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Trump's tariff threat swept the world: Why are countries' response strategies repeatedly frustrated?

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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: Trump's tariff threat swept the world: Why are countries' response strategies repeatedly frustrated?" Hope it will be helpful to you! The original content is as follows:

Faced with the Trump administration's aggressive tariff policies, many countries have adopted www.xmhouses.completely different response methods, but few have been effective. Mexico chose to actively cooperate with Trump's anti-drug law enforcement requirements and significantly strengthened border security measures in exchange for US tolerance in trade policies. However, this "provocation" has not www.xmhouses.completely avoided the threat of tariffs. The EU has adopted a more cautious strategy, suspending its original retaliatory tariff plan and focusing instead on trade negotiations with the United States, trying to find solutions through dialogue. Canada has experienced a transition from tough to www.xmhouses.compromise, fighting back with reciprocal tariffs a few months ago, but ultimately chose a more reconciliational attitude. However, none of these efforts appear to have spared countries from pressure from Trump to further escalate tariffs.

Just last week, Trump sent new tariff threat letters to about twenty countries warning that higher tariffs would be imposed on goods in these countries. This high-pressure policy has made countries realize that Trump's tariff threat is not only an economic means, but also a tool for him to achieve his political and economic goals. When dealing with this situation, countries are trapped in the dilemma of not only protecting their own interests but also avoiding the www.xmhouses.comprehensive escalation of the trade war.

Trump's tariff logic: negotiation or unilateral pressure?

Why is Trump's tariff policy so difficult to deal with? Simon Evenett, a professor at the IMD Business School and head of GlobalTradeAlert, global trade policy monitoring website, pointed out incisively that Trump's tariff threat is not a negotiation in the traditional sense, but a unilateral pressure of "either accept or give up". He said that despite several economies, including Japan and the EU,To actively respond to Trump's concerns and try to solve the problem through dialogue, but the effect of this contact is doubtful. Trump's strategy seems to be more inclined to force countries to make more concessions at the negotiating table through the continuous increase in threats.

For example, Trump threatened to impose tariffs of up to 50% on EU goods in May, a move that significantly accelerated the EU-US negotiation process. However, a new letter sent last week showed that the United States has not slowed down its pressure due to the progress of negotiations. In the letter, Trump threatened to raise tariffs on most European goods from the current 10% to 30%, catching EU officials off guard. Previously, the EU had thought that the progress made through negotiations was enough to avoid being included in the threat list, but the reality was obviously not the case.

EU's response: prudent negotiations and countermeasures are in parallel

Faced with Trump's latest threat, the EU has demonstrated a co-existing response strategy that coexists with caution and toughness. European www.xmhouses.commission President Ursula von der Leyen said on Sunday that the EU will continue to suspend retaliatory tariffs until early August to win more negotiations. She also stressed that the EU is also actively preparing further countermeasures to deal with the possibility of failure of negotiations. According to people familiar with the matter, the European www.xmhouses.commission plans to submit a second set of retaliatory tariffs to member states on Monday, imposing tariffs on US imports worth about 72 billion euros (about 84 billion US dollars). Previously, a tariff plan involving 21 billion euros of US goods was approved in April but has not been implemented so far.

French President Emmanuel Macron is even more tough, calling on the EU to speed up the preparation of countermeasures and use all available means, including "anti-coercive tools." This tool allows the EU to impose tariffs and other sanctions on the US service industry and other fields, demonstrating the EU's tough trump card outside of negotiations. However, von der Leyen said that it has not yet reached the point of using "anti-coercive tools" and negotiations are still the main direction at present.

It is worth noting that the EU is also actively exploring new markets to reduce its dependence on the US market. Von der Leyen announced on Sunday that the EU and Indonesia reached a political consensus on a trade deal, a move seen as an EU's efforts to find a new balance in the global trade landscape.

A handful of successful cases: The UK and Vietnam’s breakthrough

Among many countries threatened by tariffs, Britain and Vietnam are among the few countries that have reached an outlined trade agreement with the Trump administration. The success of these two countries may be due to their unique trade background and flexible response strategies. For example, Britain is in urgent need of consolidating trade relations with the United States after Brexit, while Vietnam has eased trade tensions with the United States through active diplomatic efforts. In addition, China and the United States reached a temporary truce after the tariff war earlier this year, which also provided some reference for other countries.

However, the scarcity of success stories also underlines the www.xmhouses.complexity of responding to Trump’s tariff threat. Dmitry Grozou, senior trade consultant at AuroraMacroStrategiesBinski pointed out that countries' strategies in dealing with the Trump administration are hugely different, and it is difficult to summarize a www.xmhouses.common "best practice." For example, Mexico and Canada have deep trade ties with the United States due to the US-Mexico-Canada Agreement, and both countries have strengthened border security in response to Trump's request, but this has not www.xmhouses.completely exempted the tariff threat. Brazil's situation is even more special. Despite its trade surplus with the United States, Trump still threatens to impose a 50% tariff on it on non-trade grounds.

Future Outlook: The Double Challenge of Negotiation and Adaptation

Faced with Trump's tariff threat, countries need to find a balance between negotiation and adaptation. Simon Evenett recommends that countries should continue to seek negotiation opportunities before the August 1 deadline, but should also be prepared for long-term adaptation. This includes supporting domestic exporters and helping www.xmhouses.companies explore new markets to reduce their dependence on the U.S. market. Dan Mullaney, former assistant to the U.S. Trade Representative, believes that Trump's latest letter may be a negotiation strategy to gain greater bargaining chips for negotiations ahead of August. However, he also warned that such a high-pressure strategy could further intensify hardliners within the EU and lead to escalating trade conflicts.

Grozoubinski admitted that Trump's tariff policy is full of uncertainty, and his "acceptable scope of agreement" depends entirely on his personal ideas and may change at any time. This makes countries walk on thin ice when formulating response strategies. Whether it is Mexico's www.xmhouses.compromise, EU's cautious negotiations, or Canada's tough reconciliation, Trump's tariff threat has always been with him, testing the wisdom and patience of all countries.

Summary: Crossroads of global trade

Trump's tariff threat is like a trade storm sweeping the world, leaving countries with difficult choices between www.xmhouses.compromise and confrontation. The different response strategies of Mexico, the EU, Canada and other countries reflect the www.xmhouses.complexity and uncertainty of the global trade pattern. Although a few countries such as the United Kingdom and Vietnam have achieved initial success through flexible diplomacy, most countries are still struggling in this game. In the future, countries not only need to strive for more favorable conditions at the negotiating table, but also need to prepare for possible long-term trade wars by opening up new markets and supporting their own enterprises. Under the shadow of Trump's tariffs, global trade is at a challenging crossroads.

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