CNN
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President Donald Trump’s tariffs are designed to boost US manufacturing, restore the balance of trade and fill America’s coffers with tax dollars. The White House’s record on those three goals has been a decidedly mixed bag.
But Trump has a fourth way that he likes to use tariffs. Trump has repeatedly threatened tariffs as a kind of anvil dangling over the heads of countries, companies or industries.
The subjects of Trump’s tariff threats have, at times, immediately come to the negotiating table. Sometimes, threats just work.
The most recent example was over the weekend, when Canada backed off its digital services tax that was set to go into effect Monday. Trump had railed against the tax on online companies, including US corporations that do business in Canada. On Friday, he threatened to end trade talks with America’s northern neighbor. Trump also said he would set a new tariff for Canada by the end of this week.
On Sunday, Canada backed down, saying it would drop the tax to help bring the countries back to the table.
“To support those negotiations, the Minister of Finance and National Revenue, the Honourable François-Philippe Champagne, announced today that Canada would rescind the Digital Services Tax (DST) in anticipation of a mutually beneficial comprehensive trade arrangement with the United States,” the Canadian government said in a statement.
On Monday, United States and Canada restarted trade discussions.
“It’s part of a bigger negotiation,” said Prime Minister Mark Carney in a press conference Monday. “It’s something that we expected, in the broader sense, that would be part of a final deal. We’re making progress toward a final deal.”
Trump’s first tariff action of his second term came against Colombia after President Gustavo Petro in late January blocked US military flights carrying undocumented migrants from landing as part of Trump’s mass deportation effort.
In turn, Trump threatened 25% tariffs on Colombian exports that would grow to 50% if the country didn’t accept deportees from the United States.
Colombia quickly walked back its refusal and reached an agreement to accept deported migrants.
“You can’t go out there and publicly defy us in that way,” a Trump administration official told CNN in January. “We’re going to make sure the world knows they can’t get away with being nonserious and deceptive.”
Trump ultimately dropped the tariff threat.
Citing a lack of progress in trade negotiations, Trump in late May said he was calling off talks with the European Union and would instead just impose a 50% tariff on all goods from there.
“Our discussions with them are going nowhere!” Trump wrote on Truth Social on May 23. Later that day in the Oval Office, Trump said he was no longer looking for a deal with the EU.
But three days later, European Commission President Ursula von der Leyen spoke with Trump and said the EU would fast-track a deal with the United States. Trump then delayed the 50% tariff deadline until July 9.
Although a deal hasn’t yet come through, Trump’s threat got Europe to get serious, in the White House’s view, on trade, when it had been slow-walking negotiations, trying to get a consensus from its dozens of members.
The Trump administration attributes a large number of corporate investments in the United State to its tariffs and tariff threats, although it’s often hard to draw a clear line from Trump’s trade policy to a particular company announcing it will build an American factory. Those decisions often take years of planning and are costly processes.
For example, shortly after Trump doubled down on steel and aluminum tariffs and included finished products like dishwashers and washing machines in the 50% tariff, GE Appliances said it would move production from China to Kentucky. The company said it had planned the move before Trump announced the derivative product tariffs – but Trump’s trade war accelerated its plans.
In some other cases, Trump’s threats have largely gone nowhere.
Furious with Apple CEO Tim Cook for announcing the company would export iPhones to the United States from India – rather than building an iPhone factory in the United States – Trump announced a 25% tariff on all Apple products imported to the United States. He threatened the same against Samsung.
But Trump never followed through with his threat, and Apple and Samsung haven’t budged on their insistence that complex smartphone manufacturing just isn’t practical or possible in the United States. Skilled manufacturing labor for that kind of complex work isn’t readily available in the United States – and those who do have those capabilities charge much more to work here than their peers charge in other countries. Complying with Trump’s demands could add thousands of dollars to the cost of a single smartphone – more than Trump’s threatened tariff.
Trump similarly threatened Hollywood in May with a 100% tariff on movies made outside the United States. That left many media executives scratching their heads, trying to figure out what the threat entailed – a threat that ultimately never materialized. The administration later acknowledged Trump’s statement about the tariff was merely a proposal, and it was eager to hear from the industry about how to bring lost production back to Hollywood.
Nevertheless, Trump’s threats against the movie industry raised awareness about the bipartisan issue, and California’s Democratic Gov. Gavin Newsom subsequently posted support for a partnership with the Trump administration to incentivize movie and television makers to film in the state again.
Trump’s threats don’t always work, and sometimes his tariffs have kicked off a trade war, raising prices in a tit-for-tat tariff escalation. But a handful of times, including this weekend, his tariff threats have gotten America’s trading partners to agree to major concessions.
CNN’s Luciana Lopez and Michael Rios contributed to this report.
