Donald Trump’s tariff wars are not just about trade

“The return of tariffs to the centre of American foreign economic policy isn’t simply a turn to protectionism. It signals something more consequential: the weaponisation of trade as geopolitical strategy. Ahead of an LSE event on trade Robert Falkner argues that while Donald Trump’s specific world view inspired the tariff wars, their impact will be felt long after he has left the White House. For most of the post-war era, tariffs were the policy instrument that industrialised countries had quietly retired. Through successive rounds of negotiations under the General Agreement on Tariffs and Trade (GATT), average tariff rates among GATT members fell from around 22 per cent in 1947 to roughly 5 per cent by the mid-1990s. Tariffs were viewed as blunt and distorting, even economically illiterate. Then Donald Trump arrived on the political stage. Since returning to the White House in 2025, Mr Trump has upended the global trading system in ways that even his first presidency didn’t foreshadow. On 2 April 2025, dubbed “ Liberation Day “, he declared a national economic emergency and imposed sweeping tariffs on imports from over 90 countries. By August, the average effective US tariff rate had climbed to 18.6 per cent , the highest since the Great Depression. Even after the Supreme Court struck down many of these measures as unconstitutional in February 2026, Trump responded almost immediately with a new across-the-board 10 per cent tariff on a different legal basis. Whatever the courts decide, the tariff era is not going away. More than protectionism The standard economic analysis treats this as a story about industrial policy gone rogue, a misguided attempt to reshore manufacturing , shrink trade deficits and generate federal revenue . There is some truth to that. But it misses the bigger picture. What is distinctive about the Trump 2.0 tariff agenda is that tariffs have become a general-purpose geopolitical lever. The evidence is striking. In July 2025, a 40 per cent tariff was imposed on Brazil – not for trade reasons, but to punish its judiciary for prosecuting former Mr President and his ally, Brazil’s former president Jair Bolsonaro. In August, India faced 50 per cent tariffs partly because it refused to stop buying discounted Russian oil. European allies were threatened with fresh tariffs for opposing Mr Trump’s attempted takeover of Greenland . The tariff threat has also been deployed against countries considering a digital services tax on American tech firms, and against BRICS countries exploring alternatives to dollar-denominated trade. This is not trade policy in any conventional sense. It is economic coercion for geopolitical purposes. The geopolitical backdrop To understand why this is happening now, we need to look at the broader international landscape. US-China rivalry has become the defining structural feature of 21st-century international politics. Much like the Cold War fractured the global trading system along ideological lines, with American and Soviet blocs developing largely separate economic spheres, intensifying great-power competition is now pushing America and China apart economically. As the logic of “ security externalities ” suggests, states naturally deepen trade ties with allies and reduce them with adversaries as tensions rise. The US-China trade war fits this pattern. But today’s situation is more complicated than the Cold War analogy suggests. America and China are far more economically intertwined than America and the Soviet Union ever were. Economic decoupling is neither easy nor cheap , and the consequences for global supply chains , financial markets and growth would be severe. The geopolitical logic may be pushing towards separation, but today’s global economic logic is pushing back hard. The domestic politics of anti-globalisation Inside Western democracies, something has also shifted decisively at the voter level . The American public’s scepticism about free trade predates Mr Trump. In fact, bipartisan support for trade liberalisation has long collapsed. In Europe , the rise of economic nationalist parties also reflects a profound anti-globalisation turn in public opinion. The gap between what economists prescribe and what voters want has grown into a chasm. This anti-globalisation mood has created fertile ground for a tariff revival. But public sentiment alone doesn’t explain the extraordinary scale of what has unfolded since April 2025. The pushback against globalisation could have expressed itself in subtler policy forms, such as non-tariff barriers, selective industrial subsidies or more assertive WTO litigation. It took a specific individual to translate diffuse public anxiety into an all-out tariff war. The “Tariff Man” factor That individual is Donald Trump. His commitment to protectionism , and specifically to tariffs, is the single most consistent thread in a political career otherwise marked by often extreme ideological flexibility. As far back as 1987 Mr Trump was taking out full-page newspaper advertisements warning about America’s trade deficit with Japan. By the 2010s China had replaced Japan as the villain in his worldview, but the diagnosis never changed. Tariffs, in Mr Trump’s view, are not a last resort; they are the preferred instrument of economic statecraft. What makes Mr Trump consequential is not just his policy preferences but his willingness to act on them regardless of economic orthodoxy, market turbulence or political cost. The Liberation Day tariffs were unpopular with financial markets, business leaders and even parts of his own political base. Hostile bond markets forced a temporary pause, leading to the moniker “Trump Always Chickens Out (TACO)” . But Mr Trump resumed the high-tariff course as soon as conditions allowed. No conventional cost-benefit calculation appears to govern this approach. What it means for business and policymakers The practical implications are significant and unlikely to be reversed quickly. For businesses, the era of frictionless global supply chains built on low tariffs and predictable trade rules is over. Companies need to factor in the prospect of tariffs as a permanent feature of the trade landscape — not just against China, but potentially against any country that finds itself on the wrong side of a White House geopolitical grievance. For policymakers outside America, the challenge is acute. Few countries can afford to retaliate in kind without inflicting serious damage on their own economies. Co-ordinating a collective response has proved difficult. The more likely adaptation is gradual: diversifying trade relationships, reducing dependency on the American market where possible and building resilience into supply chains. One thing seems clear: tariff levels will remain elevated beyond the Trump presidency. The political conditions that made Trump’s trade revolution possible – deep public scepticism about globalisation, bipartisan wariness of China and the institutional weakening of free-trade advocacy in Washington – are not going away. A future administration might moderate the tone, but returning to pre-Trump tariff policy will be politically and legally complex. The age of hyper-globalisation was built on the assumption that economic interdependence was self-reinforcing and broadly benign. That assumption has been shattered. In its place is a world where trade policy is foreign policy, tariffs are weapons and the rules-based trading order is more contested than at any point since the 1930s. For those navigating global markets, understanding that geopolitical logic is now driving trade policy may be the most important strategic insight of the decade. This article is based on “Geopolitics and Tariffs: An International Relations Perspective” published in “ Trade under strain: policy challenges in a fractured world” , a new special edition of the LSE Public Policy Review. On 20 May 2026 the author will take part in “Trade under strain: policy challenges in a fractured world”, a public event hosted the LSE School of Public Policy. Register here to attend in person or online. This article gives the views of the author, not the position of LSE Business Review or the London School of Economics. You are agreeing with our comment policy when you leave a comment. Image credit: miss.cabul provided by Shutterstock. The post Donald Trump’s tariff wars are not just about trade first appeared on LSE Business Review .

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