Donald J. Trump should have learned from his first term as US President that sanctions don’t work. His enhanced sanctions on Iran, and his throwing out the Iranian nuclear deal, may actually have speeded up Iran’s pursuit of a nuclear weapon rather than retarding it. However, it almost appears that Mr Trump intends to weaponize the US’s economic might, using sanctions and tariffs to bend the world to his will. The latest example of this economic xenophobia is his strident pledge to slap tariffs on Canada, China and Mexico. Mr Trump’s first term had been devoted to furthering a trade war with China, and the USA did not desist from a punitive tariff until China greed to import more soybeans. China might also be a geopolitical rival, but that cannot be side of Canada or Mexico. True, they are members of the North American Free Trade Agreement, and their goods have flooded the USA, resulting in cheaper goods for the US consumer.
Usually, when a country’s leadership sets about destroying its economy, it is the people of that country which suffer. However, in the case of an economic superpower like the USA, it is the whole world which will suffer. The point that Mr Trump seems to be missing is that the US consumer is buying Chinese, Canadian or Mexican over American products because they are cheaper and of adequate quality. Imposing a tariff, and thus raising their price, may be too protectionist for the WTO to agree. The excuse of fentanyl smuggling from China is more emotive than that of dumping he used when President, but the Chinese Embassy in Washington responded that China was already engaged in anti-smuggling in a big way, and that cooperation on economic issues was essential. Mr Trump has not mentioned how he plans to tackle fentanyl demand in the USA.
Mr Trump is showing that he is increasingly desperate. In 2016, He had threatened to build a wall on the Mexican border, and make Mexico pay. He did neither. Now, he has threatened it with a 25-percent tariff, not to mention an anti-immigrant drive, which will involve a large number of Mexican citizens. He has carefully not mentioned a wall, this time around. He has already tried to use the dollar’s primacy in the banking system; is this the term when he tries somehow to use its primacy as a reserve currency?
