Trump’s Trading Trust for Tariffs

At midnight, President Trump’s tariffs on Canada, Mexico, and China took effect. If you’ve been following the news, you’ve probably heard the warnings: rising prices, slower economic growth, and the looming threat of a trade war. Even Trump himself has admitted that economic pain is a possibility. Yet, he pushed ahead, slapping a 25% tariff on Canada and Mexico and a 10% tariff on China.

But why? The rationale is simple: Trump believes that rebalancing trade is essential to advancing his “America First” agenda. He’s betting that economic pressure will force other nations to act in ways that benefit the U.S., such as cracking down on drug trafficking. However, history suggests this gamble could backfire—weakening America’s alliances, isolating its economy, and ultimately making the country less powerful on the global stage.

Tariffs have long been a favorite tool of protectionist policies. The logic is straightforward: make foreign goods more expensive, and consumers will turn to domestic alternatives, boosting local industries. But the reality is often more complicated.

Take the Smoot-Hawley Tariff Act of 1930, which raised U.S. tariffs on over 20,000 imported goods. The goal was to protect American farmers and manufacturers, but it triggered retaliatory tariffs from other countries, slashing international trade and deepening the Great Depression. While the economic conditions today are vastly different, the fundamental risk remains: when the U.S. imposes tariffs, its trading partners rarely sit idly by.

One of the most immediate risks of Trump’s tariffs is the alienation of key allies. Canada and Mexico have been two of America’s closest economic partners for decades. But if they begin to see the U.S. as an unreliable partner, they may start looking elsewhere.

There are already signs of this shift. In Canada, anti-American sentiment has surged. “Canadians have become more nationalistic and wary of the U.S. since Trump took office,” reported journalist Vjosa Isai. In Mexico, both government officials and businesses have revived the “Made in Mexico” campaign, pushing consumers to favor locally produced goods over American imports.

Even more concerning is the possibility that Canada and Mexico could turn toward China. Beijing has been actively courting trade partners, eager to step into any gaps left by U.S. disengagement. If Trump’s tariffs push America’s neighbors into closer economic ties with China, it would be a strategic loss for Washington.

This isn’t just about trade; it’s about America’s global standing. Trump’s approach to foreign policy has consistently leaned on economic and military leverage to get other countries to fall in line. He has suspended military aid to Ukraine, publicly criticized world leaders, threatened to withdraw U.S. troops from Europe, and pulled out of international agreements like the Paris Climate Accord and the World Health Organization.

But this strategy has its risks. Countries that once relied on American leadership are beginning to hedge their bets. European nations, wary of U.S. unpredictability, are strengthening their militaries and forming new alliances. Australia, once a staunch supporter of American efforts to counter China, now fears that Trump could cut a separate deal with Beijing—leaving Australia to face the consequences alone.

CNN’s Fareed Zakaria put it bluntly: if America keeps changing its commitments every election cycle, why should its allies trust it?

If America continues down this path, its “America First” policy may create new competitors rather than stronger allies. European nations, no longer confident in U.S. reliability, are working to reduce their dependence on American military and economic support. They are crafting a “coalition of the willing” to assist Ukraine, as reported by Mark Landler and Jeanna Smialek. If this trend continues, Europe could eventually prioritize its own trade networks over U.S. interests, blocking American goods and forging new economic alliances.

Meanwhile, in North America, Canada and Mexico might find themselves strengthening trade ties with China or the European Union, reducing their reliance on U.S. markets. This would be a massive geopolitical shift—one that could leave America more isolated than before.

Trump’s belief in aggressive dealmaking is well-known. But the problem with his approach is that it assumes America will always have the upper hand. That may not be the case.

Consider the recent collapse of a U.S.-Ukraine minerals deal. Trump, in a heated exchange with Ukrainian President Volodymyr Zelensky, reportedly demanded a more favorable arrangement. Instead of bending to Trump’s will, Ukraine walked away. In trying to strong-arm his counterpart, Trump inadvertently pushed him to reject an American proposal—proving that brute-force tactics don’t always work.

For now, the world is watching to see how these tariffs play out. Some leaders may choose to appease Trump, hoping to weather his presidency without major changes. But others may take this moment as a wake-up call—an opportunity to reduce their reliance on the United States and forge new paths forward.

In trying to make America stronger, Trump may be unintentionally accelerating a shift that leaves the country more isolated and vulnerable. If “America First” means pushing allies away and inviting new global competitors, then the strategy may ultimately cost the U.S. far more than it gains.

When Berkshire Hathaway CEO Warren Buffett appeared on CBS over the weekend, he cautioned that “prices will be higher 10 years from now, in 20 years from now” because of President Trump’s tariffs. He’s worth paying attention to.

As Bloomberg reported JP Morgan saying, “The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions. Other than that, they’re fine.”