Trump’s Tariff Strategy: US can no longer act as the world's economic shock absorber

[Social Media]

 

Trump’s Tariff Strategy: A High-Stakes Gamble on Global Trade

 

Donald Trump’s approach to trade has always been unpredictable, but his latest vision—dubbed "Liberation Day"—seeks to upend the global economic order. Unlike the traditional image of liberation, which conjures scenes of victorious armies and jubilant crowds, Trump's version involves a sweeping tariff policy designed to shield American industry from foreign competition. Beneath the chaos of his rhetoric, however, lies a fundamental economic reality: the United States can no longer sustain its role as the world's economic shock absorber, absorbing excess global production through imports and financing other nations by issuing Treasury bonds.

 

For decades, the U.S. dollar has functioned as the world's reserve currency, meaning that countries with trade surpluses—whether oil-rich states or manufacturing powerhouses like China—have needed a safe place to store their wealth. U.S. Treasury bonds have provided that stability, offering a reliable store of value underpinned by American economic and legal structures. But this system has created massive distortions. As foreign countries stockpile dollars, the currency's value remains high, making American goods less competitive abroad. Meanwhile, cheap imports flood the U.S. market, undercutting domestic industries.

 

This phenomenon has been brewing for decades, but the tipping point arguably came with China's entry into the global trading system in 2001. Since then, the imbalance has grown to extreme levels, with an estimated $7 trillion in U.S. bonds held by foreign governments and investors. This structural reality has made American manufacturing increasingly unviable—precisely the crisis that Trump’s tariffs are intended to address.

 

 

Trump has long bemoaned the decline of U.S. industry, famously declaring: “IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY.” His solution is simple in concept: impose tariffs on cheap imports to protect American factories from foreign competitors. However, as with all economic interventions, the results are complex. Critics argue that tariffs merely increase costs for American consumers, leading to higher prices on everything from televisions to automobiles. Others warn that higher tariffs could prompt the Federal Reserve to raise interest rates, further straining the economy.

 

Yet, when Trump imposed tariffs during his first term, the outcome was not as expected. Contrary to fears that consumers would bear the brunt, the data suggests that the cost was absorbed in two key ways. First, U.S. importers accepted lower profit margins on foreign goods. Second, the dollar appreciated, increasing Americans' purchasing power and offsetting price hikes. However, a rising dollar works against Trump’s ultimate goal: if the currency remains strong, American exports will still struggle to compete, and manufacturing will continue to decline.

 

Trump’s broader economic strategy, as envisioned by key figures like Treasury Secretary Scott Bessent, is not just about tariffs but about restructuring global trade. His administration's plan appears to involve imposing tariffs on all trade partners initially, then using that leverage to negotiate a deal—what former government economist Zoltan Pozsar has called the “Mar-a-Lago Accord.” Under this framework, U.S. allies could gain tariff exemptions in exchange for helping to weaken the dollar by selling off Treasury holdings, opening their markets to U.S. goods, and joining a collective effort to impose economic pressure on China. In return, these allies would continue to enjoy U.S. military protection and access to American markets.

 

The risks of this strategy, however, are enormous. If mishandled, it could trigger a financial crisis by destabilizing the U.S. Treasury market, which serves as the foundation of global finance. A sudden selloff of bonds could drive up borrowing costs, potentially bankrupting both the U.S. government and private enterprises that rely on cheap credit. Additionally, a poorly managed trade war could lead to severe currency fluctuations, stifling international commerce and triggering a global recession. Inflation, interest rate hikes, and retaliatory tariffs from other nations are all potential consequences.

 

Adding to the uncertainty is Trump’s own volatile leadership style. His tendency to conflate economic policy with unrelated cultural and political grievances—such as criticizing foreign abortion laws in trade negotiations—creates confusion and undermines confidence in U.S. leadership. Effective economic diplomacy requires clarity and strategic focus, not impulsive decision-making.

