Donald Trump's tariffs spark a global game of thrones

Beijing’s reaction to Donald Trump’s 10% tariffs on Tuesday was instant, says Amy Hawkins in The Guardian. It imposed 10%-15% levies on imports of a range of US goods, export controls on a raft of critical minerals, and announced an antitrust investigation into Google.

This response stands in “stark contrast” to that of Mexico and Canada, which negotiated a 30-day reprieve in return for action on border security and the fentanyl trade. Although Mexico, Canada and China are America’s top trading partners, accounting for more than 40% of US imports last year, Trump also has the European Union in his sights. He has described the bloc’s trade surpluses with America as an “atrocity”.

Trump’s “brinkmanship” with Mexico and Canada ended with “largely symbolic concessions” on their behalf, says John Authers on Bloomberg. The 10% tariff on China is much less aggressive than the 60% Trump proposed during his election campaign and Beijing’s response wasn’t “robust”. As The Economist points out, tariffs on US coal, natural gas, crude oil and vehicles will have a limited effect, since China doesn’t import much oil from America and makes millions of its own cars. A “full-blown” trade war is not in Xi Jinping’s interests, given the “prevailing weakness” in China’s economy. All this leads to growing market confidence that this “confrontation will soon go away”.

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Analysing Trump’s tariffs is like “shooting at a moving target”, says Chris Giles in the Financial Times. We don’t know whether they will “happen; whether they are temporary or permanent; whether they are a bargaining chip or a punishment. We do not know what retaliatory measures will be taken.” We don’t, but “even unfulfilled threats are damaging”, says Martin Wolf in the same paper. “An inconsistent US is an unreliable partner: it is that simple.” Trump’s “gangsterish approach to international relations” may lead allies to forge other alliances, even with China, simply because it is “more predictable”.

This is already happening, says Patricia Cohen in The New York Times. If the US is raising barriers, “other nations are lowering theirs”. In the past two months, the EU has concluded three new trade deals. The Brics nations are growing. China wants to update its own free-trade agreement with Asean, and Britain recently joined the trans-Pacific trade bloc and is “looking to repair its frazzled relationship” with the EU. Nearly 60% of Asia’s trade now happens within the region, which is host to 50% of the fastest-growing trade corridors.

Trump's tariffs could hold a silver lining for Europe

Xi will be “smiling quietly to himself” as Trump “drives a wedge” not only between the US and the Global South, but also between the US and its “natural allies and like-minded democracies”, says Jeremy Warner in The Telegraph. Antagonising Canada is particularly nonsensical, given the US relies heavily on its crude imports and that Canada’s role in fentanyl smuggling and illegal immigration is “almost zero”, says Ambrose Evans-Pritchard in the same paper.

Protectionism has a “long history” in the US, and if the American isolationism of the inter-war years “teaches us anything, it is that when the US retreats from Europe, it doesn’t end well”, says Warner. “The economic damage is nothing compared with the political instability that flows from American disengagement.” There’s also a possible silver lining for Europe. If Trump’s tariffs force the EU to spend more on defence, as well as spending and investing more in its own markets, they might help “lift the bloc out of its current economic torpor”. Trump’s “tariff assault could yet prove one of the US’s worst ever economic and geopolitical miscalculations”.

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Emily has worked as a journalist for more than thirty years and was formerly Assistant Editor of MoneyWeek, which she helped launch in 2000. Prior to this, she was Deputy Features Editor of The Times and a Commissioning Editor for The Independent on Sunday and The Daily Telegraph. She has written for most of the national newspapers including The Times, the Daily and Sunday Telegraph, The Evening Standard and The Daily Mail, She interviewed celebrities weekly for The Sunday Telegraph and wrote a regular column for The Evening Standard. As Political Editor of MoneyWeek, Emily has covered subjects from Brexit to the Gaza war.

Aside from her writing, Emily trained as Nutritional Therapist following her son's diagnosis with Type 1 diabetes in 2011 and now works as a practitioner for Nature Doc, offering one-to-one consultations and running workshops in Oxfordshire.