As US President Donald Trump imposes tariffs and shakes up long-standing alliances, world leaders are testing different approaches to dealing with his unpredictable style. From Mexico to Canada to China to EU, different nations and leaders have pursued starkly different strategies with mixed results.
With a fresh wave of tariffs on steel and aluminum in effect and more reciprocal tariffs looming in April, other nations are watching closely. Should they retaliate forcefully, like Canada and the EU, or opt for quiet diplomacy, like Mexico and the UK? The answer could determine the global economic and security landscape for years to come.
Why it matters
- Trump’s America First approach is forcing allies to rethink their economic and military dependencies. Countries that once assumed Washington was a reliable partner are now questioning whether Trump’s transactional style leaves them vulnerable.
- Economic risks: Retaliatory tariffs could escalate into a full-scale trade war, disrupting supply chains and rattling financial markets.
- Diplomatic dilemmas: Nations must decide whether to challenge Trump’s rhetoric publicly or attempt to negotiate exemptions quietly.
- Security concerns: Trump’s threats to Nato and his unpredictable foreign policy approach have left many allies, particularly in Europe, rethinking their military strategies.
The big picture
According to a Politico report, countries are adopting different tactics to deal with Trump’s aggressive economic policies, each with its own set of risks and rewards:
1. Canada’s aggressive retaliation
- When
Trump imposed a 25% tariff on Canadian steel and aluminum, Canada struck back with tariffs on US goods and a fee hike on electricity exports to the US. - Trump responded with threats to double Canada’s tariffs, sparking a fiery exchange with Ontario Premier
Doug Ford . Both sides eventually walked back their actions, but tensions remain high. - The risk? The confrontation led to economic instability, with Canadian markets reacting negatively to the trade war, the Politico report said.
2. Mexico’s quiet diplomacy
- Unlike Canada, Mexican President Claudia Sheinbaum has avoided retaliatory measures and has instead sought behind-the-scenes negotiations.
- Sheinbaum has held off on retaliating against Trump’s fentanyl-related tariffs and the new steel and aluminum tariffs, hoping to negotiate exemptions.
- The risk? Mexico’s passive approach has yet to yield major wins, and Trump’s administration still sees Mexico as an easy target, the Politico report added.
3. Europe’s coordinated response
- The EU is retaliating in phases, announcing a two-stage tariff plan targeting $28 billion in US goods, set to begin on April 1.
- Trump falsely claimed on Truth Social that the EU had already implemented a 50% tariff on whiskey, vowing to hit French wines and champagnes with a 200% tariff in response.
- The risk? A full-scale trade war between the EU and the US could disrupt global markets and deepen the economic divide between Western allies.
4. China’s strategic patience?
- Unlike other countries, China’s rhetoric has been high but response has been measured, allowing space for negotiations.
- Beijing is believed to be pursuing a new trade deal, similar to the 2020 agreement during Trump’s first term.
- The risk? A full-blown US-China trade war would really hit the world economy hard.
5. The UK and Japan’s cautious approach
- The UK has refused to retaliate, with Prime Minister Keir Starmer sending trade officials to Washington to negotiate exemptions.
- Japan and Australia are following a similar path, opting for quiet diplomacy instead of direct confrontation.
- The risk? While this approach may prevent economic escalation, it also allows Trump to set the terms of the trade dispute unchallenged.
6. India: A different approach
- India’s approach reflects a strategic blend of diplomacy, economic pragmatism, and a focus on safeguarding its domestic interests. Recent moves like slashing motorcycle tariffs and dropping retaliatory duties on US agricultural goods in 2023 signal India’s willingness to make concessions to de-escalate tensions.
- At the same time, India is engaged in active bilateral negotiations, aiming to finalize a mutually beneficial trade agreement.
What they are saying
- William Reinsch, former US commerce official, told Politico: “Is it better to grovel and kiss the ring or stand up to the bully? Both have worked on occasion and both have failed. So it’s hard to know in any given circumstance which one is the better tactic.”
- EU trade chief Maros Sefcovic: “There’s still time for the US to settle this without unnecessary pain.”
- Commerce secretary Howard Lutnick: “Europe and Canada do not respect Trump or America’s ability to build its steel and aluminum industry.”
- Mexico’s former US ambassador, Arturo Sarukhán: “More aggressive responses, like Canada’s and the EU’s, could backfire.”
Between the lines
- Not only tariffs, Trump’s Nato stance is also alarming US allies. His remark that he would “encourage” Russia to attack Nato members who fail to meet defense spending targets has left European nations deeply concerned.
- Meanwhile, Canada is pivoting towards Europe. Prime Minister Mark Carney’s first foreign visit was to France and the UK, signaling a shift away from dependence on the US.
- Germany is increasing defense spending to counter Trump’s unpredictability, committing billions to military expansion in response to his Nato skepticism.
- Germany has announced historic defense spending, breaking from its post-WWII reluctance.
- Some European leaders are considering an independent nuclear deterrent, possibly involving France and the UK.
- Canada is reinforcing its Arctic presence, fearing Trump’s annexation rhetoric.
What’s next
- April 2 is the next flashpoint. Trump’s reciprocal tariffs will take effect, potentially triggering more retaliatory measures.
- Canada and the EU may accelerate new trade alliances to reduce dependence on the US.
- Mexico’s wait-and-see strategy could pay off if Trump offers exemptions, but risks looking weak.
- Nato members may push for alternative defense structures, anticipating further US disengagement.
(With inputs from agencies)