 

If Trump is to succeed in reshaping global trade to favor American industry, he must frame the debate in terms of fairness rather than nationalism. Why, he could ask, should American workers—many of whom lack basic economic security—subsidize the defense of trade routes that primarily benefit Europe? Why should the U.S. risk conflict with China to protect Japanese economic interests while Tokyo hoards American dollars instead of reinvesting them in trade? By articulating these points convincingly, he could increase the likelihood of forging a lasting international agreement rather than escalating a destructive trade war.

 

However, if his administration fails to execute this vision with precision, the consequences could be dire. A global trade breakdown, financial market turmoil, and a further weakening of U.S. economic dominance all loom as potential outcomes. In the end, whether Trump’s trade war will be remembered as a bold economic recalibration or a reckless gamble depends on how well he can navigate the complexities of international finance and diplomacy. If he gets it wrong, the economic consequences could be far more chaotic than anything his rhetoric has suggested so far.

 

Based on a report by The Times  2025-04-04

 

 

[Tug]

So the guy who has bankrupted just about every company unfortunat enough to get within his clutches had a scam university (just were are his school records) embezzled from his charity now wants to devalue my money …….not even mentioning all the other fiascos going on rite now……scary times indeed.

[ChicagoExpat]

4 minutes ago, Tug said:

So the guy who has bankrupted just about every company unfortunat enough to get within his clutches had a scam university (just were are his school records) embezzled from his charity now wants to devalue my money …….not even mentioning all the other fiascos going on rite now……scary times indeed.

Yes, he's a scam artist.  But why should any country put up with their goods being taxed while they have allowed the other country's exports, tax-free, for decades?

[FritsSikkink]

Trump is in gaga land: Trump sparks health fears as he 'forgets' to sign executive order and has to be 'guided' back to his seat

[JonnyF]

Trump is just doing what the rest of the world has done for decades.

 

The EU for example is probably the most protectionist bloc in history. But nobody complains about that. In fact, they celebrated it when Britain left the EU. Remainers rejoiced in how the EU was going to now tax all our exports to them. 

 

Thailand also puts massive tariffs on imports, often under the label of a "luxury tax". Anyone who likes to eat their favourite food brands from "back home" will be aware of that when they pay 2-3 times the price at the checkout. Try buying a Ford Mustang or a Harley in Bangkok.  

 

Even ordering simple things like motorcycle helmets from abroad I've been stung by huge import taxes here. 

 

But when Trump does it, everyone loses their marbles. 😄 

[Srikcir]

Penguins will wear black in protest against Trump's new tariffs against them. (Trump pledges to negotiate in earnest)

[Dirk Z]

5 hours ago, JonnyF said:

Trump is just doing what the rest of the world has done for decades.

 

The EU for example is probably the most protectionist bloc in history. But nobody complains about that. In fact, they celebrated it when Britain left the EU. Remainers rejoiced in how the EU was going to now tax all our exports to them. 

 

Thailand also puts massive tariffs on imports, often under the label of a "luxury tax". Anyone who likes to eat their favourite food brands from "back home" will be aware of that when they pay 2-3 times the price at the checkout. Try buying a Ford Mustang or a Harley in Bangkok.  

 

Even ordering simple things like motorcycle helmets from abroad I've been stung by huge import taxes here. 

 

But when Trump does it, everyone loses their marbles. 😄 

But when Trump does it, everyone loses their marbles. 😄 

Just like the self-proclaimed economic genius himself.

[Purdey]

How do tariffs help when the government needs to pay interest on $7.9 trillion on foreign held treasuries? Any money it makes or saves has to be paid to foreign debt holders, surely?

[candide]

Remind me. Who's the guy who torpedoed the FTA between the EU and the US, because it's been negotiated by the Obama administration! 

[candide]

6 hours ago, ChicagoExpat said:

Yes, he's a scam artist.  But why should any country put up with their goods being taxed while they have allowed the other country's exports, tax-free, for decades?

About 5% of exports to the EU were subject to special tariffs. Around the same percentage of exports from the EU was taxed by the US....

[newbee2022]

7 hours ago, Social Media said:

. If he gets it wrong, the economic consequences could be far more chaotic than anything his rhetoric has suggested so far.

