The Trump doctrine: trade wars and tensions

The slew of political and economic measures announced by the Trump Administration has created an impression that the world is returning to an era of an insane protectionism and intense political rivalry that is not only likely to trigger a trade war between Washington and Beijing but will also drive a wedge between the sole superpower and its traditional Western and non-Western allies. 

The drastic announcements by the new American president seems to have shaken the world of business and finance, with many waiting for the next moves with bated breath.

The measures have evoked strong reaction from allies and foes alike. China seems to be preparing to strike back while European countries have been mulling counter-steps in a bid to send a clear message that such steps will not go unanswered. Trump and his acolytes seem to be picking a fight on every front ranging from the domestic to the regional to the international.

On the economic front, the Republican leader is trying to deter the EU from harming American tech companies whose top officials or owners are ardent supporters of the newly-sworn president. 

Washington has been wary of EU states' measures related to digital-services taxes on US tech companies and a move negotiated in the Organisation for Economic Co-operation and Development (OECD) towards a minimum corporate tax system. Financial experts believe that such measures would transfer income from American companies to the EU as well as other polities such as Canada.

So, Trump's policies, which many consider retaliatory, are meant to harm Europe's industries, especially the auto industry. It is believed that the US-EU automotive trade is an important pillar of the European automotive industry's success. 

For instance, in 2023 European car manufacturers exported 56 billion euros worth of vehicles and components to the US, accounting for 20% of the EU's total automotive export value. This clearly indicates that the US is the number one export destination for EU-made cars, leaving the industry highly vulnerable to tariff threats from a second Trump administration.

One might think that this is an insignificant issue for the EU, which emerged as the world's largest exporter with (24.8% of total global exports and 23.8% import), but what one needs to know is its dependence on the US market, which has always been one of the top markets for the union's products and services. 

In 2023, the EU was the world's largest trader of services. Its exports of services were valued at 1,340 billion euros and its imports at 1,177 billion euros. Its exports run into trillions of dollars. But despite all that it is not a small issue for the EU. The bloc's automotive sector supports 13.8 million jobs, including in direct and closely allied supply chains. This constitutes 6.1% of the bloc's total employment.

Trump's desire to take back control of the Panama Canal is based on false assertions. His detractors claim that the right-wing politician loves to fire off misleading assertions, wild exaggerations and blatant lies.

 They find it hard to digest Trump's claim that the canal is being operated by China, something also vehemently refuted by authorities in Panama. The Latin American country also finds Trump's claim that the US is being overcharged totally baseless. In reality, the waterway, which facilitates hundreds of billions of dollars of trade each year, is a central point for international commerce and critical to Panama's standing as a regional trade hub.

According to an article by Diana Roy published in the Council on Foreign Relations recently: “The fifty-one-mile long canal connects the Atlantic and Pacific Oceans and is a critical global maritime passageway. By allowing vessels to bypass the lengthy trip around the southernmost tip of South America, the canal significantly reduces both the time and cost of shipping. Upwards of thirteen thousand ships — representing between 5 and 6% of global trade — pass through the canal each year.”

The canal has always held significance for the US. Roy notes: “The canal is vital to both the US and Panamanian economies. The United States remains the canal's biggest user, with some 40% of all US container traffic traversing it annually. Meanwhile, revenue from the canal made up about 4% of Panama's gross domestic product in 2024. Other major users of the waterway include Chile, China, Japan, and South Korea.”

The canal has benefitted China immensely, helping it deepen ties with Panama. In fact, it is the growing China's commercial ties to Panama and the region that have fueled US concerns about Beijing's broader role in global shipping and port operations. 

In order to curtail this growing influence, Trump has been threatening Panama. Some believe it is meant to convey a clear message to not only Panama but other Latin American states as well. For instance, Will Freeman, a CFR fellow for Latin America Studies, thinks that the Republican president “seems to be making an example out of Panama with the goal of getting other regional leaders to think twice before they take any bold steps to deepen ties with Beijing.”

Trump's rhetoric regarding Greenland reflects the commercial and strategic interests of the sole superpower. For decades the eight so-called Arctic nations — Canada, Denmark, Finland, Iceland, Norway, Sweden, Russia and the US — have coexisted and sought cooperation over the resources in the region. But it seems that the mineral wealth of the region is making Trump revisit American policy.

The Arctic is said to contain around 13% of the world's undiscovered oil reserves and 30% of its natural gas reserves besides housing huge deposits of minerals such as zinc, iron and rare earth metals. 

Climate change is causing the melting of ice which means long-distance sea passages, such as the Northern Sea Route (NSR) from eastern Siberia to the North Atlantic, are increasingly navigable. So, if China wants a container ship to be sent to northern Europe via the NSR, it can immensely shorten the journey time via the Indian Ocean and Suez Canal by 10 days.

But navigation is just one of the factors. Rare earth metals are very crucial for electronic devices. The production of the metals is dominated by China, which controls 95% production and supply, allowing it to dictate the price. Big powers, including the US, are eyeing this mineral wealth. Any possible control of Greenland by the US could offer Washington an edge in this insane race of resources domination.

As far as deportation, renaming the Gulf of Mexico and other policies are concerned, they are just to appease the local voters who harbour a grudge against minorities and take issue with the very existence of other genders. 

Deportation of illegal migrants may not create jobs for local Americans but has the potential to harm small businesses while also creating an immense shortage of human resource in sectors of the economy that white working classes don't want to serve.

Trump's amnesty for rioters seems to send a message to his ultra nationalist sympathisers that they will not be left alone if they risk their lives, careers and futures for the sake of the populist leader. Such cosmetic measures are also meant to divert attention from more pressing issues like inflation, rising poverty, homelessness and the growing debt burden on ordinary Americans.

The writer is a freelance journalist who can be reached at: [email protected]

Disclaimer: The viewpoints expressed in this piece are the writer's own and don't necessarily reflect Geo.tv's editorial policy.

Originally published in The News