Trump's tariff threats: How can any country still consider itself a U.S. ally?
What are the long-term consequences of, not America First, but America Alone?
Donald Trump believes that, as president, he has the authority to establish tariffs of any amount, on any country, at any time, for any reason. And to change them whenever the whim or inclination moves him.
Any doubt about this should have been removed by the remarkable and highly revealing letter he sent to Brazil, proclaiming that, as of August 1, the country would be subject to a tariff rate of 50%.
The United States has a trade surplus with Brazil. That country buys more American goods than we buy of theirs. So, there’s none of the usual economic justifications for the imposition of tariffs. And utterly nothing, economically, that would justify one of the highest tariff rates Trump has heretofore bandished.
Instead, Trump’s letter begins with a bitter complaint about the investigation underway in Brazil about former president Jair Bolsonaro’s conduct in the last election, which Bolsonaro lost. Trump's letter flatly says that the investigation is one of the reasons for the imposition of the obviously punitive tariff, since there is no trade imbalance to attempt to remedy.
There is reason to have some questions about the Brazilian Supreme Court’s behavior of late. But if there were a list of countries with questionable or dodgy court systems, Brazil would be way down the ranks. Yet no other country has been targeted with tariffs over their judicial systems. And no law passed by Congress grants a general authority to impose tariffs for that reason.
Bolsonaro is a crony of Trump’s, so Trump is attempting to use, or rather misuse, his office to get his crony off the hook.
Trump purports to be using the authority granted by the International Emergency Economic Powers Act in his second round of threatening arbitrary and high tariffs on the rest of the world. He called his first round "reciprocal tariffs”, even though there was no discernible measure or principle of reciprocity involved.
The U.S. Court of International Trade found that the reciprocal tariffs weren’t, in fact, authorized by the IEEPA and enjoined them. The Court of Appeals for the Federal Circuit lifted the injunction and scheduled oral arguments for July 31. Trump’s second round of arbitrary tariffs are supposed to go into effect the next day.
Trump’s letter to Brazil should cinch the case. There is no economic emergency posed by our trade relations with Brazil, however elastically that might be interpreted. And nothing in the IEEPA authorizes the imposition of tariffs because of alleged flaws in non-trade related judicial proceedings. In fact, nothing in the IEEPA explicitly authorizes tariffs at all. It’s a sanctions and embargo measure.
Among other infirmities in the Trump’s administration’s attempt to use the IEEPA, the trade court found that even if the act gave the president carte blanche to impose tariffs, that would be an unconstitutional delegation of authority. The Constitution gives the authority “to regulate commerce with foreign nations” to Congress, not the president. The Brazil letter should remove any legal question about whether Trump is attempting to exercise carte blanche tariff authority. He is.
As legally important as the Brazil letter should be, that’s not the largest consequence of the second round of Trump’s threat of arbitrary and high tariffs. The second round yields this question: At this point, is there any reason for any other country in the world to regard itself as an ally of the United States?
Our two neighbors and largest trading partners, Canada and Mexico, are threatened with tariffs of 35% and 30% respectively. The European Union is looking at 30%. Japan and South Korea, 25%. The Philippines, 20%.
These are the countries the United States relies on the most for national security partnerships. We have trade agreements with most of them, and trade under WTO rules with the others. There are trade irritations with all of them, but nothing that would remotely justify such punitive tariffs. Trade between us and them is generally free and fair. Americans just buy more stuff than other people. And we are less provincial about who we buy it from. That’s why we have trade deficits with other market economies.
There is an element of cruelty in Trump’s tariff threats. Large tariffs are to be imposed on small, poor countries.
The case of Tunisia stood out to me, since I regard it as a big missed opportunity for the democratic capitalist movement. It was the most promising prospect from the Arab Spring. After ousting a dictator, Islamist parties were elected, but with what seemed to be a genuine desire to govern pluralistically and with a focus on broadly improving living standards through a better performing economy. The West provided the usual loans and grants, but not enough of the technocratic support such a transition required. The country is again slipping into autocracy. However, it remains a country in which the electorate once supported a different direction with potentially radiating and significant consequences in the region. The hope for it has substantially dimmed but has not been entirely extinguished.
Trump has threatened the country with a tariff of 25%. The United States imports just $1.1 billion in goods from Tunisia, producing a trade deficit of $600 million. Tunisia doesn’t produce much and is too poor to buy much.
The second round of the Trump tariff threats is widely perceived as another negotiating tactic, to induce additional concessions before the August 1 deadline. If so, large developed countries might have things to put on the table to retain access to the American consumer market. But what are poor countries such as Tunisia supposed to put on the table? And what’s the point of pretending that trade barriers, rather than poverty, are the reason for their exiguous trade imbalances?
Even if traditional allies end up making some sort of deal, this second round has to engender a geopolitical reorientation of some sort. It may take time to evolve. But other countries have to come to the conclusion that the United States is no longer trustworthy.
This second round of arbitrary tariffs violate various trade agreements. And even if traditional allies make a deal, there can be no belief that Trump will keep it. He sees tariffs as a weapon. There will always be at least the strong possibility that something will set him off and a new tariff threat will be forthcoming. If tariffs can be leveled against Canada over fentanyl and against Brazil for an internal investigation of a Trump crony, they are a threat to be leveled against any country for any reason.
Trump is attempting to leverage America’s consumer market and military prowess to get his way in international affairs. But he is destroying every vestige of soft power, emanating from our values and example, that has been accumulated from our founding. For other countries, all dealings with the United States, in security and economic matters, are now transactional and transitory.
I can’t anticipate the specifics of the geopolitical reorientation. But I think I can sense its general direction. Our traditional allies will seek to make themselves less vulnerable and exposed to arbitrary U.S. decisions and actions, both in terms of security and economically. I also suspect it will mean attempting some sort of accommodation with regional threats, such as Russia and China. I can’t imagine that a U.S. led effort to constrain and isolate China can survive such overwrought tariff threats. Traditional allies will start hedging their bets.
To a certain extent, a geopolitical reorientation could be a good thing, particularly if traditional allies in Europe and the Indo-Pacific assume more responsibility for regional security. However, a geopolitical reorientation based upon a growing and justified belief that the United States has become arbitrary and untrustworthy will have long-term consequences. We may become more isolationist not by our choice, but by the decision of other countries to reduce their exposure and vulnerability to us.
This isn’t really America First. It is the makings of America Alone.
Reach Robb at robtrobb@gmail.com.