And there is really someone out there who believes in Trump's economic wisdom??😂😂😂

[FritsSikkink]

6 hours ago, JonnyF said:

Trump is just doing what the rest of the world has done for decades.

 

The EU for example is probably the most protectionist bloc in history. But nobody complains about that. In fact, they celebrated it when Britain left the EU. Remainers rejoiced in how the EU was going to now tax all our exports to them. 

 

Thailand also puts massive tariffs on imports, often under the label of a "luxury tax". Anyone who likes to eat their favourite food brands from "back home" will be aware of that when they pay 2-3 times the price at the checkout. Try buying a Ford Mustang or a Harley in Bangkok.  

 

Even ordering simple things like motorcycle helmets from abroad I've been stung by huge import taxes here. 

 

But when Trump does it, everyone loses their marbles. 😄 

He lost his marbles: 'Clueless' Trump makes frightening confession on how long US manufacturing will take

[BritScot]

The haters on here really are close to crazy. You all should sit back and digest the bile use all spout. This forum must be so full of billionaires with such business and success portfolios! So, use all support corruption and theft of trillions of tax payers money, tax payer's money being used to pay for terrorists and agitators, countries theft of manufacturing with crazy tariff structures. Trump was quite in his right to reciprocally tax them but he could easily have doubled the tax. Use do realise that he is only hit them with 50% of the tax they hit they issue against American goods? I think he should of hit them with equal tariffs especially China!

[thaibeachlovers]

1 hour ago, newbee2022 said:

And there is really someone out there who believes in Trump's economic wisdom??😂😂😂

I don't care if he has wisdom or not. I just want an end to a world economic scam in which the 1% reap profit while the peasants suffer. Burn it all down and start over with a system that benefits everyone, not just the 1%. If Trump is the cause, so be it.

[newbee2022]

8 minutes ago, thaibeachlovers said:

I don't care if he has wisdom or not. I just want an end to a world economic scam in which the 1% reap profit while the peasants suffer. Burn it all down and start over with a system that benefits everyone, not just the 1%. If Trump is the cause, so be it.

Who wouldn't agree? 

However, I can't see the reset button yet. 

[mikeymike100]

"Finance guru Bill Ackman offered some stern advice to world leaders reeling from US President Donald Trump's tariffs amid fears of a global trade war.

In a post on X Thursday night, the CEO of Pershing Square urged world leaders to quickly strike a deal with the president as the tariffs - which range from 10 percent to upward of 50 percent - shook global markets.

'My advice to foreign leaders is that if you have not already reached out to President [Trump], you need to do so immediately,' he wrote.

'Trump is, at his core, a dealmaker who sees the world as a series of transactions,' Ackman continued, characterizing the commander-in-chief as a 'tough but fair negotiator.

'He loves to make deals and he loves to get things done promptly.'

Ackman also said that he suspects the president will 'reward the early dealmakers with fairer deals than those that wait to sit down at the negotiating table."

 

https://www.dailymail.co.uk/yourmoney/article-14570511/Bill-Ackman-advice-world-leaders-Trump-tariffs.html

[thaibeachlovers]

Just now, newbee2022 said:

Who wouldn't agree? 

However, I can't see the reset button yet. 

Neither can I, sadly. It has ever been so- the 1% rip off the poor, at least till the tumbrils await.

[mikeymike100]

31 minutes ago, BritScot said:

The haters on here really are close to crazy. You all should sit back and digest the bile use all spout. This forum must be so full of billionaires with such business and success portfolios! So, use all support corruption and theft of trillions of tax payers money, tax payer's money being used to pay for terrorists and agitators, countries theft of manufacturing with crazy tariff structures. Trump was quite in his right to reciprocally tax them but he could easily have doubled the tax. Use do realise that he is only hit them with 50% of the tax they hit they issue against American goods? I think he should of hit them with equal tariffs especially China!

Sadly you are 100% correct!

[thaibeachlovers]

1 minute ago, mikeymike100 said:

"Finance guru Bill Ackman offered some stern advice to world leaders reeling from US President Donald Trump's tariffs amid fears of a global trade war.

