Trump overestimates power of tariffs: FT

By Al Mayadeen English
Source: Financial Times
23 Oct 2025 15:35

Donald Trump’s reliance on tariffs as a geopolitical tool is misguided, as they are “a far weaker weapon than the president believes.”

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United States President Donald Trump speaks before a lunch with Ukraine's President Volodymyr Zelensky in the Cabinet Room of the White House, on October 17, 2025, in Washington. (AP)

US President Donald Trump is overestimating the power of tariffs as a tool of economic coercion, as they are “a far weaker weapon than the president believes,” Edward Fishman, a senior research scholar at Columbia University’s Center on Global Energy Policy, wrote for the Financial Times (FT).

In an analysis published on Thursday, the author of "Chokepoints" said that Trump’s confidence in tariffs rests on a simple conviction: that “access to the US market is so vital that other countries will do anything to preserve it.”

His administration claims that the US can use its consumer market as the ultimate leverage, bending “the rest of the world to its will.”

Misplaced confidence in 'tariff victories'

The FT article notes that Trump’s so-called “wins” with the European Union, Japan, and South Korea “tell a misleading story.” These countries, the paper explains, are security allies that depend on Washington for protection, meaning that their concessions to Trump reflect “strategic dependence, not economic capitulation.”

According to the report, Brussels accepted the compact in order to garner US support for Ukraine and not because tariffs “forced its hand.”

By contrast, countries outside the US security umbrella, such as India, have proved “far less pliant.” The Trump administration imposed a 50% tariff on Indian goods in August, intending to compel New Delhi to halt purchases of Russian oil. However, the policy “is backfiring,” as Indian refiners have increased their imports of Russian crude, “openly defying Washington.”

Tariffs target the wrong actors

Fishman explains that the tariff policy “misses the actual decision makers.” Indian refiners are motivated by the low price of Russian oil, allowing them to make substantial profits. Trump’s duties instead penalize unrelated exporters, from garment factories to shrimp farmers, who do not benefit from cheap oil.

Furthermore, tariffs have politicized what should have been a forced business decision. The article notes that “tariffs, by contrast, demand capitulation from Prime Minister Narendra Modi directly, and no Indian leader can be seen bowing publicly to Washington.”

The outcome led to Modi making his first visit to China in seven years to meet with President Xi Jinping.

The limits of US leverage

The researcher stresses that the “biggest problem with tariffs is a basic fact: access to the US market isn’t as vital as Trump imagines.”

The United States accounts for just 13% of global imports, compared to its 25% share of global GDP, he explains.

While tariffs limit foreign exports, they simultaneously drive up domestic costs and unsettle supply chains, often inflicting greater damage on US businesses and consumers than on their intended targets, who can simply reroute their trade.

Real economic power lies in chokepoints

In contrast to tariffs, the paper points to chokepoints, areas of the global economy dominated by one power, as the true source of leverage. China’s dominance in the rare-earths market is presented as a clear example.

“Chinese companies control 90 per cent of refining capacity,” Fishman writes.

“When Beijing blocked exports of seven rare-earth elements to the US in April, it quickly upended supply chains and forced Trump to seek a truce,” he underlines.

Beijing can act decisively because its export controls leave targeted manufacturers with no viable alternatives, placing them in a position of complete dependence on Chinese supply chains.

The dollar remains the real weapon

According to Fishman, tariffs pale in comparison to the financial sanctions that have historically defined coercive US economic measures. These measures rest on a true chokepoint, the dollar.

“When Washington cuts access to the greenback, which is involved in 90 per cent of foreign exchange transactions, it can devastate a target without causing significant harm at home,” the expert claims.

Past presidents “understood this,” he adds, which is “why they reached for sanctions, and not tariffs, when they wanted to apply serious economic pressure.”