THE GEOPOLITICS OF TRUMP’S TARIFF PLAY, AND PAUSE

A key factor motivating President Donald Trump is the need to project power, and the willingness to use it as needed.

Despite a 90-day pause of higher levies for most nations, primarily those willing to negotiate with the US, Trump’s global tariff blitz marks an attempt to reconfigure and transform U.S. trade relations worldwide.

Fundamentally, it is a geopolitical power play targeting several countries but particularly China, which has been waging its own power play – some would even say irregular warfare – against the US, the wider west and others for years.

Headlines that Trump buckled to domestic and external pressure are generally still premature.   The jury is still out as much will depend on the outcome of Trump’s negotiations with America’s trading partners over the next 90 days and beyond and the future course of U.S.-China relations.

Whereas China is the master of global manufacturing and supply chains, the U.S. still leads in finance. We still live in a dollar-denominated and dominated world, at least for now.  Predominance on the technological front, particularly AI and related fields, is still up for grabs.

Third countries who are not fully allied or tied to the US or China, and constitute the majority of nations worldwide, are increasingly struggling in this competitive environment.

Smaller and more vulnerable nations will often be forced to make hard choices between major powers.  Larger states including regional or middle powers will have more leverage to play the majors against each other and extract more concessions for greater self-interest.

As we enter the second quarter of the 21st century, mainstream global attention is largely focused on the U.S.-China duopoly.  However, within the international power equation of competing and varying interests it is important not to underestimate the impact of middle powers that may shape events far beyond expectations over the coming years and decades ahead.

Astonishment and disbelief dominated global headlines as President Donald Trump’s landmark tariffs originally proved more vigorous than markets anticipated.  In fact, they marked the toughest US trade measures since the first half of the 20th century.

The immediate market reaction included sharp declines in global stocks and the U.S. dollar and record highs for haven assets such as gold.  Many pundits and market experts have already rendered final judgment: Trump’s shock-and-awe tariffs will hinder economic growth, ramp up inflation, trigger a recession and inflict long-term economic damage marking the end of globalization.

Many still hope that Trump’s maximalist approach is just a short-term negotiating tactic as opposed to an actual longer term move.  This is based upon the assumption that Trump likes uncertainty which keeps adversaries off-balance and gives him leverage to negotiate.

However, what should also be implicit in this assumption is that Trump is often not simply bluffing but may be willing to escalate and de-escalate as deemed necessary.

Furthermore, for many Trump’s scope for negotiation still remains unclear which further exacerbates continuing market uncertainty as he waits for others to react, and potentially take action.  Trump will then make his next moves.

So far, the White House said it has been approached by more than 70 nations to discuss reducing tariffs.

The magnitude of disbelief over Trump’s original tariff blitz marks another failure by many in markets, media and beyond, who too often underestimate his words and willingness to take action, even if short-term.

Policies and actions throughout his first term clearly outlined his general policy orientation.

However, he regularly confronted internal and external resistance that would often limit the extent of his desired objectives.  In his second term, Trump is pursuing his agenda relentlessly with impending midterm congressional elections in November 2026.

He now fully controls a loyal, hand-picked executive team and exercises enormous sway over the Republican-controlled Congress, although with a slim majority in both the Senate and House of Representatives.

When Trump announced his new tariff offensive on April 2, dubbed Liberation Day, four leading Republicans Senators sided with a Democratic resolution calling for an end to U.S. tariffs on Canada.  Although the bill was primarily symbolic as it would not muster enough votes to pass the House of Representatives, it sparked concern of a potential rift in Republican ranks over time between the party’s nationalist-populist wing and traditional free-market conservatives.

For now, the traditionalists are largely a minority.  A majority still backs Trump upon the premise that an economic course correction is long overdue and that short-term economic pain will result in long-term benefits.  That is, a reset is needed in the international trade order that must guarantee a more level playing field for U.S. producers and exports.  A very close eye is being kept on public opinion throughout.

April 2 marked another definitive moment in the rapidly evolving new world order of great power politics.

Trump’s primary target, China, promised to “fight to the end”. In the latest escalating tariff escalation, the US. President increased additional levies on China to 125 per cent.

Despite facing several tariffs, America’s two neighbors and largest trading partners, Mexico and Canada were largely granted reprieves from Trump’s tariffs before the 90-day pause due to their existing trilateral free trade agreement, which is technically up for renegotiation in 2026 but will likely be pursued earlier.

Although the European Union faced a 20 per cent flat rate on exports to the U.S., much will still depend on each member state’s individual trade with the US. Before Trump’s reversal on April 9th, Ursula von der Leyen, the president of the European Commission, said that the EU could remove tariffs on American industrial products if Trump scrapped the equivalent levies in return.

Despite headlines, the most immediate threat the EU faces is actually the dumping of Chinese products into Europe originally destined for U.S. markets.

Despite the 90-day pause, Asian countries still face the highest tariffs based on a greater proportion of their US exports. However, pragmatism in resolving differences may prevail sooner with those falling under the U.S. security umbrella including Japan, South Korea and Taiwan. Trump will most certainly leverage the defense card at the negotiating table.

With South Korea mired in deep constitutional crisis and upcoming snap elections, Japan’s Prime Minister seeks urgent engagement with the White House.

Indonesia, South-East Asia’s largest economy, was struck with a 32 per cent tariff, refused to retaliate and opted for direct negotiations with the U.S.

Vietnam, an important U.S. strategic partner, was one of Asia’s hardest hit with a 46 per cent tariff. Yet rapid diplomacy by President Lam to defuse tensions jumpstarted talks to remove duties and for a possible meeting with Trump.

The coming weeks will feature simultaneous negotiations between the U.S. and its trading partners to resolve outstanding issues.

A key question after Trump’s ‘Liberation Day’ on April 2 was how long could markets sustain steep declines and deep volatility.

After Trump’s 90-day general tariff pause, a prevailing question now becomes how long can markets endure continuing uncertainty.