Paradoxically, tariffs intended to punish China could result in it facing lower duty rates than US allies like Japan or South Korea. This is because China possesses unique retaliatory leverage (e.g., rare earths) to force targeted tariff reductions from the U.S., an option unavailable to other nations.

In multi-party negotiations, the first country to sign a deal gets the most favorable terms. Each subsequent deal is structured on a "higher stair," making it progressively less attractive. This creates intense pressure and FOMO, punishing those who wait and see, as demonstrated by India's costly delay.

The tariff war was not primarily about revenue but a strategic move to create an "artificial negotiating point." By imposing tariffs, the U.S. could then offer reductions in exchange for European countries committing to American technology and supply chains over China's growing, low-cost alternatives.

Unlike the first term's China focus, the Trump 2.0 tariff policy is primarily a domestic tool to raise $300-$400 billion in revenue. This leads to strategically incoherent outcomes, such as imposing higher tariffs on allies like Switzerland than on China, driven by fiscal needs rather than foreign policy goals.

Despite fears from announced tariffs, the actual implemented tariff rate on U.S. imports is only 10.1%, not the computed 17-18%. This is due to exemptions, trade deals, and behavioral changes by companies. This gap between rhetoric and reality explains the unexpectedly strong 2025 performance of emerging markets.

Unlike previous administrations that used trade policy for domestic economic goals, Trump's approach is distinguished by his willingness to wield tariffs as a broad geopolitical weapon against allies and adversaries alike, from Canada to India.

Countries like Japan and the EU are unlikely to abandon their trade deals with the U.S. The deals address other tariff types (like Section 232 steel tariffs) that are still in place. Furthermore, no nation wants to risk provoking an unpredictable President Trump, who could retaliate in non-tariff ways.

A new US-UK agreement exempts UK pharmaceuticals from tariffs in exchange for the UK's National Health Service (NHS) paying 25% more for new drugs. This deal effectively uses the UK's drug-costing watchdog, NICE, as a bargaining chip, undermining its authority to secure a trade concession from the US.

Contrary to popular belief, Trump's trade strategy isn't protectionism. He uses reciprocity, leverage, and executive flexibility to force other countries to lower their own trade barriers, ultimately aiming for a world with freer trade for the U.S.