Economic Means, Political Goals: How the Trump Administration Weaponised the Economy (Again)
By Dawid Walentek
Dr. Dawid Walentek is a postdoctoral researcher with the Ghent Institute for International and European Studies (GIES).
The second Trump presidency has shown a major desire to reorganise international economic exchange and the institutional architecture of trade. The second Trump administration in its first year in office argued that breaking trade relations will make the US more secure and American households wealthier. This foundation allowed to weaponise the US economy in an unprecedented way – tapping into tariffs, export controls and sanctions, among others, to reach political objectives.
Thin ideology, lasting consequences
Investigations of the world order and the position of the United States (US) are highly varied, for example placing neoliberalism, colonialism, trade liberalisation or financial architecture at the centre of attention. Yet, they do share a single line of thought, namely the fact that the US is the greatest beneficiary of the existing system regulating international affairs in general and international economic exchange specifically. However, the recent populist turn in US politics has argued precisely the opposite – the US is bearing the cost of the current world order and, as a net payer, it is contributing to the well-being of everyone else at the expense of American households.
The idea that the US is a loser of trade liberalisation has gained traction among Republican lawmakers, breaking a decades-long legislative effort for trade liberalisation (Hennessey, 2011). Traditionally, a majority of Republicans and around a third of Democratic lawmakers would vote in favour of economic liberalisation, creating a centre-right alliance that has driven the US trade policy. Currently, neither of the two parties runs a trade liberalisation platform; once in office, Biden kept the trade restrictions put up by Trump during his first presidency and vowed to move the course of US economic policy towards protectionism. In addition, negative sentiments towards trade liberalisation are matched with disregard for the institutions set up with the help of the US to govern the global economy – for example with the vetoes to staff the World Trade Organisation (WTO) by Trump and Biden alike, making the WTO dysfunctional for years already.
The argument that the US is having the short end of the stick when it comes to international trade resonates among the American voters too. An opinion poll conducted by Pew Research shows that close to half of Democratic voters believe that the US has lost more than it has gained from international trade and this proportion has been stable over the years. In the last decade, we have observed Republican voters to shift from a half to three-quarters claiming that the US has lost more than it has gained from trade – making Republicans more sceptical of the benefits of trade liberalisation relative to Democrats (Gracia, 2024). This is matched with a strong belief among Trump supporters specifically that free trade agreements have been bad for the US – taken together creating conditions for broad support for the second Trump administration to reorganise the US trade policy. While Trump’s populism is described as a “thin” ideology, built around a competition between elites and ordinary people (Mudde & Kaltwasser, 2017), it has striking consequences for international trade and its institutional architecture.
Economic means for political goals
The newly found political consensus in the US about the price that America pays for upholding the world order and its international trade has two intertwined consequences. First, there are no apparent audience costs for political leaders when deciding to uphold trade restrictions and no benefits for pursuing trade liberalisation – across the political spectrum. Second, voters of Trump are strongly in favour of all measures that undermine the international economic system – effectively capturing the Republican agenda in respect to trade. The second Trump administration frequently sends signals that speak to voters’ preferences – for example with Trump calling “tariffs” one of the most beautiful words in the dictionary, following his inaugural speech in January 2025. The shift in the preferences of US voters, and Republican voters specifically, away from trade liberalisation and economic engagement that occurred after the first presidency of Trump, paved the way to weaponise the American economy during Trump’s second term in an unprecedented fashion and pace.
Tariffs became the default tool of foreign policy under the second Trump administration. They are exercised in multiple ways and with varying objectives. To start, in the first year of Trump’s second term, we have seen tariffs as a tool that broadly redefined US relations with the world and America’s role in the architecture of the world economy. On the so-called “Liberation Day”, in April 2025, Trump imposed duties on goods and services from nearly all countries in the world, using a baseline of ten per cent and with higher rates for countries observing a large trade deficit with the US. What followed, are country-specific tariffs, with more clearly spelled out motivations – for example a 40 per cent tariff on Brazil to alter the situation of Jair Bolsonaro, a Brazilian ex-president currently serving a prison sentence. What is more, the second Trump administration began threatening and implementing secondary tariffs – a policy regime where countries that trade with a specific target state also face higher tariffs for the US market. For example, Trump threatened 25 per cent tariffs on states that trade with Iran, in the wake of the Iranian protests in early 2026, and earlier in 2025 introduced an additional tariff of 25 per cent on India for purchasing Russian oil. In the majority of the cases the objectives of new US tariffs were a mix of fiscal considerations, pursuit of national interest through improving the economic position of the US and foreign policy objectives, either specific to the Trump administration (e.g., support for far-right figures abroad) or in line with long-term US goals (e.g., undermining the economic position of Iran).
