Understanding Trump’s Tactics

In the first few weeks since his inauguration, President Donald Trump followed through on his campaign promises to impose tariffs on other countries.

Initially, his administration imposed 25% tariffs on goods from Canada and Mexico – except for energy imports from Canada at 10% – plus additional 10% tariffs on all Chinese products coming into the United States.

The media and pundits quickly signalled the return of Trump’s trade war. However, it is worth considering that Trump’s imposition of high tariffs is not an end in itself – it is part and parcel of his psychological warfare with other countries.

This was demonstrated when Trump decided to delay the tariffs on Canada and Mexico after “fruitful” discussions with both countries’ leaders. In this regard, tariffs should be understood simply as an economic tool to achieve the United States’ national interests, though critics have decried and deemed it illegal.

Trump’s co-written book The Art of the Deal gives an insight into his aggressive and assertive negotiation tactics in doing business, which he has applied to his political game as well. This negotiation style involves setting the initial terms aggressively – terms which may be bold and ambitious – to set the standard and tone of the negotiations around this reference point.

This is called the anchoring tactic, though he likes to impose extreme terms to turn the negotiations in his favour. His recent ordeals with Mexico and Canada exemplify this – he has also issued follow-up threats of increased tariffs should these countries retaliate.

Trump understands that his unpredictability has given him an advantage over others, thus making his threats more effective. He succeeded; following these salvo of threats, Canada and Mexico agreed to address the issue of drug smuggling and illegal immigration in exchange for a one-month pause in tariffs.

Unlike his first term – which saw him imposing tariffs on others and allowing negotiations only after some time had passed – this time he had reached an agreement with Canada and Mexico before any real actions were taken.

This is exactly what Trump hopes to achieve. He is using aggressive tactics by instilling fear and unpredictability to get what he wants before really starting a tariff war. In fact, a tariff war might be something that he does not desire after all, as it would cause inflation in the United States.

Sun Tzu might have approved – in The Art of War,he postulated that a “skillful leader subdues the enemy’s troops without any fighting.”

Past Lessons

As this is his second and last presidency, Trump understands that he is running out of time to achieve his political agenda. He hopes to quickly achieve concessions that others will make in exchange for not imposing high tariffs.

Although Trump has toyed with the idea of running for a third term, the odds are almost zero. The US Constitution limits a person from getting elected more than twice as a president and it would be very difficult to amend the constitution because of its rigidity.

Constitutional expert Bruce Fein argues that one possible way for Trump to hold on to power is by disregarding the law, though this is very unlikely to happen given that the United States has a long democratic tradition that provides checks and balances. A case in point: Trump’s bid to hold onto power after he lost the 2020 election was unsuccessful.

Even more important is that Trump seemed to have learned lessons from his first presidency.

After a years-long trade war with China, Trump concluded his Phase One trade deal successfully. This trade deal appeared to be a massive victory for the United States, as China pledged to protect intellectual property rights and agreed to purchase more goods from the United States to correct the trade imbalance between both countries. However, China failed to fulfil its obligations under the Phase One trade deal.

Trump is not keen to repeat this mistake, which could explain why Trump would want to achieve concessions as soon as possible.

He is using this plan of reciprocal tariffs as a bargaining tool for countries to reduce tariffs or eliminate non-tariff barriers.

A recent poll run by Reuters showed that over 90% of economists believe that the rapidly shifting trade policies would increase the likelihood of a recession, which could lead to unintended consequences of Trump’s own doing. This is a situation that Trump would want to avoid.

Weeks before he unveiled his “Liberation Day” plan, Trump also announced the imposition of 25% tariffs on all aluminium and steel imported to the United States without any exceptions or exemptions.

Interestingly, after a phone call with Australia’s prime minister, Trump said that an exemption for Australia is under consideration, given that Australia is one of the few countries with which the United States has a trade surplus. Such statements have sent an ambiguous signal to other countries, thus prompting countries such as South Korea to also request exemptions.

Trump also managed to extract concessions from India and Japan, both of which promised to buy more goods from the United States. Before the meeting with Trump, Modi announced that India would cut import tariffs on selected products. Following the meeting between both leaders, India agreed to buy more energy from the United States, thus aligning with Trump’s goal to make the United States the leading energy supplier.

