The Trouble With Trump’s Tariffs
Nothing makes the global economy tremble quite like uncertainty. And that’s exactly the point of US President Donald Trump’s current tariffs campaign.
Under the guise of strengthening the US economy and domestic manufacturing, Donald Trump and his administration have successfully weaponized uncertainty to assert his influence over international financial markets and control the media narrative.
Cunning, calculated and conniving, it’s all part of the madman approach to diplomacy. In Trumps’ second term, he’s taking no chances. It seems the 47th President Of The United States Of America is committed to finally achieving his goal of Making America Great Again, no matter the cost.
The principle of uncertainty plays a vital role in the complex machinery of global finance. When potential investors feel certain their payout will equate to a dividend payoff, they are more willing to gamble on new ventures, and vice versa. Without that assurance, investors are resilient to take on the risk, and the market contracts.
Uncertainty is monitored and tabulated by several global metrics, including the Economic Policy Uncertainty Index and World Uncertainty Index. Historically, these indexes peaked around the 9/11 attacks, the SARS outbreak, UK’s referendum vote in favour of Brexit, the 2016 US Presidential election and the outbreak of COVID, to name a few. High uncertainty is traditionally associated with restricted trade and stagnated economic growth across various sectors.
According to these indices, uncertainty had an uptake in late 2024 around Trump’s re-election and steadily rose, spiking in line with his recent round of tariff announcements. Trump is gaming the system and revelling in the ensuing bloodbath. By his own admission, Trump expects dignitaries and ambassadors of the affected countries to grovel at his table and beg for reprieve. In fact, he’s certain of it. That’s the play.
Trump is and always has been a showman and a dealmaker. As a property developer, TV personality and author of ‘Art Of The Deal’, Trump epitomized the ‘greed is good’ mentality of the 1980s and ‘90s popularized in the film ‘Wall Street’. Before he was President, he was a business icon and pop culture trope, immortalised by his catchphrase from ‘The Apprentice’: “you’re fired!” Coincidentally, that’s also the position he and DOGE oligarch Elon Musk have taken towards the US public service sector.
If this were a classic American western, Trump would be the big bad gringo riding into town in a black hat, firing potshots to intimidate the denizens, setting up shop in the saloon, asserting his dominance and daring any brave soul to challenge his authority.
Trump, for now, thrives on the uncertainty he brings to the world. It is beneficial for him to appear erratic, unpredictable and unquestionable in his decisions, which brings us to the madman theory.
The madman theory is rooted in Cold War politics and commonly associated with Richard Nixon’s presidential reign, particularly his dealings with the Communist bloc of the era. The basic idea is to make outrageous threats appear credible, in line with the doctrine of mutually assured destruction that was all the rage at the time.
Fifty years later and Trump’s sophomore presidency thus far bears all the hallmarks of the madman theory in full play, only this time instead of nukes it’s an arsenal of disruptive tariff announcements and sweeping Executive Orders attempting to realign American social and cultural norms in his vision.
These tariffs are Trump flexing his muscles as a world leader given a second chance at redemption. He and his team of have taken advantage of the well-documented downturn in US manufacturing and lowered morale of the disenfranchised American working class, harnessing their discontent to instigate a sociopolitical revolution.
It’s not good politics – it’s clever PR. But is it a sound diplomatic policy to pursue?
For diehard Trumpers, this represents a new age of American supremacy that will see the country regain its place as a global influencer in the realms of finance, politics and culture – Manifest Destiny for the Trump age of believers.
For the rest of us, it is just outdated jingoistic rhetoric that is better suited to the late 19th century than the 21st. America has strayed far from its post-WWII image as the defender of freedom, the well-armed enemy of oppression. At this point, the US is more likely to start the war rather than end it.
The confusion and uncertainty sown by Trump’s tariffs have had worldwide implications, especially in Australia where our economy and quality of life is dependent on reliable international trade relations. Since WWII, The United States and Australia have been natural allies in commerce and diplomacy, sharing common ideals and pursuits.
But that relationship is being eroded by the indifference of the Trump administration towards Australian interests. A preview of the 2025 Lowy Institute polls shows a significant drop in Australians’ trust in the United States to act responsibly, falling 20 points to just 36% since Trump’s Inauguration last November.
Unfortunately, the current Australian government doesn’t have the true grit to face down Trump and his tariffs in a high noon shootout. Our elected leaders have more interest in legislating against people getting their feelings hurt than taking a hard stance and reminding the United States of our worth as a trading partner.
Australia is a country rich in natural resources vital to maintaining global industries. For example, we produce steel that exceeds the highest standards in the world. President Trump recently accused Australian producers of flooding the US market with our steel and aluminum products.
But that’s how capitalism apparently works – when you have the best product available, you can demand top dollar and rightfully so. And, honestly, why would you build your future on anything less than the best? If anything, he should be grateful. Perhaps a ‘thank you’ not tariffs is in order, don’t you think, President Trump?
We shouldn’t hold our collective breath for reprieve from this recent bout of political madness any time soon. The world has entered into a new era of brinksmanship, another Cold War where, once again, losers will vastly outnumber the winners.
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