Trump's Tariff Play Could Disrupt America
The other side of the trade rewrite few are discussing
The recent meeting between US President Donald Trump and Saudi Arabia’s Crown Prince Mohammad bin Salman had all the glitz and glamour. “$21 trillion” was mentioned several times, the amount of capital that Trump says the world has committed to the US economy.
Whether it is $21 trillion or a different figure, money is pouring into America. And, in highly strategic ways. Alongside Saudi Arabia’s pledge to invest $1 trillion, there are the agreements the US inked with South Korea and Japan that could see a combined $900 billion invested in US infrastructure, such as nuclear energy sites. By far, these are all wins. Asia is now building out America’s infrastructure. Asia is now driving America First.
But none of this is the full story. There is another side that few, if any, are asking.
And that is, are tariffs putting America in a vulnerable state?
TARIFF DILEMMA
At the core of this question is whether America is becoming reliant on the rest of the world coughing up billions. And, how others are navigating America’s trade plays.
Take the deal signed between the US and India. A few months ago, this relationship was in tatters over US tariffs. The situation peaked as Indian Prime Minister Narendra Modi visited China after a seven-year pause, and Trump pushed Europe, the largest trading partner of India, to impose 100% tariffs on Delhi.
Fast-forward to today, and both sides have inked an energy deal that will see America supply 10% of India’s liquified petroleum gas (LPG) needs. Most in the West may never have heard of LPG. But in India, over 70% of households use LPG as their main energy source, mainly for cooking and heating. This figure jumps to more than 80% in rural areas of the country. The problem is, the US-India LPG deal is only for one year.
A lot can happen in 12 months. What if India refuses to renew it?
Apply this to the myriad of deals America has signed, and a disturbing picture forms. If nations refuse to sign new deals or are no longer shaken by tariff threats, what happens to the US economy?
Right now, the biggest stimulus for the US economy is the influx of capital and global deals, spurred by tariffs. If this slows, America faces new headwinds. The US is quietly becoming reliant on the tariff-induced agreements and their forever renewal and extension.
GEOPOLITICAL REPOSITIONING
Equally important is how others are repositioning because of tariffs.
The latest deals between the US and Malaysia, and separately, between the US and Cambodia, have caught the attention of the world. The government in Kuala Lumpur could mimic US trade moves, a stunning decision.
But now, China is warning Cambodia and Malaysia, asking them to explain the deals they have signed with Washington. In particular, the Chinese foreign ministry said it has “grave concerns” about Malaysia’s deal, signaling the gravitas that Beijing is placing. Is China preparing to raise the pressure on nations that are drifting “too close” to America?
Once again, tariff-induced deals could circle back and create new blowback. This time, if America’s chief adversary steps in. China could set limits on just how much the US can reap from taxes and duties.
FUTURE RISK
As the global economy slows, America faces new headaches.
Construction activity is dropping, loan delinquencies are rising, and consumer confidence is at record lows. This puts the spotlight on the hundreds of billions of dollars in committed capital. The question now, however, is whether this is enough to buoy the US as global economic concerns rise. If not, will Washington reopen deals that many believe have been finalized?
And, as the US treats tariffs like mud, throwing them around freely, the short-term boost could give way to long-term dependency. The US reliance on the world is growing.
And if other economies tighten their wallets in the future, it could be America that wobbles the most.
-ABISHUR PRAKASH AKA. MR. GEOPOLITICS
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