US President Donald Trump. — Bloomberg
WASHINGTON: President Donald Trump has pledged hundreds of billions in tariffs to remake the global economy and target even his closest neighbours.
But so far, it’s been more Art of the Deal than a revolution.
Trump on Monday shelved plans for tariffs on Canada and Mexico, after doing the same for Colombia the prior week.
In each case, Trump relented despite countries promising only modest changes on border security and immigration.
Trump and his allies have held up those concessions as vindication of his approach.
But the US president’s willingness, at least for now, to hold off tariffs has underscored doubts over whether Trump, who famously obsesses over market performance, might once again prove a paper tiger on his more fiery trade threats.
Trump could always reverse course again and press for more extreme measures, or impose tariffs in a bid to offset the projected cost of some of his domestic agenda.
But the deferrals are only likely to feed the US president’s growing reputation for stopping short of his bombast when it comes to trade, using the levies as a negotiating ploy.
Even after Trump announced he was pushing ahead with his tariffs over the weekend, the slide in markets was contained as analysts predicted concessions that would limit their impact.
Still, uncertainty swirls. Trump did not announce a pause on China tariffs, which have more support in his party, ahead of a planned phone call with President Xi Jinping later this week.
He’s also pledged levies on the European Union (EU) and key sectors.
And Trump emphasised that the Mexican and Canadian pauses are only for a month, raising the prospect he could snap back the levies if he doesn’t see the outcomes he wants.
And Trump’s moves, even if not fully implemented, have come with costs.
Trump’s threats and the prospect of them becoming real dropped US stocks and the currencies of his targets, including the Canadian dollar, Mexican peso, the euro and South African rand.
Each of those recovered as Trump delayed his Mexican threat, then his Canadian one.
Meanwhile, in world capitals, leaders are taking stock of how to respond to the White House bombast. Much of Canada’s Liberal Party leadership campaign to replace Prime Minister Justin Trudeau has centered on how to take on Trump.
And internationally-minded businesses across the closest of US allies have been forced for weeks into reviewing their own supply chains.
It all leaves unclear whether Trump is all bark on tariffs or whether he still aims to shift the United States back towards an era a century ago when import levies were the chief source of revenue.
Trump said he’d take part in ongoing talks towards a deal with Mexico, and conditioned Canada on whether they can reach a “final economic deal”. And he’s still threatening a host of other tariffs, including on the EU.
Allies of the president touted the concessions from Mexico, a deployment of 10,000 National Guard members to prevent drug trafficking and further talks in security and trade, as proof of Trump’s negotiating prowess.
But they struck a familiar tone. Mexico agreed to dispatch 10,000 troops to its own southern border under President Joe Biden’s administration in 2021, and also dispatched several thousand troops to its southern border in 2019 amid similar pressure from Trump over migration.
Canada made a similar announcement, saying that “nearly 10,000 frontline personnel are and will be working on protecting the border” and pledging a handful of new measures, like C$200mil to fight organised crime and naming a fentanyl czar.
Trump also praised a C$1.3bil announcement Trudeau has previously made.
Trudeau’s government scrambled to put together a border plan two months ago, after Trump first threatened tariffs over migration and fentanyl flows.
They also repeatedly pointed out there is no evidence the northern border is a significant problem on these issues.
But as time passed with no deal, Canadian officials grew frustrated at the lack of information about what Trump was looking for, and raised doubts that fentanyl was his true motivation.
“We’ve shown them and said that we’ll do what’s necessary to deal with this,” said Finance Minister Dominic LeBlanc in a television interview last Sunday.
“But I wonder if that’s the actual pretext, or if there’s another policy objective that they’re pursuing.” — Bloomberg
