the sea power. This can be translated in gaining more influence in the Indio-Pacific, EU, Middle East and Asia. The US is trying to influence these zones to keep them far from Russia and China.
This strategy has largely been neglected since the 2000s, a period marked by a growing closeness between Russia and China. That trend is now accelerating, especially in light of the newly launched trade war. A sea power like the U.S. cannot afford to lose credibility and reliability on the global chessboard. In other words, it cannot abandon its “strategy of peace” without risking the long-term erosion of its global dominance. Because what truly is gonna be lost is its influence leaving room for Russia and China to grow theirs.
Therefore. two main objectives emerge from this apparently conflicting strategy:
- isolating China;
- extracting concessions from its allies in order to guide them towards specific strategic objectives.
Sources :
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