Trump's 'trade tsunami' unsettles geopolitics

Reuters

3 days ago

LONDON, Aug 8 (Reuters) - Visiting Beijing at the height of U.S. President Donald Trump's "Liberation Day' trade war rhetoric this April, Kenyan President William Ruto described a 'broken ... global order". He declared that Kenya would work with China to build a "fair, inclusive and sustainable ... world order".
Even at the time, it looked like a particularly brazen example of a developing nation that traded heavily on its ties with the U.S., and had become the only declared 'major non-NATO ally' of Washington on the African continent in 2024 largely as a result of its declared support for Ukraine.
Now, Kenya faces a review in the U.S. Senate of whether it deserves to retain that position given its ties with Iran and China in particular.
And with Kenyan newspapers reporting an imminent trade deal with Beijing with zero apparent trade barriers, just as Trump imposes 10% tariffs on Kenya, Ruto implied there was now little choice which side to pick.
"I have a bit of a problem with some of our friends," Ruto told an investment event in Nairobi this week, citing worries about the closer relations with Beijing. "But it's what I must do for Kenya ..."
Trump's administration sees its embrace of tariffs as key to its approach to the wider world, including matters of war and peace including Russia and Ukraine, China and Taiwan as well as efforts to stem cross-border drug flows from Mexico and Canada.
For multiple nations in the so-called 'Global South', what Indian newspapers have called a 'trade tsunami' have come as a dramatic shock to countries that have long been used to walking an awkward path between various foreign power blocs.
In some cases, as with Kenya, that may simply have accelerated shifts already underway. In others, such as India, the world's most populous democracy and fifth largest economy, it risks reversing decades of gradually built improvements in relations with successive U.S. administrations.
It is a dynamic that reached a particular height this month, with Trump's administration unveiling its latest tariffs on every nation in the world, just as Trump threatened to impose further trade costs on Russia's trading partners – particularly India and China – if there was no ceasefire in Ukraine soon.
The 10% U.S. import tax imposed on Kenyan goods is in fact one of the lower rates – Brazil and India may grapple with tariffs up to 10 times that, with dozens of other nations facing levels somewhere in between and in multiple cases explicitly linked to specific political objectives.
As well as U.S. envoy Steve Witkoff visiting Moscow, this month has seen Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer sitting down with Chinese counterparts for discussions that already appear to be moving beyond a potential trade deal to much wider U.S.-China issues.
The knock-on effects of that are still being digested in Taiwan, where the United States, in seeking to soothe relations with Beijing ahead of a potential meeting between Trump and Chinese President Xi Jinping later in the year, appear to have snubbed Taiwanese leaders.
According to multiple reports, that included cancelling a planned Washington visit for Taiwanese Defence Minister Wellington Koo as well as denying the island's President Lai Ching-te permission to land and refuel in New York on a now-cancelled visit to Central America.
Taiwan is well used to the shifting tides of U.S. support, and is not unused to taking second place to Washington's overtures to Beijing – not just on trade but many broader issues. However, multiple other nations appear to have been genuinely shocked by the way they have been targeted by Trump.
India's foreign ministry described as "unjustified and unreasonable" comments from Trump describing Indian oil purchases as 'fuelling the Russian war machine" in Ukraine.
It described the purchases as "necessary measures to safeguard ... national interests and economic security' and criticised both the United States and European nations for continuing some of their own trade with Russia.
Some Indian newspapers were considerably blunter, describing the U.S. position as hypocrisy.
The reality is a touch more complicated – although it is true that neither the U.S. nor European nations have gone as far as they might have in seizing Russian assets or blocking Russian trade themselves, a point repeatedly made by Ukraine itself.
On multiple occasions, Trump has described trade tariffs as one of his preferred tactics to end armed conflict and minimise further bloodshed.
And when it comes to both ending fighting in Ukraine as well as years of unrest in the Democratic Republic of the Congo in Central Africa, he has also explicitly pursued linked mineral deals critics say may benefit the U.S. before the host nations.
