Here’s a Letter I sent to Bloomberg earlier this month, explaining why it’s no mystery that US partners are “giving in” to President Trump on trade:
Dear Editor,
Chris Anstey provides an excellent analysis of the current world vis-a-vis trade policy and the lack of other countries reciprocating against President Trump (https://www.bloomberg.com/news/newsletters/2025-08-02/why-us-partners-are-giving-in-to-trump-on-trade-new-economy). Rather than bemoaning the lack of a coordinated response by other nations, however, there are two much easier explanations for the lack of response on the world stage.
First, other world leaders likely recognize that tariffs are a pathway to impoverishment, not prosperity. One need only look at the US example over the past six months for evidence of exactly this. Despite President Trump’s insistence, tariffs are a tax on the domestic market, not on foreign countries. Insofar as world leaders recognize that taxing their own citizens is detrimental to their own prosperity, the correct response to Trump’s tariff barrage is, as economists have been pointing out, to do nothing.
Second, world leaders likely recognize that the legal bases Trump has used to implement these tariffs are shaky at best. Recent court cases in the US have cast serious doubt on the President’s ability to unilaterally impose tariffs on the world. Combine this with an upcoming midterm election and the President’s tanking approval ratings and it could easily be the case that these tariffs only last a year or two.
The simple fact is that there are no winners in a trade war. The only question is how much losing each side is willing to accept before changing their tune. World leaders outside the US recognize this and are wisely choosing not to engage in nonsense. The world needs to be tearing down barriers to trade, not erecting new ones.