Trump's chaos is a strategy and he plays it well

The US president's tariff wars have had almost everyone on tenterhooks, defensive and in a weak bargaining position - exactly what he wanted

- Natale Labia

On 1 August, US President Donald Trump's so-called reciprocal tariffs were due to take effect (barring any admittedly typical last-minute changes).

With his "Liberation Day" on 2 April feeling like a distant memory, the world now appears to be entering a new chapter of trade protectionism. As this shift takes place, five key dynamics offer clues as to how this new phase of US trade policy is likely to play out.

First, confusion is the strategy, not an accident. The lack of formal agreements entered into by Trump, let alone legally binding ones, is not simply down to bureaucratic delays. Trump's preference for deals that are not worth the handshake reflects a deeper tactic: using chaos as leverage in his perennial quest for the "art of the deal".

The vagueness and improvisation are not bugs in the system, they are the system. By keeping trade agreements intentionally loose and inconsistent, Trump maintains the upper hand, wielding unpredictability as an axe to dismantle what was, perhaps optimistically, referred to as "the global order".

Second, the notion that "Trump always chickens out", a theory dubbed "Taco", has been overstated. Although there have been moments of retreat since 2 April, many of his pledges have stuck. The 10% baseline tariff announced at the time now appears to be a permanent fixture.

Sector-specific duties in the US, such as on cars, steel and aluminium, remain substantially higher than before and, crucially, have become fiendishly complex. Sam Lowe of Flint Global recently tried (heroically) to make sense of what tariff the US might apply to canned Belgian beer, a task that underscores the absurd intricacy and gimmickry of these protective measures. The long-term effects this will have on the global economy are likely to be profound and permanent.

Weak response