Trade talks morph into Trump's global bargaining table

Politico

9 hours ago

President Donald Trump's trade talks aren't just about trade. They're about tech regulation, defense spending, critical minerals — even war and peace.
Since slapping sweeping tariffs on nearly every country in April, Trump has turned narrow, trade-focused talks into kitchen-sink diplomatic forums. In closed-door negotiations, the president's top lieutenants have pressured foreign governments to significantly increase their military budgets, upend their tax systems and scuttle domestic legislation that could hurt U.S. businesses. The president has even leveraged U.S.-brokered ceasefires, such as the one between Israel and Iran, to induce other countries to buy more American goods
It's part of a broader effort by Trump to use tariffs not only as a tool to boost domestic manufacturing and revenue, but as a lever to extract concessions on a host of unrelated issues.
'Access to the American market should cost you. Additional tariffs or additional levies — of course it makes sense to tie it to foreign policy. Why wouldn't we?' said former Trump adviser Steve Cortes.
'I get why countries are like, 'What the hell? This isn't the America we've been dealing with.' No, it isn't,' Cortes added. 'You just have to decide, is it worth it? If it is, well, play by our rules.'
Trump sees a win-win: If countries refuse to bend to his will, he keeps his 'Liberation Day' tariffs in place, protecting domestic businesses and boosting U.S. coffers. Case in point: Trump on Friday ended trade negotiations with Canadain part because of its digital services tax on American tech companies slated to start being collected Monday, which he called a 'direct and blatant attack on our Country' in a post on Truth Social.
The broad set of issues at play has frustrated other negotiations ahead of the president's self-imposed July 8 deadline to broker trade deals, as foreign leaders grapple with the fact that everything is on the table when negotiating with the United States.
The ongoing uncertainty threatens to upend the global economy, confuse American industry, alienate U.S. allies and drive countries into the arms of China.
'It's unprecedented, if not completely dubious,' said one official from an Asian country, pointing to the Trump administration raising antitrust legislation in talks with South Korea and export controls in talks with China, as an example. The person, granted anonymity to discuss the negotiations, added: 'There is no indication it's working, and Trump will not reverse course.'
But White House aides argue that the administration's kitchen-sink approach matches the scope of the problem.
'This whole thing is unprecedented. I mean, we are trying to basically reset what's a four or five decade-old status quo in which the United States was basically subject to free riding by a lot of our trading partners and other countries in the world, whether it be on trade, on defense and national security,' said a White House official, granted anonymity to share the administration's thinking.
'I push back on the idea that you can silo off trade,' the official added. 'They're all connected here.'
At the NATO summit in the Netherlands this week, Trump threatened new tariffs on Spain after the country refused to increase its defense spending in line with other NATO allies — even though Spain is part of the European Union and doesn't negotiate trade deals independently. It's also been a hot topic in negotiations with Japan and South Korea, which have balked at the 5 percent across-the-board defense spending target the U.S. has set for its allies in Asia despite their exclusion from NATO. Trump this month said the U.S., which spends roughly 3.4 percent of its GDP on defense, would not abide by the 5 percent pledge.
Trump has positioned Canadian investment in his 'Golden Dome' missile defense system for the United States as a way for the country to 'prove' itself amid ongoing trade negotiations — though the U.S. actually can't build the system without help from its northern neighbor.
At the same time, the U.S. is pressuring South Korea to abandon antitrust legislative proposals aimed at regulating online platforms that are opposed by Google, Apple and Meta. It has also, like Canada, pressured the U.K. and EU countries to eliminate their digital services tax.
On Tuesday, Trump added another demand, suggesting that China boost purchases of American oil as a thank you for the Israel-Iran ceasefire — an ask that comes as the president pushes Beijing to increase its imports from the U.S. And he's implied that he used the cudgel of trade wars to negotiate peace between India and Pakistan this spring, though India has disputed the suggestion.
Trump took a similar approach during his first term when he threatened hefty levies to get Mexico to curb the flow of Central American migrants to the U.S., and tariffed China over 'unfair practices' in part related to the theft of U.S. intellectual property.
In his second term, Trump has built on that strategy. He levied tariffs on Mexico, Canada and China in February aimed at curbing the tide of fentanyl and undocumented immigrants into the U.S. He also in April threatened 25 percent 'secondary tariffs' on any country that imports oil from Venezuela, a move he framed as targeting the country's authoritarian leader Nicolás Maduro and the Tren de Aragua gang.
Foreign leaders are confronting the very real possibility that if they slow walk negotiations or abandon talks, Trump would happily slap a tariff large enough to effectively serve as an embargo with the U.S. — cutting off access to the world's largest economy.
'The president feels that tariffs are leverage — leverage for the relationship, of which trade is one component. That's why each of these negotiations has unique elements to it, which makes matters more unpredictable,' said one former White House official, granted anonymity to speak candidly about the president's approach.
But giving into the president's demands on non-trade issues isn't a guarantee of tariff relief. Trump has shown no signs that he will heed French President Emmanuel Macron's calls for an end to the U.S.'s trade war with the European Union after NATO members agreed to hike defense spending to 5 percent of their gross domestic product.
That unwillingness to significantly budge on his array of tariffs has bogged down trade negotiations and hindered the administration from crafting substantial trade deals. As the U.S. has set out to negotiate deals with more than 60 trading partners, world leaders have grown increasingly frustrated with what they say are unbalanced demands from the U.S.
Other trading partners, including the European Union, have bristled at the terms of the UK framework and said they would not agree to a similar deal. That arrangement left a 10 percent so-called baseline tariff in place, while laying out a path to slash sector-specific tariffs.
The bloc isn't alone, and Trump's numerous demands and 'do-it-or-else' approach have made it challenging for countries to corral the domestic political support they'll need in order to sell any deal at home.
'If the deal gets too imbalanced, it will get a very bad reception by most of our national public opinions,' said one European official granted anonymity to speak candidly about the state of negotiations with the United States. 'I don't think the EU side and countries can really accept a very imbalanced deal without risk of it backfiring.'
But former Trump administration officials doubt the White House is about to change course.
'I see no evidence that the administration intends to reverse or scale back its use of this approach,' said Patrick Childress, a former U.S. Trade Representative assistant general counsel.