America should think twice before replacing sanctions with tariffs

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The writer is a professor at Johns Hopkins University and co-author of “Underground Empire: How America Weaponized the World Economy” with Abraham Newman, who also contributed

Donald Trump likes to say that only he can protect America from being “ripped off” by greedy allies. So why does he want to replace the one cornerstone of national security that foreigners subsidize with a system that makes American consumers pay the cost?

In recent weeks, Trump has talked about lifting US financial sanctions against Russia and China, which he says undermine the dollar and make China’s currency more attractive. Instead, Trump wants to turn tariffs into America’s tool of coercion. The threat of 100 percent tariffs could force reluctant governments to stick with the dollar or force NATO members to spend more on their military.

America has an unhealthy relationship with financial sanctions. But he latched onto them because he doesn’t have to pay most of their costs. It makes foreigners pay instead. Trump wants to ditch that, replacing US sanctions power with an expensive imitation of Chinese economic coercion.

The former president is unlikely to be interested in the long-term risks of overuse of sanctions. He probably wants to ease the pressure on Russia and cryptocurrency (which is increasingly clashing with the US security state). But even if he is not sincere, he is not completely wrong.

The dollar’s strength allows the US to corner foreign banks and financial actors, forcing them to cut off adversaries’ access to the global financial system. That is why America’s financial sanctions are so strong. But as officials such as former Treasury Secretary Jacob Lew have argued, the more the US exploits the dollar, the more other countries will seek to avoid it.

Still, the dollar, if used carefully, allows America to carry out coercion on the cheap. China is not nearly so lucky. They have to pay to punish others. The Chinese government does not control global finance and instead has weaponized access to China’s markets to inflict economic pain on other countries.

Disrupting market access hurts China and its targets, undermining its trade and undermining its prosperity. Chinese businesses and consumers lose access to foreign goods or have to pay more for them. For example, when China wanted to punish Australia, it manipulated regulations to stop imports of Australian coal. That didn’t work too well. Restricting market access has cost China $2 billion a week, while encouraging Australia to find profitable markets elsewhere.

That’s the approach Trump wants to copy, using huge tariffs to cut off market access instead of regulation. To borrow the language of his opponent Kamala Harris, Trump wants to replace America’s key economic security weapon with a highly ineffective “sales tax” on American consumers and businesses. Instead of taking advantage of China’s vulnerabilities, he wants to emulate them.

This would happen on an enormous scale: Trump promises “higher tariffs than you’ve ever seen in this country.” And as JD Vance suggests, it is likely to be used to punish allies as well as, or perhaps even instead of, adversaries.

Of course, the more the US uses tariffs to punish allies, the more it will look elsewhere for markets. The German economy is already deeply involved in China’s. It will become even more so if Trump wins and gets his way. The careful efforts of the Biden administration to build long-term cooperative agreements with allies in the export and production of semiconductors will be torn to shreds.

It is true that the US has become addicted to financial sanctions. But punitive tariffs are a much harder drug, with harsher immediate side effects and a worse long-term prognosis.