President Donald Trump wants you to know that he likes tariffs. He has long boasted about it being his favorite word and, in his first three weeks in office, has already had multiple opportunities to implement them.

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But some economists and business leaders have different ideas. Concerned about persisting inflation, especially among common household goods like eggs and other groceries, high interest rates and stock market fluctuations, some thought leaders worry Trump’s tariffs may be too blunt of an economic weapon.

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We break down Trump’s decision to make tariffs a central part of his economic strategy, including how he has used tariffs in the past, and what the U.S. could gain in upcoming and ongoing trade negotiations.

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Trump’s tariff playbook: Lessons from his first term

In his first term, President Trump used tariffs as a bargaining chip in high-stakes trade negotiations, most notably with China, Canada and Mexico.

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‍China: In 2018, Trump imposed 25% tariffs on $50 billion worth of Chinese goods, later expanding them to cover $360 billion in imports. China retaliated, but the pressure led to a 2020 trade deal, committing China to purchasing an additional $200 billion in U.S. goods over two years.‍

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Canada and Mexico: In 2018, Trump threatened to withdraw from NAFTA, calling it a bad deal for the U.S. and American workers. He placed tariffs on steel and aluminum as leverage to force Canada and Mexico to renegotiate a new trade framework, eventually leading to the United States-Mexico-Canada Agreement. The USMCA included stronger protections for workers and new manufacturing requirements for the automotive industry.‍

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Mexico: Trump said he would put escalating tariffs on all Mexican imports in 2019, beginning at 5% and increasing to 25%, unless Mexico cracked down on migration from its borders. Mexico quickly deployed thousands of troops to its southern border before the tariffs before they took effect.

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Trump’s approach has been simple and consistent: impose or suggest punishing tariffs to force world leaders to the negotiating table and then extract favorable economic or policy concessions before rolling back the tariffs.

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Trump’s first-term tariffs have won him short-term, sometimes immediate policy wins, but they have not always fared well for the U.S. Notably, his negotiated pact with China fell short of its two-year deadline and led to higher costs for U.S. businesses and consumers. Some industries, such as agriculture, suffered from retaliatory tariffs from China and other world economies. 

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‍The art of the tariff: What is Trump’s tariff strategy in his second term?

‍In just the first few weeks of his second term, Trump has already signaled that tariffs will once again play a central role in his economic and geopolitical strategy.

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‍Trump's tariffs on Colombia‍

Trump floated the idea of 25% tariffs to force Colombia to accept deported aliens, which the South American country did within a day. ‍

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Trump's tariffs on Mexico and Canada‍

Trump announced 25% tariffs on Mexican and Canadian goods (and 10% tariffs on Canadian energy) in response to the ongoing problem of alleged fentanyl and human trafficking into the U.S. However, within days, he paused the tariffs for 30 days after securing new commitments from both countries to harden their borders and combat drug trafficking. The result mirrors Trump’s first-term use of tariffs, not necessarily to raise revenue or protect domestic industries.

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Trump's tariffs on China‍

Trump implemented an extra 10% duty on Chinese goods in retaliation for what he calls China’s “unreasonable behavior,” including alleged intellectual property theft and forced technology transfers.

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Trump has also hinted at expanding his tariff regime to Europe and Asia. He has proposed new tariffs on automobiles and technology imports from the European Union and South Korea to bring back manufacturing to the U.S. and update long-existing trade agreements.

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‍Trump’s tariffs: What to watch out for next

‍As Trump reactivates his preferred tariff strategy, businesses should prepare for volatility and uncertainty. Trump has suddenly called for tariffs and has withdrawn them just as quickly.

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Global supply chains, many already strained in Trump’s first term, may be disrupted further. Instead of being withdrawn completely, some tariffs may be put on hold, which might tempt companies with cross-border operations to frontload shipping or increase domestic trucking in as few as 30 days, for example. The frequent starts and stops could be challenging to manage in short order.

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Finally, the new economic and policy agreements to avoid tariffs could lead to many new regulations or consequences that businesses may not foresee. Staying agile and informed is key for companies and logistics professionals

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‍The bottom line

‍President Trump prides himself on being a master negotiator and businessman. His tariffs can be seen as the so-called best alternative to a negotiated agreement, or the best course of action someone can achieve if an agreement cannot be made, according to popular negotiation theory.

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In short, President Trump may not necessarily want to enact tariffs on other economies’ imports; instead, he may be using tariffs as a bargaining tool to pressure others, even longtime trade partners or allies, to make concessions for the U.S.’ benefit. Ultimately, Trump’s planned or actual use of tariffs is not likely a protectionist play.

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Rick Chen is the director, communications at Mothership. He was previously the head of communications or company spokesperson for Credit Karma, Gusto, Metromile and Blind and has been featured in accounting, HR, insurance and tech trade publications and national outlets like CNBC, Forbes, Lifehacker, Reuters, Rolling Stone and more.