Trumps Tariff Gamble A Key Pillar of Trumps Fourfold Dream
Three months into the new round of Trumps presidency in the White House his extensive efforts and those of his associates continue towards realizing four main declared goals. These goals include stopping the conflict in Ukraine establishing a ceasefire in Gaza imposing new trade tariffs and containing Irans nuclear defense capability. However to date no significant progress has been made in any of these areas.
Three months into the new round of Trump's presidency in the White House, his extensive efforts and those of his associates continue towards realizing four main declared goals. These goals include stopping the conflict in Ukraine, establishing a ceasefire in Gaza, imposing new trade tariffs, and containing Iran's nuclear defense capability. However, to date, no significant progress has been made in any of these areas.
Among these objectives, the issue of tariffs has attracted the most attention and has become known as the "global tariff war." In this regard, Donald Trump, the then-President of the United States, on April 2, 2025, presented a plan during a press conference in the White House Rose Garden to impose heavy customs duties on imported goods from over 100 countries. This plan included levying a 10% "global tax" that applied to all countries with which the United States simultaneously had trade relations and a trade deficit. According to Trump, these countries were accused of engaging in "unfair" trade practices.
He also called this day "Freedom Day," "one of the most important days in United States history," and "the day of America's economic independence."
Following Trump's decision, international financial markets experienced a downturn in the subsequent weeks. However, the severity and speed of this decline in the U.S. stock market were unprecedented, causing losses amounting to tens of trillions of dollars within a short period.
This situation prompted investors and billionaires whose assets had significantly decreased to publicly condemn the administration's tariff policies and demand their cancellation or reversal.
Subsequently, China's announcement of a retaliatory reaction, imposing 125% tariffs on American products, was a clear sign of the beginning of a full-scale trade war between the world's two economic giants and severely intensified distrust in global markets.
However, the sharp fall in the stock market worried Trump. As a result, only one week after announcing the initial decision, he declared a 90-day suspension of the imposition of the most severe tariffs.
Nevertheless, this suspension did not include all tariffs. The new 10% tariff remained in effect, as did the previous 25% tariffs on Canada and Mexico, and existing tariffs on imports of sectors such as steel, aluminum, and automotive parts were not lifted.
Thus, the so-called "Freedom Day" has been postponed for at least three months. The exact duration of this pause and any future decisions in this regard will continue to depend on Trump's unpredictable will.
What is clearly evident from the events of the past two weeks is that the decision-making process in the White House, despite the administration's spokespersons' attempts to describe it as a well-thought-out procedure, is deeply chaotic. Officials with economic responsibilities or advisors who counsel the president do not act consciously, balanced, or professionally; because real and rational decision-making on any issue cannot be far from reality. Generally, Trump's advisors are divided into pro-tariff and anti-tariff factions; but neither group has sufficient courage to support their views – even, if necessary, against the president – as happened in his first term. In any case, no one stands against the president's will, as he is the final decision-maker; and Trump imposes tariffs not because of their positive effect on the U.S. economy, but simply because he feels it will be good.
One of Trump's key miscalculations is the notion that by imposing tariffs, American industrialists can be deterred from operating in "other lands," brought back home, and the U.S. can once again become the global leader in manufacturing and industry. Critics believe that this policy, more than being based on economic analysis, is rooted in emotion, and it is this emotion-driven approach that worries global markets.
As a clear example, just two days after announcing the new tariff plan, Trump was forced to declare that products such as smartphones, computers, semiconductors, chips, and other electronic equipment were exempt from these tariffs. This decision can be seen as a direct reaction to pressure from companies like Apple; because a large portion of Apple's iPhones and computer components are produced in China. It was clear that many American companies active in the high-tech sector, which have moved their supply chains abroad, especially to China, would be severely harmed by the tariff increases. This very reality compelled Trump to "take a step back" in this specific case.
The scale and complexity of the United States' trade relations with the world reveal the challenges of this approach. A look at U.S. export statistics confirms this point: last year, the total value of U.S. exports amounted to $3011 billion, including items such as oil, machinery, electrical equipment, vehicles, and pharmaceuticals. In contrast, China's total export value during the same period amounted to $3715 billion, primarily consisting of digital broadcasting equipment, electrical machinery, computers, furniture, and textiles.
In terms of trading partners, based on the latest data, last year Mexico was the U.S.'s largest trading partner with 776 billion Euros (goods exports and imports), accounting for 15.9% of total goods trade. Canada ranked second with a 14.3% share, followed by China with 10.9% and Germany with 4.4%. These statistics show that the fabric of U.S. global trade is much more complex and extensive than simply focusing on one or two countries.
Overall, although one of Trump's stated reasons for imposing tariffs was to protect American jobs and companies, and he repeatedly promised during his election campaign that: "Under my plan, American workers will no longer worry about losing their jobs to foreign countries. Instead, it will be foreign countries that worry about losing their jobs to America."
The reality, however, is that his administration's trade policies have yielded mixed results. These policies have shaken global financial markets, caused significant disputes with the United States' largest trading partners, and reduced investor confidence in the American economy during this turbulent period.
This decline in confidence has also harmed the exchange rate. 1 As a result, the value of the dollar has rapidly decreased against other currencies, as investors have gravitated towards safer currencies such as the Euro, Japanese Yen, or Swiss Franc.
Although the U.S. stock market is so large and well-established that it is unlikely investors will completely abandon it, a continuous decline in confidence could inflict a serious blow to the economy and also affect global market stability.
Supporting these concerns is the important forecast by the United Nations Conference on Trade and Development (UNCTAD), which declared that a decline of over two percent in global growth is a result of Trump's unbalanced economic decisions. These analyses indicate that policies initiated with the aim of domestic protection may have widespread negative consequences at the international level.
Ali Beman Eghbali Zarch, Head of the Eurasian Studies Group
(The opinions expressed are those of the authors and do not purport to reflect the opinions or views of the IPIS)