Bullying Our Allies

Trump is spending little time pressuring our enemies, but a lot of energy beating on our allies. And that carries significant consequences.

I have company in town this morning, but I wanted to drop a quick recap and some thoughts on Trump’s recent economic threats to some of our closest allies. — Jay

Trump keeps bullying our allies, and this won’t end well. If you’re keeping score, he has now threatened Canada, Mexico, Panama, Denmark, and now (checks notes) Colombia.

Four out of five of those countries are within our own hemisphere, and Trump seems bent on rewriting the rules entirely around American dominance in this part of the world. It won’t be achieved only through the strength of our markets or the power of our ideas and values. It will be at the receiving end of an economic gun.

That is a gigantic, jaw-dropping departure from the basic rules of the post-war world order, which has always had as its baseline economic interdependence and mutual respect. It’s important to track what’s happening and how this could affect things both in the short term and over the coming years.

Tariffs on goods from Canada and Mexico… maybe?

The clock is ticking on Trump’s threatened tariffs on our neighbors Canada and Mexico, with 25 percent tariffs on all goods set to begin on February 1.

Yes, that’s the end of this week.

It isn’t clear whether Trump will actually impose them as threatened, or if they remain some kind of perverse negotiating ploy. But the uncertainty continues to spook markets and cause big exporters and importers to put contingency plans in place.

You’ve also probably seen and experienced this: Egg prices are already spiking to record highs from shortages of poultry due to widespread outbreaks of Avian Flu. In some states, like California, the shortages are causing eggs to rise to $9 a dozen. And egg producers are having trouble sourcing healthy hens, with the price on those soaring as well.

The situation is being exacerbated by a moratorium on communications and advisories from our key health departments and agencies, meaning we might not even get to hear directly from the government how bad things have gotten with the bird flu and where the outbreaks are most impactful.

A trade war with our neighbors could send prices of many other goods soaring, too, particularly petroleum products, lumber and fresh produce. And in any event, both of our neighbors will now seriously consider how to scale back their dependency on the U.S. market and explore ways to diversify their risk.

Something rotten in the state of Denmark

Trump and the Prime Minister of our NATO ally Denmark, Mette Frederiksen, held a “fiery” confrontational call mid-month that only recently came to light thanks to reporting from The Financial Times.

During the call, Prime Minister Frederiksen tried to cool the tone, making suggestions for greater cooperation on military and economic issues. But she reiterated that Greenland was not for sale, which of course she shouldn’t have had to say in the first place.

But during the call, Trump still insisted that he wants to take over Greenland, and he has not ruled out using coercion to achieve it. This has pretty much freaked out most of Europe, which is trying both to prevent Trump from doing something calamitous while preparing their own set of retaliatory tariffs should Denmark be singled out. There is greater strength in numbers, after all.

Our European allies must be exhausted from having first to decouple from energy dependence on Russia as a result of that country’s invasion of Ukraine only to have to explore decoupling from economic interdependence with the United States, which is supposed to be their greatest ally. Europe is increasingly feeling like it is on its own, even when it comes to military defense. And that is opening the door for Chinese overtures. China is far away, so the thinking goes, and would not be interested in threatening a trade war with the European Union.

Browbeating Colombia

Yesterday, Trump opened a new front in our attacks on allies by threatening Colombia with high tariffs. This was for the crime of refusing to accept U.S. military planes bearing undocumented migrants. Last year, Colombia accepted 147 flights of migrants on commercial aircraft, but it had protested the use of military aircraft.

This protest arose specifically after reports had emerged that 88 Brazilian migrants were handcuffed inside of U.S. military transports and left without adequate ventilation or allowed to use the bathroom. Some of the deported migrants had even fainted mid-flight.

Colombia initially shot back with threatened tariffs of its own, but it is a small country whose economy is highly dependent on trade with the U.S. New tariffs could cause significant economic hardships to Colombian farmers who sell their coffee and their fresh flowers to the U.S. market. So its president backed down, much to the delight of the MAGA faithful, who see it as an incredible validation of Trump’s aggressive foreign policy, even toward our friends.

But this is incredibly shortsighted. Trump believes he is gaining credibility for the U.S. but he’s actually just forcing our allies to reassess their relationships with us. After all, who in their right mind would continue to rely so heavily on an unreliable partner? Our trading partners in our own hemisphere may soon realize that they would be far more protected if they had a stronger economic union and the ability to counter U.S. economic aggression collectively.

Trust is something built up over time but destroyed quickly. The world might forgive us, perhaps, for electing a bully and a chaos agent like Trump once. Doing it twice sends a clear signal that we are an unreliable partner with whom a long term relationship would be fraught and toxic.