Trumponomics 2.0 Fashions Trade into a Hierarchy of Allies & Foes

Spread love

Trump’s tariff blueprint is less about blanket protectionism and more about leverage—rewarding allies, while keeping pressure on Asia

By S JHA

MUMBAI, August 22, 2025 — Eight months into Donald Trump’s return to the White House, the contours of “Trumponomics 2.0” are becoming clearer. Economy commentator Trinh, writing on X, describes the new tariff regime as less of an all-out assault on global trade and more of a system of leverage, designed to sort partners into “buckets” and force alignment with US priorities.

The EU has emerged as a relative winner in this recalibration. Under the new deal, Brussels faces a maximum 15% all-inclusive tariff, with sectoral ceilings applied to cars, semiconductors, pharmaceuticals, and lumber. Exemptions for aircraft, aircraft parts, and generics reflect a carefully negotiated compromise. As Trinh puts it, “EU tariffs are NOT stacked. They are ceilings.” In effect, the EU pays for market access by drifting closer into Washington’s orbit—on trade, investment, and even defence cooperation.

Contrast that with Asia, where Trump’s tariffs are blunt and punitive. India sticks out with a punishing 25% tariff burden, second only to China. While China remains the primary target, with combined tariffs at 55% when Trump’s first term is factored in, New Delhi finds itself facing steep duties despite its “strategic partner” status. “India sticks out like a sore thumb,” Trinh observed, noting that the added 25% highlights how Washington views India’s trade posture as unfair.

The logic, Trinh explains, follows the Miran paper that appears to be Trump’s playbook: tariffs are not meant to be uniform but conditional. Allies like the EU earn tariff relief by aligning more closely with US policy, while others—Japan, South Korea, India—must negotiate or risk being left in higher-tariff “buckets.” Section 232 measures, particularly on steel and derivatives, add further uncertainty, with products suddenly subjected to duties without warning.

This “earn your tariff cut” model has profound implications. For the EU, it nudges policy toward dependence on US economic and security structures. “For India and much of Asia, it signals that Washington’s embrace is far from unconditional. And for China, it underlines the enduring centrality of economic warfare in Trump’s worldview,” added the Vietnam-based economy commentator.

Ultimately, Trumponomics 2.0 is less about protecting American workers in a blanket fashion, and more about restructuring the global trade system into a hierarchy of allies and adversaries—one tariff ceiling at a time.