Tag: Impact

President Donald Trump is showing no hesitation in following up on his campaign vow to heavily utilize tariffs during his second term. 

The president was quick to impose them on Colombia over the weekend when the nation refused to accept flights of deported nationals that had illegally migrated to the U.S., threatening retaliatory tariffs of their own. When the South American country then did an about-face and agreed to take back their citizens, Trump hit pause on the levies.

JPMorgan Chase CEO Jamie Dimon told CNBC last week that he views tariffs as “an economic tool,” and depending on how they are used, “They’re an economic weapon.”

Psychotherapist and author Jonathan Alpert, who has coached numerous business owners and C-level executives on negotiating, says tariffs, or the threat of tariffs, can be a powerful psychological tool in negotiations because they leverage fear and uncertainty.  

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“By imposing or threatening tariffs, Trump signals strength and an ability to inflict economic difficulty, prompting the other country to reconsider their position,” Alpert told FOX Business. “In Colombia’s case, the quick retreat shows how effective this ‘economic weapon,’ as Jamie Dimon calls it, can be when the stakes are high and the other party feels they have more to lose than gain.”

However, Alpert says, applying this strategy to larger economies like China or the EU is a different story. 

He argues those larger countries often have more complex and diversified economies, making them less susceptible to immediate tariff threats. There’s a concern that they might retaliate with countermeasures, which can escalate into prolonged trade wars with wider economic implications. 

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“The success of tariffs as a negotiating tool depends on the perceived balance of power and whether both parties have the political will and economic flexibility to endure the consequences,” Alpert said. “In many ways, it’s psychological warfare – and to Trump’s credit, he is masterful at it.”

He added that ultimately, while tariffs can create short-term victories, they’re not a one-size-fits-all solution. 

Monica Gorman, managing director at Crowell Global Advisors, who served as a trade and supply chain expert in the Biden administration, told FOX Business she doesn’t want to speculate on what the Trump administration will do, but historically, if a country is subject to new tariffs, it typically responds with retaliatory tariffs of its own – as we just saw with Colombia. 

Similarly, she said, if a group of countries face increased tariffs with one big strategic partner, they generally sustain their trading volume by forming an alliance to trade amongst themselves instead. For example, the EU just recently signed a trade deal with a bloc of countries in South America and updated their agreement with Mexico in anticipation of possible higher U.S. tariffs. 

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Gorman says tariffs should be approached strategically, pointing to the old adage that “when all you’ve got is a hammer, every problem looks like a nail.” 

“But both foreign policy and trade policy are complex,” she said, “and we don’t want to use a hammer when we should be using a scalpel…”

Alpert agrees that risk lies in overusing tariffs can lead to creating long-term resentment or instability in global markets. 

“For the U.S., the key will be knowing when and where to apply this pressure—and just as importantly, when to back off,” he said, adding, “Trump has had great success in the business world and his ‘Art of the Deal’ strategy seems to be effective thus far.”