Trump's trade policy requires 'art of the deal'

The trade policy of the United States during Donald Trump's first term (2017-20) was truly astonishing. Although Washington’s series of tariff hikes seemed troubling from Seoul’s perspective, one could not help but admire Trump’s "art of the deal," which ultimately enabled him to achieve his objectives. I envied the American people for having a leader like Trump.

After Trump was reelected as president with overwhelming support in November, I was eager to see what kind of dealmaking he would employ this time to advance American interests. However, I have been disappointed with the trade policies announced so far. Can “The Return of the King” really save America? Compared to his first term, the biggest weakness of Trump’s current approach is that he occasionally appears hesitant. The tariff hikes on specific countries and products were expected. If he had pushed forward with the universal tariffs he mentioned during his campaign immediately upon taking office, I would have thought, that’s the Trump I know — bold and relentless. Even if such a move led to a global economic downturn, a strategy of universal tariffs — committing to a full-scale economic showdown — might have forced more world leaders to yield to Trump. While he loudly proclaims that the U.S. economy is strong, he seems to be concealing an underlying concern. It could be what the liberal media in the U.S. call "Trumpflation," and it seems unlikely that "New York’s president” (Federal Reserve Chair Jerome Powell) will simply comply with the wishes of "Washington’s president” (Trump). Alternatively, he may fear that an all-out economic confrontation between the U.S. and the world could trigger a global depression. Either way, Trump appears concerned about the side effects of universal tariffs.

Second, Trump seems to be overextending his battlefronts, which could become a significant weakness down the road. The initial tariff hikes were intended to pressure Canada, Mexico and China into curbing illegal immigration and drug trafficking. When this executive order was announced, I was personally impressed. In Eastern military strategy, a ruler must first neutralize domestic threats and secure political support before waging war against foreign adversaries. Following this executive order, reports emerged that Mexico and Canada were willing to cooperate with Trump. At this stage, he should have toned down his aggressive rhetoric toward these countries and pursued pragmatic gains, yet he failed to do so. If I were one of Trump's advisers, I would have cautioned that to win the tariff war, the U.S. must avoid turning two of its longest-standing allies and neighbors into adversaries.

Third, the U.S. may struggle to extract sufficient concessions from China in this tariff war. During the first U.S.-China tariff war under Trump, China seemed caught off guard by America's aggressive approach. However, this time, China does not appear rattled. Initially, Trump proposed a 10 percent tariff on China, only to add another 10 percent later. This suggests that Trump is not fully in control of the U.S.-China trade war. When Trump first announced that Mexico, Canada and China would be designated as drug-trafficking nations subject to tariffs, Canada and Mexico quickly reached out for high-level discussions to resolve the issue. Trump confidently stated that Chinese President Xi Jinping would soon call him as well — yet China has taken no action. This has clearly frustrated Trump. Meanwhile, China remains unfazed and is employing a “manmandi” (calm and unhurried) strategy. It almost seems as if China anticipated all of Trump’s possible moves and developed counterstrategies for every scenario.

Lastly, Trump’s trade advisers from his first term appeared to be more competent than his current team. In any war, keeping the enemy uncertain about your next move is crucial. Trump’s current trade policies certainly create such confusion. One day, he announces tariff hikes on specific countries; the next, he targets particular products. He even introduced the idea of a reciprocal tariff system based on value-added tax — though it's unclear whose idea this was. His strategy of making his trade policy unpredictable seems to be working. However, in trade relations, such a tactic tends to do more harm than good in the long run. If trading partners perceive that U.S. trade policies shift unpredictably from day to day, they may simply opt to wait instead of responding to each new tariff measure. If they concede something today, the U.S. may demand another concession tomorrow. Thus, their best strategy is to delay action until Trump’s trade policies become more settled. In contrast, during Trump’s first term, both the U.S. and its trade partners had clear objectives, allowing them to gradually find a balance over time. This was thanks to the highly skilled advisers around Trump, who crafted sophisticated and well-calibrated strategies. However, today’s U.S. trade policy lacks both a clear message and strategic precision.

Considering all these factors, it feels as if Trump is in a hurry for some reason. Does he believe that time is not on his side? The more hastily he rolls out policies, the more chaotic the situation becomes, and the more he restricts his own options over time. This contradicts the very "art of the deal" philosophy he championed in his autobiography, which emphasizes maximizing one’s negotiating leverage. His current approach is costly, spreads the battlefield too wide and lacks clear messaging. As a result, it is difficult to bring negotiating counterparts to the table, let alone maintain control over discussions. At this moment, Trump’s trade policy seems to lack the "art of the deal."

Joo Won is deputy director of the Economic Research Department at Hyundai Research Institute. The views expressed here are his own.