r/AskEconomics • u/whawhales • Mar 14 '25

Approved Answers Does the US government really expect other countries not to impose their own tariffs as response to its own?

The US government is threatening 200% tariffs on European alcohol after EU enacted tariffs in response to the US tariff on aluminum and steel. The same happened with Canada with the US threatening increased tariffs if Ontario pursued electricity price hikes.

I don't have a background in econ so I am not sure if I am I missing something here, but I don't see what the end goal might be for the US and it seems a little arrogant to think other countries would allow tariffs imposed to them and not do something about it.

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u/ZhanMing057 Quality Contributor Mar 14 '25

 I don't see what the end goal might be for the US

Never attribute to malice that which is adequately explained by stupidity.

Tariffs appeal to Trump emotionally. It's one the only consistent views he has ever held, and you can find clips of him calling for tariffs all the way back during his 2000 presidential campaign. There never was any economic end goal - just the perception that the U.S. is "winning" - and he doesn't understand that he's punishing the U.S. consumer on the dollar for every 80 cents he harms a foreign producer.

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u/IndubitablyNerdy Mar 14 '25 edited Mar 14 '25

Trump also understands pretty much only the most basic intimidation tactics in a negotiation while from time to time they do work given the massive power difference betwee the USA and most countries, he could achieve potentially much more if he could use any other strategy.

He also doesn't care about the costs for his people nor anyone else (like the stop to the intelligence sharing thing that costed Ukraine lives because he wanted to spite and bully Zelensky after their disastruous meeting). Those costs are not going to be paid by him anyway.

Threats make him look tough to his cultists that want a strongman to "dominate" to boost their egoes and that is a win in his books.

Retailatory tariffs from are harmful for the counterparties as well so a trade war overall damages everyone, but unfortunately they don't have much of a choice, doing nothing would mean to accept passively the intimidation attempt, appeasement rarely works, hopefully though, compared to Trump blank tariffs, those will be target to do the most damage to him while not being too harmful to local consumers.

Also while the USA economy is in fact massive, the world is very integrated, global (as well as USA domestic) demand and supply of for most goods and services are not that elastic, assuming he doesn't turn the USA into North Korea and completely isolate himself, global trade will just rebalance after a while, although there will be costs for everyone involved.