Donald Trump no longer treats tariffs simply as instruments for correcting trade imbalances or forcing manufacturing to return home. He also wields them as tools of geopolitical coercion and, at times, as outlets for personal anger and retaliation.
From a series of recent episodes, it has become clear that countries and politicians who make concessions to Trump do not secure lasting stability, but instead invite further demands and repeated tariff threats.
As New York Times columnist Nicholas Kristof has put it, Trump “hits weaklings hard, but retreats when facing the strong” – an assessment that neatly captures this reality.
Viewed from this angle, China stands out as the only player that both understands Trump's methods and has responded effectively. Beijing has consistently sought to answer U.S. pressure with measures it portrays as reciprocal: raising tariffs in step with Washington, playing the “rare earths” card in response to technology restrictions, and mirroring port fees imposed by the United States. Whether one endorses these tactics or not, they amount to a systematic attempt to meet coercion with what China frames as proportionate countermeasures.
For countries that lack the capacity, the political will, or simply the courage to push back against Trump's tariff bullying, the only viable option may be to seek safety in numbers. It is telling that at a moment when the Davos forum is openly questioning the breakdown of the old “rules-based international order,” and Trump continues to use tariffs to strong-arm other states, India and the European Union have, after 20 years of negotiation, finally concluded a historic free trade agreement.
Earlier in January, the EU also approved an FTA with the South American bloc Mercosur. These moves reflect a broader effort by like-minded economies to “huddle together for warmth” by deepening low-tariff, rules-based trade ties among themselves.
The question, then, is which path will ultimately deliver stronger growth and more successful industrial upgrading: a world in which countries band together to preserve relatively low tariffs and open markets, or one in which the United States swings the tariff hammer to bully the rest of the globe.
The answer will test not only the judgment of governments, but also the validity of traditional economic theory in an era of weaponized interdependence. For now, the global economy has little choice but to watch this experiment unfold.
