Do tariffs serve?

“One cannot live in the lie of mutual benefit through integration when integration is the reason for subordination”, said Canadian Prime Minister Mark Carney at the Davos Forum in January. And it is evident: global integration implies subordination to the big ones, the United States and China. Consequently, the strategy of second-tier states can be none other than to collaborate to ward off dependence; this is the policy that the BRICS practice, with success, and it must also be that of Europe.The US and China are preparing for economic confrontation. The former due to the scarcity of rare earths, and the latter because they aspire for the renminbi to become a reserve and trade currency, like the dollar. Today, the dollar represents 57% of central banks' reserves. In the new post-globalization commercial environment, which will be one of fragmentation and confrontation, even the big players will have to deploy trade weapons to protect themselves.Donald Trump assures that he will bend nations through tariffs because the US market is the most important in the world for imports. It is, but it accounts for only 13% of global imports. From a global perspective, not selling to the US will have little impact on any state's exports: in relation to world trade, trade with the US is small. Even Canada, with trade traditionally linked to the US, does not suffer particularly from American tariffs. It has found alternative markets; hence its approach to Europe.Tariffs only have important effects if trade is concentrated on a scarce good. When Trump imposed tariffs on most states in April 2025, China responded by limiting the export of rare earths. Ford temporarily closed some factories due to a lack of raw materials and Raytheon had problems maintaining the production of Tomahawk missiles. Within weeks, the US reduced its tariffs on China.Let's look at another case. When the US department's import rules tightened, China limited the export of equipment containing technological components. The US was forced to give China freedom to buy highly sophisticated material; for example, Nvidia chips. Thus, the US allowed the trade of its most strategic product with its greatest competitor. The gap between what Trump says and what he does continues to grow.

The conclusion is clear: general tariffs have little effect on the importer and exporter; on the other hand, specific tariffs condition supply in the short term and can be a powerful lever for the importer. Trump's "blackboard" with all countries and general tariffs is an advertising announcement of little interest and even less effect.In 2024, China earned $3.400 billion from rare earth exports. Researchers from the United States Geological Survey estimate that a 30% reduction in these exports would affect 2.2% of the US GDP, which is $600,000 billion; conversely, it would mean a revenue reduction of $1,000 billion for China. This is coercive power in international trade: the great damage that can be generated at a small cost for the perpetrator. However, as long as the damage harms the counterpart and oneself, the measure will have little effect.A key issue is how economic sanctions are imposed. If it is done progressively to measure the effect of the imposed measures and adapt new ones to experience, it is a bad system: the affected party has time to react and seek alternative markets. Economic warfare requires preserving measures and having them available if needed. As Deng Xiaoping said: “Hide your strength and bide your time”. Trump does exactly the opposite.

The US has international systems controlled mostly by them: the SWIFT international payment system, the data storage cloud –controlled by Microsoft, Google or Oracle– and oil –used as a commercial weapon–. The insecurity that will be generated by the possible conditional use of these networks and markets, a consequence of Trump's imperialist and excessive policies, will produce an effect contrary to what is sought: states will find alternatives that, without having the same capacity, will allow them to respond to the limitation of use or commercial pressure exerted by the US. An international payment system alternative to SWIFT already exists, CIPS, which is used by 1,700 institutions in over 120 states. There is a Chinese IT cloud and one from the EU, which is of limited use but is expanding. Alternative renewable energies to oil are on the rise, a trend that will reduce the power that fossil fuels represent for the US –achieved through the effectiveness of fracking–. China is already the leading manufacturer of electric cars. BYD has surpassed Tesla.The US trade war threat policy is not solid due to the demonstrated weakness in withstanding price increases for certain products in the domestic market. And this is who votes. The war in Iran will end due to the increase in gasoline prices for the American consumer.Trump's tariff policy is more of a bluff than a reality. Its main objective –to attract industry to the US and reduce trade dependence– has not yielded results: there has been no significant industrial implantation in the country. It was a policy with insufficient leverage to achieve overly ambitious goals. He will never admit it.