New Trends in Trade Policy: Political Considerations Behind Tariff Strategies

Recently, Trump announced a new tariff plan, causing fluctuations in global markets. This plan is based on the trade surplus that trade partners have with the United States, establishing what is called "reciprocal" tariff rates. Although the logic of this proposal is controversial, it undoubtedly provides an opportunity for Trump to initiate a new round of trade negotiations.

There are differing views on this tariff plan in the market. One perspective believes that this represents the United States moving towards trade protectionism, which could have long-term negative effects on the global economy. Another viewpoint argues that this is merely Trump's negotiation strategy aimed at securing more benefits for the United States.

Analysis indicates that the latter viewpoint is more likely. Trump's true objectives may include: increasing overseas orders, creating domestic job opportunities, and uniting allies to pressure competitors. Additionally, the market turmoil caused by tariffs may also aim to apply pressure on the Federal Reserve, indirectly influencing monetary policy.

Although Trump has often described tariffs as a "national policy," the likelihood of them being adopted as a long-term policy is low given the timing and political pressure. With the 2024 midterm elections approaching, a prolonged period of high tariffs could lead to economic recession and asset inflation, which would severely impact the Republican Party's electoral prospects.

In fact, shortly after the announcement of the tariff plan, the stance of the Trump team began to soften. Senior economic advisers to the government indicated that multiple countries had already begun trade negotiations and emphasized that the United States was not trying to undermine the market. These statements suggest that the tariffs may just be a bargaining chip in the negotiations.

However, there is still uncertainty during the negotiation process. In particular, if negotiations with major trading partners such as the European Union and China do not progress smoothly, it could lead to an escalation of conflicts in the short term. However, considering that most countries are likely to negotiate actively with the United States, the likelihood of overall deterioration in the situation is low.

For Trump, achieving "political achievements" before the 2024 midterm elections is crucial. High inflation and stock market volatility will undoubtedly affect his political prospects. Therefore, it is in Trump's interest to initiate negotiations early to address uncertainties.

The evolution of this tariff strategy reflects the complex relationship between international trade policy and domestic political considerations. Developments in the coming months will reveal the true purpose and effects of this strategy.