Donald Trump is widening his use of tariff threats and imposition of ad hoc tariffs. now targeting Turkey.
Given Trump’s record of withdrawing from or attempting to renegotiate trade agreements, and his spraying around of tariff threats and the ad hoc imposition of tariffs, it will be difficult for the world of trade to have any certainty in what the US may do in the future.
Businesses tend to hate this sort of uncertainty.
Trump is not just using trade weapons to try to drive more favourable deals for the US, he is using them as a punishment.
Washington Post: Trump takes aim at Turkey, announcing doubling of steel and aluminum tariffs in effort to punish country
Turkish President Recep Tayyip Erdogan warned Friday against those who try to “bully” his country, as an announcement by President Trump imposing new tariffs on Turkey sent its currency into free fall.
“The language of threats and blackmail cannot be used against this nation,” Erdogan said in apparent response to Trump’s early-morning tweet saying he was doubling existing U.S. import levies on Turkish steel and aluminum. “Those who assume they can bring us to our knees through economic manipulations don’t know our nation at all,” he said, without directly mentioning Trump or the tariffs.
But the U.S. announcement quickly sent the value of the Turkish lira, already under severe strain, to a record low against the U.S. dollar. The currency crisis has fueled growing concerns in the international financial community and among investors about the health of the Turkish economy.
Trump’s willingness to ratchet up the financial pain on Turkey followed an unsuccessful effort this week to resolve the ongoing dispute between the two countries over Andrew Brunson, an American pastor held on charges that include espionage and trying to overthrow the government.
This seems to be just how trump does things. For Trump, sanctions substitute for foreign policy
For all the talk of “fire and fury” we once heard from President Trump, his administration’s most-frequently used weapons have been not have been explosive — they’ve been financial.
Since entering office, Trump has often used economic sanctions (and, concurrently, tariffs) in an attempt to bend other countries to his will. The administration feels, with some justification, that tough sanctions brought North Korea to the negotiating table.
Now Trump hopes that reinstating sanctions on Iran will also force that country to bargain with the United States and craft a new nuclear deal.
But the evidence that these sanctions are working as a foreign-policy tool isn’t convincing. And there is considerable concern that the Trump administration is overusing them while neglecting other important facets of foreign policy, like simple negotiations or coordination with allies.
The Washington Post’s Carol Morello recently outlined just how prevalent sanctions have become in the Trump era in a recent article. She found that during just one month — February 2018 — the United States had imposed sanctions not only on North Korea, but also groups or individuals in Colombia, Libya, Congo, Pakistan, Somalia, the Philippines, Lebanon and more.
Though their use may be increasing, sanctions are not a new idea — they date back hundreds of years, if not further. Yet academic research has found that they often don’t work as intended. One study looked at 200 sanctions from between 1914 and 2008 and found only 13 that were clearly instrumental in achieving their creators’ aims.
The problem isn’t necessarily that they can’t inflict financial damage on a foe (given the power the United States holds over the global economy, that much is now a given). Instead, the issue is that this damage doesn’t always contribute to any logical foreign policy goal.
Using tariffs and sanctions is a heavy handed way of trying to get what Trump wants – there may be some successes in the short term, but damaging the finances of countries can have much wider effects (like for international investors and those who trade with the targeted country).
And Trump risks burning a lot of diplomatic bridges. Establishing a record of mistrust and unreliability may end up biting the United States on the bum.
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