Trump's trade tariffs: “The really big battlefield is AI”
Michael Strange is an associate professor in international relations, at the Department of Global Political Studies.
The US has been using its market to influence the domestic policies of other countries since the 1930s – nothing new in global trade policy. But Donald Trump's tariffs are revolutionary and have the world in their grip. Why does the US use tariffs to exert economic power? Michael Strange, a global politics researcher, explores the interests driving the trade conflict.
The US and China appear to be the most aggressive opponents in the trade conflict, with 145 per cent import tariffs on goods from China to the US, and 125 per cent on US products in China.
“This is paradoxical as trade between the two countries is nowhere near the level that the media talks about in regard to the trade war. The US is, in fact, one of the most isolated economies in the world.
Part of the conflict is that China is trying to build relations with other countries, while the US is pressurising countries not to be friendly to China. At the same time, China is warning other countries about following the US example of raising tariffs against it.
“But this cannot be compared to what happened during the Cold War. The Soviet Union had the capacity to be militarily active all over the world, China does not have the same capability.”
The US and China taking a strong stance is also a way to speak to their domestic audiences.
“What got Trump elected president was an odd marriage between some very wealthy individuals and big business on the one hand, and labour unions on the other. Tariffs are the easiest way to pursue a policy that can satisfy the demands of both these different groups.”
Tug of war for businesses in Europe
Europe's defensive role in the trade dispute is reflected in the European Commission's pause in its response to US tariffs. Many companies have investments in the US and some of Europe's largest technology companies are American owned.
“Europe is much more dependent on the US market than China is. Large companies such as Ericsson are conducting their own negotiations with US companies and the Trump administration.”
The US strategy is to use tariffs as economic leverage to reduce countries' assets. Tariffs are a very blunt tool, but do not require political change or military intervention.
“The US wants more European companies to move their assets to US territory. Companies are under a lot of pressure, and some are choosing to move parts of their operations.”
Major consequences in the long term
The US paused most trade tariffs for 90 days, but the question is, what will happen after that?
“I think the EU member states will comply with what the US wants and make agreements. We probably won't see anything stronger than that from Europe.”
The US also wants to increase pressure on the EU to reduce regulation in the tech sector.
“This concerns the EU's Digital Services Act (DSA). What we might see if the EU relaxes some regulations is more of our data going to the US – in the context of AI and social media.“
If tariffs continue to be used in the longer term, it could be a matter of life and death.
“What we could see if tariffs continue, especially in parts of Africa and countries like Lesotho, is the collapse of countries and war.”
Even within the US, Trump's trade policy is becoming problematic and has led to 12 states suing Trump to declare the tariffs illegal.
“The US needs to tread carefully, so as not to lose its central role in global politics,” concludes Strange.
