For most of the history, tariffs were a solution to specific economic problems. Washington used them to raise money and protect the US industries from foreign competitors. And after World War II, the presidents used tariffs selectively.
President Trump increased this practice. He says he will use tariffs to solve a number of political problems such as migration and territorial expansion. On Sunday, Colombia threatened 25 percent of tariffs after two aircraft bearing deported immigrants were averted. The government in Bogota quickly reversed the course.
It is a strategy rarely from other presidents – and the one that Trump now puts on almost daily, as my colleague Alan Rappeport and I describe In The Times story published this morning. I will explain it in today’s newsletter.
Universal instrument
Since joining Trump, he told several nations to tax imports from their countries if they did not do what he wanted. He said he would give a 25 % tariff to Canada and Mexico products and a 10 % tariff on China products unless these countries have stopped drug and migrants to the United States.
He also stated that he would put tariffs to Russia during the war in Ukraine and Denmark if he refused to advance the territory of Greenland. The rapid surrender of Colombia this weekend can disrupt Trump and raise questions about the rest of the world how far it will take the strategy.
The past presidents usually issued tariffs in response to trade issues – an increase in imported tires from China, which damaged US tire manufacturers, Canada subsidies gave its protogers, a European quota on the import of bananas.
Trump is not the first president to use trade to shape other goals abroad. For example, Richard Nixon said Okinawa would return to Japan only if he sent less textiles to the United States. But Trump’s “very obvious and transaction” approach is unique in American history, said Douglas Irwin, economic historian at Dartmouth College.
Is it allowed?
Countries that belong to the world business organization promise not to bother each other with tariffs just to strengthen their own economies. However, international rules have an exception of national security. And one US law gives presidents wide powers if they declare a national emergency.
In the past, this Act – International Act on Emergency Economic Powers from 1977 – is used to issue sanctions, but not tariffs. For example, after North Korea tested a nuclear weapon, for example, Washington used the law to trade with the ground and punished its officials.
Trump’s tariffs indicate that he considers the Latka to be low for national emergencies, said Ted Murphy, a business specialist in Sidley Austin.
Other countries still hold the best way to respond to these threats. Many of them have developed lists of US goods to tax if there is a trade war. But they also take care of the Tit-for-Tat tariffs. The United States is a huge market and needs access to it. “The escalating tariff war will hurt other countries much more than it hurts the US economy,” said ESwar Prasad, professor of business policy in Cornell. “This applies to virtually every major American business partner, including Canada, China, the European Union and Mexico.”
That is why many leaders decided to agree with Trump’s requirements. Mexico does more to discourage migration and confiscate illegal opioids. Canada sent more drones and helicopters to the border. This has boasted that stricter visas rules have reduced illegal transitions by 86 percent in the last two months.
What to do next?
However, many allied governments hate the idea that they are strongly armed over politics disagreements. The European Union expands trade agreements with South America and Mexico.
On Monday, the highest European diplomat said it was necessary to “close the series” because the Trump administration threatened other tariffs. She said Europe was a “economic heavy and geopolitical partner”.
It seemed not to be bullying.
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