Donald Trump’s Tariff Strategy: A Businessman’s Approach to Global Leverage
Donald Trump, whose career was built in real estate development, is clearly using tariffs as leverage—not in the way a libertarian or Austrian economist might envision, but from the practical mindset of a dealmaker.
What Trump is doing, in essence, is a form of high finance: creating noise to waste the time and resources of his opposition. The goal? To force negotiations in America’s favor, particularly because the U.S. economy remains stronger than much of the world.
In today’s era of artificially low central bank interest rates, the reality is that if your interest rates are near zero, your economy is fundamentally weak. While this isn’t true for every nation (Switzerland being a notable exception), most countries use low rates to mask structural problems. Switzerland, for example, keeps the franc weak to support exports, even though it arguably has the strongest currency fundamentals due to its superior property rights framework—making it a preferred destination for foreign capital.
Most countries, especially in Europe, suffer from weak property rights protections, which discourage investment. As a result, they resort to tariffs and regressive taxation just to retain capital within their borders.
Trump understands this. By using rhetoric and leveraging the slow U.S. court process, he forces other nations to the negotiating table. Ironically, even left-wing opposition in the U.S. that blocks his tariffs may still be helping him. Why? Because the mere threat of tariffs, paired with his domestic deregulatory agenda, continues to attract capital to the U.S.
The Downside of Trump’s Tariff Tactics: Messaging and Media
The biggest risk to Trump’s strategy isn’t economics—it’s perception. Media backlash, emotional rhetoric, and isolated economic fallout in blue states or cities could create political problems. For example, Canadian tourism in places like Old Orchard Beach, Maine—a region that didn’t vote for Trump—is reportedly in decline.
But politically, Trump doesn’t have to pretend to care about places that didn’t support him, especially when he’s dealing with the consequences of policies shaped by blue states and their leadership.
Still, this partisan approach could backfire. The long-term impact on national unity and economic cohesion remains to be seen. But from a big-picture perspective, Trump appears to be trying to break high-tariff economies—particularly in Europe—by forcing them to waste time and energy.
Why Capital is Fleeing to the U.S.
Despite being in office for less than six months, Trump’s strategy feels impactful because of how weak the global economy is right now. Europe is fragile. And Trump is clearly aiming to push these economies to a breaking point before the 2026 midterms.
For investors, this points to opportunity—particularly in the U.S. That said, it’s important to remain cautious. If Trump fails to disrupt the global order, this surge in capital may turn out to be a short-term “pump and dump.” But if he succeeds, the U.S. could become an even stronger global magnet for wealth.
Why Trump Has the Upper Hand
The European Union is structurally vulnerable. It doesn’t have the monetary flexibility of the U.S. Federal Reserve, and it operates under intense regulatory burdens. If the EU is blocked from accessing U.S. markets, deflationary pressures could intensify across Europe, forcing countries to reconsider their stance on market access.
The EU acts like a centralized bloc, often trying to impose its regulatory will globally. But its heavy bureaucracy makes business difficult, and while countries like China and Russia exploit this, they still struggle to move money out of Europe. The U.S. benefits greatly here—not only from its lower pre-Trump tariff environment, but also from the dominance of the U.S. dollar.
There are more U.S. dollars outside the country than inside, and that gives America enormous leverage. Even if other countries tried to de-dollarize, their poor property rights frameworks and fragile economies make it almost impossible to replace the greenback without entering a hyperinflationary spiral.
Why the U.S. Doesn’t Hyperinflate
With so many U.S. dollars in circulation, you might ask: why hasn’t the U.S. experienced hyperinflation? The answer is property rights—and free speech.
Like Switzerland, the United States offers among the strongest property rights in the world. But the U.S. also has another unique strength: the freedom to express economic ideas. Free speech allows for the kind of open discussion that can steer policy away from disaster. In countries where certain financial ideas are deemed “offensive” or “illegal,” innovation dies—and so does wealth creation.
In parts of Europe, for example, permanent life insurance is either nonexistent or heavily regulated, limiting the creation of capital products that are common in the U.S. This stifling of creativity and financial innovation is a key reason American economic dynamism continues to outpace its peers.
Trump Knows the Weaknesses—and How to Exploit Them
Trump, with his international business background, understands America’s strengths—and other countries’ weaknesses. He’s not negotiating like a politician; he’s negotiating like a businessman who knows what leverage actually looks like.
If you understand that, you’ll be in a better position to make smart short- and long-term investment decisions.