The current use of tariffs by the US is a reminiscence of non-targeted sanctions, but in a light (and inverted) version. Comprehensive sanctions were abandoned by policymakers from late 1990 onwards as the unintended consequences – suffering of the general population in the target state – became increasingly clear and unacceptable to the public (Gordon, 2019). The shift towards targeted sanctions was supposed to address these concerns and assure that sanctions are predominantly painful for specific groups within the target state, for example a government and its allies or a single industry. The use of tariffs by the second Trump administration offers a peculiar return to non-targeted sanctions, as the policymakers in Washington expect them to generate general costs for the target – at least in their communication with the US public. By the same token, secondary tariffs, like secondary sanctions, also operate in a non-targeted fashion – with, for example, US tariffs on India having broad consequences for the Indian economy, undercutting growth projections (Bhargava, 2025). At the same time, the exact distribution of the costs of tariffs is unclear; unlike in the case of sanctions, goods and services covered by tariffs still enter the US market, albeit with a higher price-tag. Consequently, it is the price elasticity of demand and supply that determine whether (and to what extent) the costs of tariffs are paid by the exporters or by the US consumers – with current research offering negative to mixed findings on the welfare effect for American consumers (Manak, 2026).
While tariffs make it more expensive to import goods and services into the US, export controls restrict the ability to export US products. Export controls also (re-)entered the toolkit of the second Trump Administration – with an initial ban on exports of advanced chips used for AI technology, following security considerations and a desire of Washington to continue its technological edge over China, a policy in line with the previous standing of the Biden administration. However, Trump in early 2026 – after one year in the office – mixed export controls on advanced chips with tariffs. In the new framework exports are permitted, but chips need to first be imported into the US, and exports are capped at a volume equal to roughly half of advanced chips sold in the US. This strategy mixes narrow security considerations related to China’s development of advanced technology, with broader concerns about offshore production of strategic goods like latest chips and it is paired with economic considerations of spurring investment in production facilities in the US and raising tax revenue on goods that otherwise would have either not at all (complete export ban) or directly travel to China from factories in Taiwan.
Although tariffs and export controls made a splash in the news, the second Trump administration has not abandoned sanctions – a policy tool favoured by US presidents for decades (Attia, 2024). Already early in 2025 Trump has substantially strengthened sanctions on Iran and added pressure to economic coercion towards Cuba, Venezuela and Russia, among others. During the second Trump administration we have also seen a re-emergence of a practice paired with sanctions on Iraq under Saddam Hussein, where economic policy was matched with the use of naval power – blocking entry of ships to Iraq just off its coast. While in the case of Iraq we observed a complete naval blockade, the second Trump administration is during its second term complementing sanction policy towards Iran, Venezuela and Russia with seizing of listed oil tankers, further reducing prospective revenues.
The combination of export controls and tariffs advanced by Trump’s second administration showcases how quickly different tools of economic coercion can stand in conflict with one another. A successful implementation of the tariffs on chips would translate to a further shift in the production to the US, yet it would also mean that Chinese demand for cutting-edge chips would be satisfied (McGuire, 2026). An exclusive focus on export controls could potentially allow for the US to sustain its technological edge over China, yet at an economic loss. What is more, in the second Trump administration the line between sanctions, tariffs and export controls is increasingly blurry. Partially because they are deployed in a combination and partially because Washington uses all these tools to achieve a broad spectrum of objectives – ranging from national security to domestic audiences, while also attempting to use economic coercion as a tool of industrial policy. Here, the reoccurring message from the second Trump administration is that the current world order has to be redesigned to favour US interests and American households.
Price of economic coercion
The weaponisation of the economy for political objectives by the second Trump administration is a policy regime consistent with the ideological foundation of Trump’s movement and the shift in the beliefs of Trump’s voters that the US and American households are bearing the costs of the world order that the US has created. Consequently, reconstructing it with the use of tariffs, exports controls or sanctions – or a mix of these policies – is beneficial and puts “America First.”
Nevertheless, the advances of Trump’s brand of populism into economic policy and international trade come at a price. First, there is a limit to the frequency of use of economic tools. Once trade relations weaken – with fewer goods moving between the US and the target state – the impact of tariffs and sanctions may diminish. Second, uncertainty around the global trade regimes, breaking of long-standing trade ties and hollowing out of institutions that govern international commerce may have long-term consequences – reducing international economic exchange. Third, the dissonance between the narrative that overturning US trade policy and the global economic regime is beneficial for American households and the reality of higher prices and a less dynamic labour market may generate a backlash among US voters.
References
Hennessey, K. (2011, December 13). Free trade voting patterns in Congress. Hoover Institution.
Gracia, S. (2024, July 29). Majority of Americans take a dim view of increased trade with other countries. Pew Research Center.
Mudde, C., & Kaltwasser, C., R. (2017). What is populism? In: Populism: A Very Short Introduction. Oxford University Press.
Gordon, J. (2019). The Hidden Power of the New Economic Sanctions. Current History, 118(804), 3-10.
Bhargava, D. (2025, September 6). Tariffs weigh on India’s growth outlook despite tax relief. ING Think.
Manak, I. (2026, January 16). How Economic Security Helped Drive Trump’s Tariff Wars. Time.
Attia, H. (2024). Divert when it does not hurt: The initiation of economic sanctions by US presidents from 1989 to 2015. Review of International Economics, 32(1), 109–131.
McGuire, C. (2026, January 14). The New AI Chip Export Policy to China: Strategically Incoherent and Unenforceable. Council of Foreign Relations.