Donald Trump's on-again, off-again tariff threats against Canada and Mexico are causing economic uncertainty and diplomatic friction. Experts suggest this volatility is a deliberate strategy to exert pressure, but it risks alienating allies and undermining long-term economic stability.
President Donald Trump's recent decision to delay tariffs on goods from Canada and Mexico marks yet another twist in his administration's approach to international trade. This move, while providing temporary relief, underscores a broader strategy characterized by unpredictability and potential long-term risks.
Trump's back-and-forth on tariffs is seen by some as a deliberate tactic to gain leverage in negotiations. By creating uncertainty, the administration aims to pressure Canada and Mexico into making concessions that align with the "America First" agenda.
"Everyone has to understand that you're on the long ride here with this jolt, this is not just turbulence for a few seconds," - Nick Vyas, the founding director of the University of Southern California's Randall R. Kendrick Global Supply Chain Institute
However, this approach carries significant risks. The constant changes in policy create economic whiplash, forcing businesses and markets to adapt quickly. This volatility can lead to:
Repeatedly threatening and then retracting tariffs weakens the credibility of the US on the global stage. This unpredictability makes it difficult for businesses to make informed decisions about:
"When you threaten and then continue to walk things back, obviously, the threat loses its power," - Andrea Schneider, the director of the Kukin Program for Conflict Resolution at the Cardozo School of Law
The lack of predictability can stifle economic growth and create a climate of unease among investors and consumers alike.
Trump's tariff strategy can be viewed as a form of brinkmanship – pushing a situation to the edge of disaster in the hopes of achieving a positive outcome. While this approach may yield short-term gains, it also carries the risk of long-term damage to relationships and economic stability.
Gladys McCormick, the Moskowitz endowed chair in Mexico-US relations at Syracuse University, notes that if tariffs are eventually implemented, they are likely to be applied selectively rather than across the board. Industries like manufacturing and automotive, which are heavily integrated across borders, may be spared due to the potential for severe economic disruption.
While the Trump administration has stated that tariffs are intended to address issues such as illegal immigration and the flow of fentanyl, some experts believe there are other motivations at play.
Christopher Tang, a professor at the University of California, Los Angeles, suggests that the tariffs may be aimed at closing a "backdoor" for Chinese products entering the US via Mexico. By imposing tariffs on goods from Mexico, the US could potentially disrupt China's efforts to circumvent existing trade barriers.
"The absence of metrics suggests that this is not about fentanyl and it's not about immigration. This is very much about political theater," - Gladys McCormick, the Moskowitz endowed chair in Mexico-US relations at Syracuse University
Trump's tariff tactics represent a high-stakes gamble. While the administration hopes to achieve its policy goals by exerting pressure on trading partners, the strategy carries significant risks. The economic uncertainty, strained relationships, and erosion of trust could ultimately undermine the US's long-term economic interests. Only time will tell whether this approach will pay off or backfire.