For countries that need to shape their own long-term policies to the U.S. and other major powers, however, the second-order effects of these developments can be hard to approach clearly – and matters get even worse when they are wrapped in the president's own more personal ambitions.
Within India, for example, there remains widespread disquiet that the U.S. was seen as siding much more with Pakistan – normally regarded as a clear ally of China – during its recent clash with India, with the government in Islamabad requesting U.S. help to manage escalation.
Pakistan's nomination of Trump shortly afterward for a Nobel Peace Prize may have won it friends in Washington – with a growing list of other nations making similar suggestions.
The fact that one of those nominations comes from Israeli Prime Minister Benjamin Netanyahu, though, who has presided over a devastating war in Gaza deeply unpopular across much of the wider world, has done little to reduce already rising talk of Western and particularly U.S. double standards.
Some other dynamics already look relatively steady.
The Trump administration is unlikely to fix relations with Brazil under its current government, given its anger at the treatment of former right-wing president Jair Bolsonaro, under house arrest in a move that has prompted U.S. sanctions.
Meanwhile, Trump's relations with Gulf Arab states seem relatively secure for now given common business interests.
But other dynamics remain wildly unpredictable, including with Israel over future developments in Gaza.
In a sign of just how fast-shifting the world has now become, Myanmar's military strongman – one of the world's most isolated leaders, albeit supported by Moscow and Beijing – responded to Trump's letter imposing 40% tariffs on goods from his country with a fawning letter describing his 'sincere appreciation' – an apparent precursor to potential talks with Washington over rare earth minerals.
Much of this tariff-related turmoil, so far at least, has been to the benefit of both Moscow and Beijing, creating ready divisions and frustration for them to exploit with trade deals and sometimes propaganda.
Whether that can remain the case for the remainder of the year, though, is a very different question – particularly as both are now the focus of what the U.S. sees as arguably its most important negotiations, balancing trade and geopolitics.
If the Kremlin is genuinely not willing to move towards a ceasefire in Ukraine – and few for now believe it is – then it is incredibly difficult to predict the effect of U.S. sanctions, both on Russia itself but even more on India and China.
In the short term, Trump's tariff blitz might well move those nations all closer to each other, helping cement the sort of Russian-Chinese leadership of the BRICS group of emerging economies that both Moscow and Beijing have long hoped they might achieve.
Without a doubt, China has made it clear it does not want to see the Kremlin lose badly in Ukraine. Particularly likely, Beijing fears an outcome in which President Vladimir Putin's rule collapses, at worst raising speculation of a similar fate for Xi. But the more this is tied to wider trade and other issues with the U.S. and beyond, the more complex that calculus.
Even more importantly, Beijing must also make its own decision on what deal it wants to strike if any – and again, how that affects its other strategic priorities particularly Taiwan.
If an agreement can be reached, the Trump administration is giving the impression that it might pull back on support to the Taipei government, perhaps including weapons sales.
Simultaneously, both Moscow and Beijing will be looking at the U.S. Pentagon strategic posture review due to be published in the autumn for direction on worldwide U.S. military deployments. Both will be hoping Washington pulls back forces in the vicinity of their borders – but the rougher relations are when that report is published, the less likely that might be.
And all of that, of course, means the second and third order effects rolling down to other nations become even less predictable. That is unsettling enough even for major U.S. allies, with the European Union, Britain, Japan, South Korea and other major partners moving fast this summer to seal their own deals with Trump before the strategic chessboard moves again.
By the end of the year, more clarity is possible.
Either Trump will have met with Xi as a start to ongoing dialogue, or relations with Beijing will have fractured further – and similarly with Moscow things might well be either notably more hostile or considerably friendlier.
That would at least give the rest of the world something more solid to work with. In the meantime, expect nations caught in the middle to either try to keep their options open – or make a virtue of jumping early to one side or the other.