The Trump administration’s tariff war, often dismissed as economically foolish, actually reveals a calculated theoretical strategy. While it is true that trade wars generally lead to economic pain on all sides, the distribution of that pain is asymmetrical, and this asymmetry is central to understanding the rationale behind Trump’s approach. The US, with its massive consumer base and relatively lower dependence on exports compared with countries like China or Canada or global south, is structurally positioned to absorb the shocks of a trade war better than its rivals.
The US and China (or rest of the world), might benefit most from cooperation (free trade), but each has an incentive to defect (impose tariffs) to gain a unilateral advantage. If both defect, both suffer, but if one defects while the other cooperates, the defector gains more. Trump’s early and aggressive imposition of tariffs can be seen as a pre-emptive defection, based on the belief that the US is better insulated from the negative consequences than its trading partners. Thus, the US suffers, but to a lesser extent, making the strategy rational in relative terms. When both parties threaten mutually harmful outcomes, the winner is the one who convinces the other to back down first.
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Trump’s posture which is openly antagonistic and seemingly unafraid of economic escalation, functioned as a credible threat. Smaller economies, or even large ones with greater export dependency, may be compelled to seek compromise to avoid internal crises. China and India, for instance, rely significantly on export-driven growth, and a sustained tariff war threatens factory closures, unemployment, and capital flight, costs that could destabilise the regime’s legitimacy.
In this context, the United States’ domestic market is large enough to sustain internal demand for many goods, and its financial system is robust enough to withstand some short-term volatility. Hence, even if the US experiences rising prices or temporary inefficiencies, its relative position improves if its adversaries face steeper downturns. This scenario results in a new equilibrium: a globally suboptimal outcome where mutual tariff imposition persists, but the US remains comparatively better off, at least in the short term.
Moreover, the credible threat of tariffs, even without sustained application, enhances bargaining power. Countries and corporations begin to adjust supply chains or offer trade concessions, not necessarily because the US has won economically, but because it has signalled its willingness to endure limited damage to extract strategic advantages.
However, while the tariff game may be rational in theory, betting on relative endurance and asymmetrical pain, it becomes risky when the assumptions underpinning that strategy no longer hold. If retaliation from trading partners is more coordinated than expected, the US could face a broader and more damaging backlash. Similarly, if domestic costs, such as rising prices, job losses, or disruptions in key industries, begin to escalate unpredictably, public support for the strategy may erode. In parallel, the aggressive use of tariffs can alienate allies and push rivals to consolidate their positions, forming new trade blocs or deepening alternative alliances that bypass the US.
Finally, markets may not respond with strategic patience but with panic, leading to volatility, reduced investment, and capital flight. In such conditions, what began as a shrewd manoeuvre to shift the global balance of trade may devolve into a costly and self-defeating gamble, where the equilibrium shifts from a position of relative gain to one of collective loss, with the United States unable to escape the negative feedback loops it helped create.
In a scenario where domestic social movements escalate against Trump’s tariff policy, the strategic calculus of the tariff war shifts significantly. As the economic consequences of the trade war begin to materialise, rising prices for consumer goods, job losses in export-dependent sectors like agriculture and manufacturing, and increased uncertainty in local markets, public dissatisfaction may grow, giving rise to organised resistance.
Farmers, for instance, who had been hit hard by retaliatory tariffs from China and other countries, could begin mobilising beyond traditional lobbying and engage in public protest, aligning with labour unions, small businesses, and even parts of the tech and retail industries affected by higher import costs. Urban consumers, facing rising prices on everyday items, may also join broader coalitions demanding a reversal of the policy. These movements could find common ground with environmental and anti-globalisation activists, reframing the trade war not only as economically harmful but also socially unjust and politically reckless.
What lies ahead for tariff war
As protests grow louder and gain national traction, perhaps even merging with broader movements against inequality, corporate favouritism, and authoritarian governance, Trump could be forced to dilute or reverse parts of his trade strategy. This might include scaling back tariffs, offering subsidies to affected sectors (as he did with farmers during his term), or seeking renegotiations with trade partners under more cooperative terms.
However, such a retreat would come with consequences. Domestically, it could be perceived as a loss of control or credibility, especially among Trump’s political base, who might interpret any softening as a betrayal of his “America First” rhetoric. Internationally, adversaries could view the policy reversal as a sign of strategic weakness, emboldening them to hold firm in future negotiations or retaliate further.
Moreover, the partial rollback of tariffs might fail to immediately undo the damage already done—disrupted supply chains, investment hesitations, and frayed diplomatic ties could take years to rebuild. The political cost of having triggered an avoidable crisis without durable gains would become a liability in upcoming elections, weakening Trump’s negotiating power and potentially fracturing the coalition that sustained his trade war approach.
In short, escalating social movements against Trump’s tariff policy could force a recalibration, but one that reveals the fragility of unilateral economic warfare in a complex democracy. The reversal, while necessary to placate unrest, could leave behind a legacy of diminished trust, geopolitical disarray, and weakened domestic consensus on how to engage with the global economy.
Dr TT Sreekumar is a professor at the School of Interdisciplinary Studies, English and Foreign Languages University (EFLU), Hyderabad, and serves as the director of the Educational Multimedia Research Centre.