In a post on X Thursday night, the CEO of Pershing Square urged world leaders to quickly strike a deal with the president as the tariffs - which range from 10 percent to upward of 50 percent - shook global markets.

'My advice to foreign leaders is that if you have not already reached out to President [Trump], you need to do so immediately,' he wrote.

'Trump is, at his core, a dealmaker who sees the world as a series of transactions,' Ackman continued, characterizing the commander-in-chief as a 'tough but fair negotiator.

'He loves to make deals and he loves to get things done promptly.'

Ackman also said that he suspects the president will 'reward the early dealmakers with fairer deals than those that wait to sit down at the negotiating table."

 

https://www.dailymail.co.uk/yourmoney/article-14570511/Bill-Ackman-advice-world-leaders-Trump-tariffs.html

Good advice, but the numpties in charge around the world only have revenge as an option. Such losers. So stupid they think Trump cares about their retaliatory tariffs. The plan is to return US companies ( and any others that want to sell in the US ) to the US mainland. Can't make an omelette without breaking eggs. 

[newbee2022]

5 minutes ago, mikeymike100 said:

think he should of hit them with equal tariff

That would be the same then as NO tariffs.

[newbee2022]

4 minutes ago, thaibeachlovers said:

Good advice, but the numpties in charge around the world only have revenge as an option. Such losers. So stupid they think Trump cares about their retaliatory tariffs. The plan is to return US companies ( and any others that want to sell in the US ) to the US mainland. Can't make an omelette without breaking eggs. 

Well, but Trump missed a main point.

In his wisdom he forgot, what eg EU buys from US as service by Amazon, Microsoft, Apple, Meta, Netflix, X, Starlink, Google, aso.

This is not mentioned in his "calculation".

[The Alien]

I understand that Trump aimed to change trade policies and raise tariffs, but there were more diplomatic approaches he could have taken, such as organizing meetings with trade ministers or communicating through U.S. trade missions and embassies. His accusations against other countries for using unfair trade practices and "ripping off" the U.S. for years seem excessive. In trade, buyers and sellers negotiate prices and quality, and once both parties reach a satisfactory agreement, the transaction proceeds—that’s the nature of business. Additionally, it’s difficult to intimidate a powerful country with significant bargaining power. Resorting to bullying tactics and using inappropriate language against allies to appeal to his base is not a mature way to conduct diplomacy.

[Jerry777]

What's wrong with equal taxes or tariffs as we call them? How can any country sell a car or anything to the USA with a 5% tariff and the USA sells them a car or anything made in the USA and they charge 30%? This simply does not make sense to me. I don't care who is president. Fair is fair. Get used to it. I know how easy it is to send any goods from my company made here to the USA  with very little tarriff but when we try to send the same thing back here, its an absolute nightmare. 

[thaibeachlovers]

13 minutes ago, newbee2022 said:

Well, but Trump missed a main point.

In his wisdom he forgot, what eg EU buys from US as service by Amazon, Microsoft, Apple, Meta, Netflix, X, Starlink, Google, aso.

This is not mentioned in his "calculation".

The sheeple are so mind controlled by such as Amazon, Microsoft, Apple, Meta, Netflix, X, Starlink, Google that I doubt he has to worry about them. They ain't going to give up their social media fix for anything, and will still keep buying overpriced tat from Apple.

[thaibeachlovers]

21 minutes ago, The Alien said:

I understand that Trump aimed to change trade policies and raise tariffs, but there were more diplomatic approaches he could have taken, such as organizing meetings with trade ministers or communicating through U.S. trade missions and embassies. His accusations against other countries for using unfair trade practices and "ripping off" the U.S. for years seem excessive. In trade, buyers and sellers negotiate prices and quality, and once both parties reach a satisfactory agreement, the transaction proceeds—that’s the nature of business. Additionally, it’s difficult to intimidate a powerful country with significant bargaining power. Resorting to bullying tactics and using inappropriate language against allies to appeal to his base is not a mature way to conduct diplomacy.

there were more diplomatic approaches he could have taken, such as organizing meetings with trade ministers or communicating through U.S. trade missions and embassies.

