It would be fair to call President Trump as obsessed with tariffs. Import tariffs on every country that does not conform to his foreign policy ideas, is the “rules-bases order” converted into the Trump-based order.
Punishment by imposing tariffs is an ill-advised obsession of Donald Trump’s. He played this card already during his first Administration (2016-2020), and it was in most places, especially in China, ineffective and just hot air propaganda.
First, because China had already then and even more today, developed other markets in Asia, foremost with the ASEAN countries and later with the Global South; and second, because the US depends more on imports of Chinese goods, than China depends on exports to the US. Hence, the enormous trade imbalance in favor of China.
In the course of a ten-year negotiation, China and Indonesia initiated the world’s largest Free Trade Agreement, based on the ASEAN association, the so called Regional Comprehensive Economic Partnership (RCEP), comprising 15 countries (Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand and Vietnam), accounting for nearly 30% of the world’s population, and 30% (US$ 30 trillion – 2024 est.) of global GDP. The RCEP is the largest trade block in history. It became effective on 1 January 2022.
Trump hopes to reduce the US – China trade disequilibrium by imposing tariffs on Chinese-made imports. What he does is putting a stick in the wheels of US industries depending on imports from China, thereby slowing the US economy; and US consumer goods becoming more expensive, contributing to US inflation, the very affliction he promised during his campaign to fight as number One Priority.
On a political level, imposing tariffs on countries he does not agree with, is outright blackmail. Will Trump blackmail Canada into becoming the 51st State of the United States by his announced 25% tariffs for Canadian goods?
In Mexico, under another 25% tariff threat, President Claudia Sheinbaum promised to deploy 10,000 national guard members to 18 cities along the U.S.-Mexico border as part of a deal to delay U.S. tariffs.
The Mexican National Guard has been created only a few years ago. They are unarmed and have so far little experience. They are operating under the Mexican military and are supposed to “prevent drug trafficking from Mexico to the United States, particularly fentanyl.”
Along with the understaffed Mexican military, they will also be confronted with the task to stop illegal immigration to the US. See this from the NYT https://www.nytimes.com/2025/02/04/world/americas/mexico-troops-border-deal-trump.html .
The question arises, to what extent do these tariff impositions by President Trump contradict or violate the terms of the North American Free Trade Agreement (NAFTA) between the US, Canada, and Mexico, signed in 1993, by then President Clinton? – And let us remember, NAFTA was designed to benefit first and foremost the United States, resulting then in a strong critique, particularly by Mexico.
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During his campaign, Trump promised he would take the Panama Canal back. The French started building the Canal in 1881, but ultimately failed. The project was taken over in 1904 by the United States and finished in 2014. Under a US agreement with Panama, the Canal was turned over to sovereign Panama on 31 December 1999.
There is no legal base for interference by any country in the sovereign domain of Panama. Nevertheless, self-styled Emperor Trump said he wants to take the Canal back. He says its managed by China. True. Panama, a sovereign country, has the right to grant a management contract for the canal, basically the two ports on the Caribbean and the Pacific side, to whom ever Panama choses.
China has a worldwide reputation for first class port management. One brilliant example is the Athens harbor of Piraeus. Another one is the recently inaugurated (November 2024), China-built, and managed merchant port of Chancay, Peru, arguably the largest on the South American Pacific Coast.
To the chagrin of Donald Trump’s, it will most likely pool exports to Asia and the US West Coast, as well as imports of most South American nations.
President Trump has already anticipated high tariffs – 25% for all exports from Chancay to the US. In Peru, a vassal state of Washington’s, he may get away with it. And if so, not only killing economic benefits of the port for Peru, but also for those South American countries who were planning to use it.
That Mr. Trump does not like his economic competitor, China, is an open secret. To make his point stronger, he just added a lie – that China charges US vessels higher tariffs for crossing the Panama Canal. This would be totally against the Canal management agreement of “neutrality” and would certainly not have survived unnoticed for a quarter century.
