President-elect Donald Trump regards tariffs as a powerful tool, one that can be strategically deployed to exert pressure on both allies and adversaries, addressing a range of issues from drug smuggling and unauthorized border crossings to challenges to the US dollar's supremacy. Trump, who once proclaimed himself "Tariff Man" and recently hailed import taxes as "the greatest invention ever," embraces a high-stakes, high-reward approach that aims to maximize leverage over other countries, compelling them to engage in negotiations. There is an argument to be made for employing tariffs as a formidable bargaining tool, albeit one that carries the risk of increasing consumer prices for those already burdened by the high cost of living. With the United States importing approximately $3 trillion worth of goods annually, the prospect of tariffs can wield significant influence over nations whose economies would collapse without access to the American market, should Trump impose a 100% tariff on their exports.

Stephen Moore, a former senior economic advisor during Trump's first term, articulated this leverage in a phone interview, stating, "If we couldn't trade with Mexico, we would survive. But it would be catastrophic for Mexico. That gives us leverage, and leverage is everything in negotiations." Moore, who once strongly advocated for free trade, admitted that Trump persuaded him of the utility of tariffs as a negotiating instrument. "It's a perilous game, one that could succeed," said Moore, author of "The Trump Economic Miracle." Karoline Leavitt, spokesperson for the Trump-Vance Transition, echoed this sentiment, "President Trump will swiftly act to mend and revitalize an economy that prioritizes American workers by reshoring American jobs, curbing inflation, boosting real wages, reducing taxes, slashing regulations, and liberating American energy."

Christine McDaniel, a trade official under former President George W. Bush and a senior research fellow at George Mason University's Mercatus Center, concurred that tariffs can serve as a threat to other countries, convincing them to strike deals with Washington. "It can be effective, but it must be a credible threat, and it must be substantial. And it's risky," said McDaniel. Trump's recent threat to impose a 25% tariff on all Canadian imports garnered immediate attention from Ottawa. Within days, Canadian Prime Minister Justin Trudeau was seen at Mar-a-Lago, where he reported having an "excellent conversation" with Trump. (He did not mention that Trump jested about Canada becoming the 51st state if it couldn't handle US tariffs. And on Monday, Trudeau threatened to retaliate with Canadian tariffs on US imports).

During his first term, Trump threatened tariffs on imported automobiles, a move that caught Japan's attention, a nation reliant on selling cars to Americans. Trump later secured a deal with Tokyo that was praised by farmers for opening Japanese markets to US agricultural products. "It was a win-win," McDaniel remarked, adding that the deal was necessary because Trump withdrew the United States from the Trans-Pacific Partnership, resulting in a "significant loss" for US agriculture. It's conceivable that Trump's second term could utilize tariffs, or the mere threat of them, to prompt Mexico, Canada, China, or other nations to tackle pressing issues such as drug trafficking.

Moore, a senior visiting fellow in economics at the Heritage Foundation, a conservative think tank, suggested, "Employing tariffs as a weapon to encourage other countries to prevent drugs from entering the United States could save lives." However, the concessions Trump claims may not be as substantial as they seem. For instance, in 2019, Trump celebrated a Phase 1 trade agreement with China as a significant victory for farmers because Beijing pledged to substantially increase its purchases of US agricultural products. Yet, according to a Commerce Department report, China fell significantly short—by more than $200 billion—of its commitment to buy US goods and services. Erica York, senior economist and research director at the Tax Foundation, a right-leaning think tank, expressed skepticism about tariffs being an effective bargaining chip, especially since the mere threat of tariffs can harm the US economy, the stock market, and depress business investment. "It's more for show—and that show harms the economy by increasing uncertainty," York said.

There's also the potential cost of using tariffs as a bargaining chip: a loss of trust from friends and allies. Dean Baker, co-founder of the left-leaning Center for Economic and Policy Research, argued that Trump could achieve some short-term wins by threatening to impose massive tariffs on Mexico and Canada. "I'll bet you anything that Mexico and Canada will try not to be in that situation again. It's not a very good long-term strategy," Baker said. "It's like breaking a contract. You could do that, but then no one will work with you without paying in advance." Another way tariffs can be employed is to target national security vulnerabilities. For example, President Joe Biden cited national security in his decision in May to increase tariffs on $18 billion of imports from China, including batteries, critical minerals, and electric vehicles. "Concentration of critical minerals mining and refining capacity in China leaves our supply chains vulnerable and our national security and clean energy goals at risk," the White House stated at the time. However, York warned that it's "very easy" for national security to be "abused" as a justification for tariffs. She pointed out how Trump used national security as a pretext for imposing tariffs on steel and aluminum from close allies, including Canada, the European Union, Japan, and the United Kingdom.

Trump has also attempted to use broad tariffs to protect manufacturing jobs, particularly in Rust Belt communities that have suffered from the decline of the US manufacturing sector over decades. While this may make political sense—Pennsylvania, in the heart of the Rust Belt, was the most significant battleground prize in the last three presidential elections—many economists question the wisdom of this policy. McDaniel, the former trade official under George W. Bush, said tariffs can provide some industries with a temporary reprieve but ultimately cost consumers. "It can be a very short-term gain for a very small group of people. But you end up hurting more people than you help, and it's only temporary," said McDaniel. "Sooner or later, global market conditions catch up with you. You can't outrun them." Baker concurred, arguing there is a "myth" that factory jobs are still well-paying jobs worth preserving. "The manufacturing wage premium has largely disappeared. What's the point of trying to save jobs that aren't particularly good jobs—and making everyone else pay more?" Baker said.

Last month, Trump threatened to impose a 100% tariff on Brazil, Russia, India, China, and South Africa—the BRICS nations—unless they abandon efforts to create a rival currency to the US dollar. Yet, this threat left many puzzled, in part because they don't believe the US dollar's dominance is genuinely at risk. Moreover, countries should want to use the dollar because it's the best currency and it's backed by robust institutions and a dynamic economy—not because there is a gun to their head. Even Moore admitted that using tariffs to threaten BRICS nations is a "very, very flawed strategy" by Trump. "He's wrong on this BRICS thing," he told. Regardless of the rationale for threatening tariffs, there is a danger that it all spirals out of control by reigniting inflation, alarming the stock market, and sparking a full-blown trade war. US tariffs invite retaliation from other countries. During Trump's first term, everything from US autos and soybeans to whiskey were targeted with retaliatory tariffs. Moore noted that history shows this can all end disastrously, citing how the Smoot-Hawley tariffs of 1930 and subsequent retaliation intensified the Great Depression. "You don't want to get into a tit-for-tat situation," Moore said.