It's hard to find an area of international politics today that stirs more emotions than the months-long trade disputes sparked by the decisions of the Donald Trump administration. Whether we call them "tariff wars," "trade reset," or "tariff blackmail," the fact remains that the US president's decisions have sparked unrest in government offices and among global economic analysts alike. The surprise was fueled primarily by the scale of the actions: tariffs imposed simultaneously on allies, trading partners, and rivals—and the unpredictable manner in which they were implemented.
Foto: Markus Winkler (Źródło: Pexels)
A critical tone prevails in mainstream media. We hear that Washington's actions will lead to rising prices, a decline in imports, and turbulence in financial markets. Comparisons are being made to the beginnings of the Great Depression, the effects of the Smoot-Hawley Act, and the spiral of protectionism that led to a global recession after 1929.
However, as is often the case, reality turns out to be more complex.
Customs – a tool as old as the nation-state
The dispute over tariffs is not a 21st-century invention. On the contrary, it is one of the oldest instruments of economic policy. Tariffs built the power of modern-era states, were the foundation of mercantilism (the term denotes efforts to promote exports, minimize imports, and strive for a positive trade balance), and in the 19th century became a tool for the industrialization of many countries.
The history of the United States itself provides an interesting example. America—until recently the flagship defender of free trade—for most of the 19th century applied some of the highest tariffs in the world, protecting its own fledgling industry. Back then, political debates were dominated by the idea of the so-called "infant industry," described in the classic works of Friedrich List and promoted in the US by Alexander Hamilton, among others. According to this concept, a developing country must protect its nascent industries before they can compete with the economic powers.
The history of South Korea and Japan after World War II shows that protectionism works under certain conditions: tariffs, import limits, controlled state loans and industrial policy created the foundations for the later technological successes of these countries.
Only the globalization of the last three decades—with the rise of outsourcing, international supply chains, and financial interconnections—has weakened the effectiveness of traditional tariff barriers. In the age of the global network economy, every tariff move is like a stone thrown into a lake: the ripples spread far beyond the point of impact.
The New Context of Globalization
Today's global economy is not a world of steam, steel mills, and industrial workers. It's a world in which the components of a single product are manufactured in dozens of countries, and a tariff on a single component increases the final cost not only of imports but also of domestic production.
Globalization has created a system of connected vessels in which:
- tariffs hurt domestic producers as quickly as foreign ones
- value chains easily shift to countries with lower tariffs
- companies can bypass barriers by changing logistics routes
- trade balance data do not always reflect the actual added value
In this sense, Trump-era protectionism may prove riskier than the protectionism of the 19th century.
Trump and his goals: industry, trade balance, negotiating pressure
In this context, it's worth asking: Why does Trump need these tariffs?
Formally, the answer is simple and can be summarized as:
- equalization of trade conditions
- reduction of the deficit
- stopping the deindustrialization of the USA
- pressure on countries that, according to the White House, abuse their cost advantages
Trump has been repeating for years that America cannot be safe without its own steel, and cannot be rich without industrial production: If you don't have steel, you don't have a country. This rhetoric resonates with voters from regions affected by the decline of heavy industry.
The US administration currently uses tariffs not only as a means of protecting industry but also as a tool for political pressure. This is particularly evident in its relations with China, where tariffs are combined with restrictions on the export of key technologies, particularly in the microprocessor sector.
At the same time, however, there is a paradox: the United States—a highly developed country with high labor costs—is attempting to use instruments originally designed for "catching up" or "developing" economies. In this sense, the Hamiltonian and Listian logic, which worked in the 19th century, may be counterproductive in the 21st.
The US in the New Architecture of Global Trade
The tariff wars launched by the Trump administration are not taking place in a vacuum. They are part of a broader shift in US economic policy, evident even before 2016. Both Democrats and Republicans share a growing conviction that the current model of globalization no longer serves the interests of the American middle class.
In this sense, Trump's tariffs are a symptom of a deeper shift in which:
- The US is trying to regain control over strategic supply chains,
- is trying to reduce dependence on China,
- wants to force a revision of trade agreements signed in the era of the liberal consensus of the 1990s and early 2000s.
From an international policy perspective, this shift is not temporary. It is a consequence of the growing competition between the US and China, which now encompasses technology, finance, trade, diplomacy, and military security. Tariffs are one tool of this competition, but not the only one.
The United States also began to:
- promote reshoring and friend-shoring (moving production to allied countries),
- invest in domestic production capacities for chips and high-tech components,
- strengthen agreements with Indo-Pacific countries.
In this context, Trump’s actions – though often chaotic and contradictory – are part of a long-term shift in the focus of American economic strategy.
Unpredictability as a Method
Perhaps the most surprising element of Trump's tariff policy isn't the tariffs themselves, but the manner in which they are announced. The president:
- announces
- then suspends
- negotiates
- even threatens
- finally cancels
- and announces again
This style is closer to merchant/salesman game than to classic public administration and diplomacy. In this game, bluffing is a tool. The volatility of decisions is meant to confuse partners, force them to react, and throw them off balance.
From the point of view of economic diplomacy, this is an unorthodox approach, but one that is inherent to Trump's personality, who, as many observers have noted, negotiates the way he conducts his business: impulsively, without revealing his cards, using provocative language, and ruthlessly.
Does it work?
Partly yes. While the market reactions were violent, they were also short-lived. Officially, inflation in the US didn't rise, and in fact, it began to decline—if these data are to be believed. Oil prices fell, putting pressure on exporting countries, including Russia. And many countries, despite public criticism, joined the talks.
This doesn't mean the strategy is coherent or predictable. It just means that its consequences are not as unequivocally negative as commentators have predicted.
Is there a plan to this?
Some economists, including Yanis Varoufakis, argue that the tariffs are just one piece of a larger puzzle, a strategic plan: an attempt to devalue the dollar and rebuild American industry—especially the crucial defense sector. These analyses are interesting, but they cannot be confirmed by hard data. In practice, it is equally likely that Trump's policies stem not from a long-term doctrine, but from intuition and the belief that strong pressure brings results.
Ultimately, the economic world is more complex than ever. Traditional analytical models often fail, and political, crisis, and technological factors are changing the situation in ways that are difficult to predict.
Madness or policy reset?
So, are Trump's actions insane? That's too simplistic a statement. A more accurate concept seems to be strategic unpredictability—one that has been used in the past by countries seeking to shake up the existing balance of power.
In this sense, Trump's actions accomplish the following:
- they provoke
- they force a reaction
- they refresh ossified patterns
- they force the renegotiation of contracts, and
- at the same time, they carry the risk of unintended consequences
In this view, tariff wars are not "madness"; they are part of a broader game between powers that are increasingly moving away from the illusion of a neutral, ideologically neutral global market.
Will this create a new model for global trade? No one knows—perhaps not even Trump himself.
In the second part of this article, we will try to explain how the deindustrialization of the 1990s, the “China Shock,” automation and AI, and contemporary tariff wars have transformed global trade and labor markets, creating a new, more fragmented economic order.