 

Apparently you know nothing about Trump. That is the BS used for generations to control trade benefiting other than the US. Trump doesn't care about doing business as usual and is blowing their cosy little game to smithereens. Good for him not doing BS any more.

 

Resorting to bullying tactics and using inappropriate language against allies to appeal to his base is not a mature way to conduct diplomacy.

Those numpties in Euroland don't deserve diplomacy. Bunch of warmongering charlatans IMO.

Good for Trump sticking it to them in a way they don't find pleasant.

[FritsSikkink]

1 hour ago, BritScot said:

The haters on here really are close to crazy. You all should sit back and digest the bile use all spout. This forum must be so full of billionaires with such business and success portfolios! So, use all support corruption and theft of trillions of tax payers money, tax payer's money being used to pay for terrorists and agitators, countries theft of manufacturing with crazy tariff structures. Trump was quite in his right to reciprocally tax them but he could easily have doubled the tax. Use do realise that he is only hit them with 50% of the tax they hit they issue against American goods? I think he should of hit them with equal tariffs especially China!

He doesn't hit the countries; he hits the USA consumer who buy the goods.

[Eric Loh]

I wondering if Trump know that US has a trade surplus in the service industry. Service industry growth outpaced real GDP growth. Over 1 trillion USD in services are exported. The service sector has been declining with Trump's trade policy uncertainties and now the tariffs will be a hammerblow as recessionary and global growth fears weigh on the sector. Trump is reckless and don't grasp the totality of his tariff war which will drive down the world economy. He is surrounded by sycophants and cowards who are gutless to speak out.  

[Eric Loh]

[SunnyinBangrak]

41 minutes ago, FritsSikkink said:

He doesn't hit the countries; he hits the USA consumer who buy the goods.

I'm still confused by the fact that every single countty around the world imposes tariffs on imports and benefits from it. Yet if the USA imposes tariffs like all the other countries it is disastrous for Americans. Is it because of the weather? the geography? Or is it our old friend liberal logic combined with irrational hatred giving rise to yet another nonsensical narrative?

End of the day the US needed to tackle the snowballing trade defecits. Can we calm down and wait for other countries to cancel their tariffs on the US and get some trade balance back? Or are we seriously going to keep screaming and hyperventilating for months?

[uncletiger]

An interesting analysis. Not completely wrong. But it fails to hit the truly relevant point. The US is completely rejecting globalism, and forging an economy where you either work to better your own country, or you work to subjugate it.

 

Economists like to point out that free trade makes everyone better...on average. It's the on average part that is the problem. Because as Trump has told us, 50 years of data clearly show the vast, vast majority of Americans are worse off. Free trade works by pulling wealthy countries down to the same level as impoverished ones, while making a few who control the global supply lines very, very wealthy. In the process, those countries who were desperately poor might experience a slight increase in their standard of living, but again that came at the expense of the US which experienced a much more significant decrease.

 

What Trump is truly doing is simple. He's ending globalism. Because the US is not responsible to support the standard of living in countries like Vietnam or Thailand. The goal of the US, and for every country, is to increase and protect their own standard of living. The very opposite of globalism, sovereigntism accepts that some countries will be worse off, but the wealth that is in the US, stays in the US. Even if that is less efficient on a global basis, it leaves the USA in a substantially better position.

 

And that is the real war. The globalists want a one world government where everyone is the same. No borders. The US wants sovereignty and competitive nationalism, where everyone is responsible for themselves, with lots of diversity and competition. If the EU wants to continue to push globalism, they will henceforth have to do it without the USA.  The US will work to become entirely self sufficient, with resilient domestic supply chains and trade existing on the margins. Countries that want to trade with the US can continue to do so, but there will be no trade war, because the US is quitting the game.

 

Globalism and global supply chains are dead. You don't make your country dependent on goods and services from your enemy, and right now, the strongest supporter of globalism, the EU, is the enemy.