Tariffs drive up prices for consumers and hurt long-term growth, but are they useful as a tool of statecraft? President Donald Trump has repeatedly threatened tariffs to coax or coerce other countries to change their foreign policy to advance American interests, but he’s had uneven success.
India is a case in point. Trump announced last week that Prime Minister Narendra Modi has agreed “to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela.” But India has not corroborated Trump’s claims, and the Kremlin said it hasn’t been notified of any changes. This previously happened in October, when Trump declared publicly that he’d received similar assurances from Modi, on which he never delivered.
Perhaps India is playing for time, telling Trump what he wants to hear and gambling that the Supreme Court will invalidate tariffs imposed under the International Emergency Economic Powers Act. South Korea may have been doing the same by dragging out the ratification of a trade deal that committed the country to invest $350 billion in the U.S. Unfortunately for Seoul, Trump noticed and announced a new 25 percent tariff on Jan. 27.
Trump thinks his erratic nature is a strength. He turns down the temperature, only to turn it up again — as he did with Korea. There’s logic to the “madman theory” of foreign policy. Unpredictability can be a force multiplier.
Yet it’s also his greatest liability, especially as Trump has been known to stand down with little to show for it. He announced major tariffs on several European countries to pressure Denmark into selling Greenland, but he blinked days later without any meaningful concessions. Trump also looked for an off-ramp to a trade war with China after Beijing cut off U.S. access to critical minerals.
Other times, Trump takes wild swings and never follows up. Asked last week about his announced hike on South Korea tariffs, the White House said it still has no timeline for when they might go into effect. Threats to slap 100 percent tariffs on Canada in reaction to its pending trade deal with China are also just bluster, at least thus far.
All this shows how difficult it is to sustain unpredictability. Patterns emerge, and others learn to adapt — or call bluffs. Such frenetic threats — especially when followed by chickening out — begin to define the limits of American power.
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