The liberalized, global trade order is getting knocked down and reassembled through President Donald Trump’s wall of tariffs. Dozens of countries, including China, India, and Switzerland, are still scrambling to secure lower rates for their U.S.-bound exports. When the ink dries in these trade accords, though, the peace might be short-lived.
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Eight months into his second term, Trump has shown a willingness to tear up and renegotiate trade accords, even those carrying his stamp of approval. That was the case with Mexico and Canada, two of the largest U.S. trading partners; they forged an agreement with Trump in 2018 to replace a prior one he’d consistently derided as “the worst trade deal ever made.”
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The latest tariffs open the possibility of a Trump-imposed forever war in trade that doesn’t have a ceasefire or fixed-end date — one that ultimately carries on by executive whim, at least during the rest of his term. Brad Setser, a trade expert at the Council of Foreign Relations, called it a “concern, a big one.”
“I think most trading partners recognize that any deal is temporary and can be renegotiated by Trump,” Setser told Quartz. “They’re trying to strike the best possible deal to limit the damage to their own interests for a period of time.”
“Almost everyone took note of the tariffs on Mexico and Canada, which effectively undid the Trump term-1 trade deal,” Setser said.
Trump’s trade hostilities are already having an effect on U.S. business dealings. “I happen to know from our Fortune 500 companies in Omaha, they’re losing business in Canada right now,” Rep. Don Bacon of Nebraska told Quartz in a recent interview. “The Canadians are bitter, and I know it. I know the diplomatic folks in Washington and I hear from Omaha businessmen that are seated on their pocketbooks.”
Indeed, observers initially believed the U.S.-Mexico-Canada Agreement would fortify their bargaining position and spare the U.S. neighbors from the brunt of Trump’s trade war. But they were lumped into the conflict with everyone else with a spate of double-digit tariffs on steel and aluminum, which remain in effect.
Trump forged limited trade agreements with Japan and South Korea during his first term. In 2018, he painted the accord with Seoul as a “fair and reciprocal one,” invoking the same language that he’s used to describe the goals of his ongoing trade wars. That didn’t keep him from sending letters to both countries threatening them with 25% tariffs.
It’s proven difficult for trade negotiators to compress complex discussions that usually take several years into a shorter span of months or even weeks. The rapid speed of the negotiations has already caused confusion in Washington and Tokyo over what both countries had agreed to in their not-so-formal handshake deal.
“The other party is not a normal person,” Japanese Prime Minister Shigeru Ishiba told lawmakers in Tokyo this week in reference to Trump, per the Washington Post. “In negotiations like this, implementation is far more difficult than reaching an agreement.”
There’s similar disagreement brewing between the Trump administration and the European Union, particularly around the terms of a $600 billion investment fund. Trump has said he is free to invest the money as he wishes.
“The details are $600 billion to invest in anything I want,” Trump said this week on CNBC. “Anything. I can do anything I want with it.”
However, the E.U. doesn’t have the authority to compel private sector investment into the U.S.
Trump said in the same interview that if the funding didn’t materialize, he’d slap a 35% tariff on the 27-member E.U. bloc.
Most foreign governments have been careful not to strike back against the Trump administration with retaliatory tariffs. China has imposed a 10% tariff on U.S. products. Both Brazil and India have kept the door open to levying import duties of their own. Notably, all three form part of the so-called BRICS bloc of emerging economies.
Foreign capitals are keeping a close eye on a legal challenge to Trump’s unilateral authority on tariffs, one that leaves the trade landscape unsettled for the foreseeable future. “Many are also aware that Trump’s current round of tariffs is subject to a very serious U.S. legal challenge, and the tariffs could be removed, Setser said. “Trump would have to use more conventional trade authorities to replicate the current set of tariffs. So there’s an enormous amount of uncertainty.”