Trump’s tariff tactic would be a mainstay in his administration – his unveiling of a base 10% global tariff on the rest of the world suggests he is willing to play this long, uncomfortable game with both allies and enemies alike.

Trial and Error

However, this kind of psychological tactic may not always work.

The United States and China were unable to come to an agreement and have since led to China’s quid pro quo levies. While the Chinese do not want to back down from the trade tensions with the United States, news reports from early March showed that Trump might visit China in April to hammer out a deal. This indicated that Trump might not be interested in fighting a tariff war.

Though the prospect of Trump visiting China has been dampened by Chinese countermeasures against his recently announced global tariff plan, he responded by threatening to further increase tariffs on China by 50%, in addition to the recently announced 34% tariffs as part of the Liberation Day plan. This led to over 100% cumulative tariffs on Chinese goods exported to the United States.

Due to the price and quality competitiveness of Chinese products, Chinese products are not easily replaceable. Since American consumers have to bear the brunt and inflation is expected to rise, Trump will be put in a difficult position, potentially prompting a revision to his tariff policies.

Impacts to Southeast Asia

Trump announced his Liberation Day global tariff plan on 2 April 2025, a drastic move that caused stock markets across the globe to tumble. A baseline of 10% tariffs on all exports to the United States are imposed, but all Southeast Asian countries are levied different rates of tariffs depending on their trade balance with the United States.

Cambodia and Laos are slapped with the highest tariffs (at 49% and 48%, respectively), followed by Vietnam (46%), Myanmar (44%), Thailand (36%), Indonesia (32%), Malaysia and Brunei (24%), the Philippines (17%) and finally Singapore (10%).

Barely a day after the new regime came into effect, however, Trump announced a 90-day pause on tariffs for 75 countries, including those in ASEAN. This hard reverse adds on to the psychological pressure that Trump aims to impose on leaders of other nations.

Before the Liberation Day announcement, ASEAN countries had diverse responses to the ongoing situation. Vietnam was already restless and expressing willingness to purchase more US agricultural products, open its market to US investments and refrain from imposing retaliatory measures. Thailand, on the other hand, was seen to be slow in responding to the trade issue and had no clear negotiation strategy, which was a great concern for the private sector in Thailand.

The Philippines and Malaysia appeared more optimistic, holding the opinion that the United States’ tariff policies have less direct implications on them. Both believed that they should maximise the existing regional trade agreements and diversify their trade partners in light of the steps pursued by the Trump administration.

Needless to say, the announcement must have sent massive shocks across the region, especially to countries with no concrete strategy and response plan.

Moving forward, ASEAN countries need to understand that Trump’s end goal is not to have a tariff war with the rest of the world. The United States is simply using threats of tariffs to force other countries – particularly those who have trade deficits with the United States – to reduce or remove tariffs and non-tariff barriers.

If this is a psychological war, how should Southeast Asian countries respond to it?

In such a setting, it is never a good idea to fully accede to the demands, as it would only lead to more concessions. We have seen, for example, how Vietnam’s good offer to the United States was being rejected.

Instead, countries should preserve their autonomy and continue to engage with the United States to get a mutually beneficial deal. A good instance is how the president of Mexico handled Trump – she kept a “cool head” and persuaded Trump with evidence that the deployment of Mexican soldiers to the borders has slowed down the flow of fentanyl.

Such a diplomatic approach led to praises from Trump and also to Trump’s decision to reverse some of the tariffs. Though Trump also reversed some of the tariffs on Canada, Trump continues to target its prime minister due to the latter’s more aggressive approach.

As ASEAN chair this year, Malaysia bears a huge responsibility to ensure that ASEAN has a united and coordinated response towards the trade issue. Prime Minister Anwar Ibrahim has engaged some ASEAN leaders and called for a united front against this challenge.

If ASEAN is divided and chooses to negotiate bilaterally with the United States, the deals that each member secures would be different, potentially benefiting the United States more than ASEAN collectively. In the negotiation, ASEAN must present the hard facts to the United States, showing that the tariffs would not only harm ASEAN but would also be equally damaging to the US economy. If it is indeed psychological warfare, then ASEAN needs to know that it goes both ways.