However, the lie may sell with the insouciant American people. Why would China do that? And no other US Administration since 2000 has noticed it?
When Trump first announced the threat of taking back the Canal, Panama’s President José Raúl Mulino, resolutely said no way.
On 2 February 2025, Trump’s Foreign Secretary, Marco Rubio, met with Panama’s President, Mulino, in Panama, using Trump’s reasoning for US “national security”, that the current position of influence and control of the Chinese Communist Party over the Panama Canal area is a threat to the canal and represents a violation of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal.
Secretary Rubio added that this status quo is unacceptable and that absent immediate changes, it would require the United States to take measures necessary to protect its rights under the Treaty.
The Canal is managed by a Hong Kong based subsidiary of CK Hutchison Holdings which won the bidding process in 1997. Obviously, the company has not posed any threat to US national security during the last 25 years. Immediately after Secretary Rubio’s visit, Panama’s President Mulino had a change of mind and said he would not renew the contract with the Chinese port management company.
That was not enough for Emperor Trump, who wanted Mulino to immediately revoke the contract. Apparently Mulino was sufficiently pressured, coerced, or threatened – it is called blackmailed – that he agreed.
He also said he would not renew Panama’s membership in the Chinese “Belt and Road” worldwide infrastructure program. Mulino also agreed to grant US military vessels free passage through the Canal.
Was the coercion just insane tariffs – or worse?
The contract revoking might open Panama to international arbitration on the basis that the move was a politically motivated expropriation. In addition, free passage for US military vessels could face further legal jeopardy, as this would amount to preferential treatment and be a clear violation of the canal’s commitment to neutrality.
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President Trump’s reinstating of the Monroe Doctrine on Latin America seems clear, converting Latin America and the Caribbean (LAC) again to Washington’s backyard. This will displease certainly many of the hitherto Latin American US allies.
The Monroe Doctrine was articulated in President James Monroe’s seventh annual message to Congress on December 2, 1823. The European powers, according to Monroe, were obligated to respect the Western Hemisphere as the United States’ sphere of interest. At that time, more than 200 years ago, nobody thought of China.
So, China is de facto not part of the doctrine. However, Trump takes the liberty to expand the Monroe Doctrine – which, never had an international legal base – throughout the world, including China and Russia.
Will the new US Emperor Trump bully enforcement of the Monroe doctrine throughout Latin America with tariff blackmail? – It is not impossible. At present LAC countries depend from 30% (Argentina) to 80% (Mexico) on trade with the United States. On average, LAC countries trade with the US may be close to 50% – making the US by far the largest single trading partner of LAC.
This percentage had hardly changed in the last 20 years when US Governments had other priorities than enforcing the Monroe doctrine. This would have been the time for LAC countries to diversify their economies, to escape the dollar pressure. They missed it. By neglect or false trust in their northern partner?
Compare this to Russia and China which realized latest with the western instigated Maidan (Kiev) Coup in February 2014, that western belligerence was not about to ease within short.
So, they reoriented their market economy towards Asia and the Global South. Today, Trump tariffs on Chinese goods are Trump propaganda stints, doing more harm in the US at home than to China.
LAC countries might be well advised to concentrate their economy on LAC-internal markets and on Asia. Though, this does not happen overnight, it is never too late, but high time to start their move towards economic, financial, and political independence.
Peter Koenig is a geopolitical analyst and a former Senior Economist at the World Bank and the World Health Organization (WHO), where he worked for over 30 years around the world. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed; and co-author of Cynthia McKinney’s book “When China Sneezes: From the Coronavirus Lockdown to the Global Politico-Economic Crisis” (Clarity Press – November 1, 2020). Peter is a Research Associate of the Centre for Research on Globalization (CRG). He is also a non-resident Senior Fellow of the Chongyang Institute of Renmin University, Beijing.
Published by The 21st Century
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