Is the Trump Strategy for Tariffs to Carry a Big Stick?
President elect Trump has not even taken office and he is already impacting markets, the latest being a threat to impose 25% tariffs on all products from Canada and Mexico, and an additional 10% levy on goods from China.
This followed easing market concerns after Scott Bessent was chosen to be then next Treasury Secretary so you can imagine the market reaction when Trump‘s tariff comments hit the wires.
Taken at face value an across-the-board hike in tariffs would have a severe economic impact but is this just the first salvo in “big stick” diplomacy.
What is Big Stick Diplomacy?
Big stick policy was a political approach used by the 26th president of the United States, Theodore Roosevelt. The terms are derived from an “aphorism” which Roosevelt often said: “speak softly and carry a big stick; you will go far”.[1] The American press during his time, as well as many modern historians today, used the term “big stick” to describe the foreign policy positions during his administration (Wikipedia)
What caught my eye is that Europe was not included in the tariff threats. Logic says,, especially in the case of Canada and Mexico, that the comments should not be taken literally but as part of a broader strategy to renegotiate the Mexico-Canada (Trade) Agreement (USMCA) and/or get concessions to tighten border security.
This suggests that the new administration has put the threat of tariffs on the table as either part of “big stick” diplomacy or a broader attempt to impscy trade relations.
Whatever the case, there are still nearly two months before President Trump takes office and he is already heating things up..
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