The weaponisation of tariffs and the new era of coercive trade

 

From Charles Santiago

It’s not just about trade. Neither is it an isolated act. It is part of a broader trend where tariffs are no longer mere trade tools but geopolitical weapons.

By unilaterally escalating tariffs, powerful economies like the US force trading partners into a defensive stance, compelling them to negotiate for exemptions under terms that often extend beyond commerce.

This strategy does not just recalibrate trade balances; it reshapes alliances, supply chains, and even domestic policies in weaker economies.

At its core, this approach exploits dependency. Countries like Malaysia, deeply integrated into US-led supply chains, face an impossible choice: either absorb punitive costs or submit to political and economic concessions in exchange for relief.

Semiconductor giants, medical suppliers, and agricultural exporters must now navigate a labyrinth of lobbying, diplomacy, and compliance. All these while competing for the favour of Washington’s trade architects.

This is simply narcissistic.

The process is inherently unequal, privileging those with the resources to influence policy and leaving smaller players, such as Malaysia, at the mercy of shifting geopolitical winds.

For corporations, the stakes are equally high. Businesses reliant on tariff exemptions must now align their strategies with US political priorities, whether in tech decoupling from China or adhering to sustainability mandates.

Those that fail to lobby effectively risk being sidelined, while those that comply may find themselves entangled in conditions that erode profitability or autonomy. The message is clear: trade is no longer just about competition, it is about allegiance.

The long-term implications are alarming. As more nations adopt retaliatory tariffs, global commerce fragments into blocs where access is contingent on political compliance rather than market efficiency.

Supply chains, already strained by pandemic shocks and geopolitical tensions, grow more brittle.

This doesn’t just raise trade costs but risks exacerbating hidden human crises. As corporations scramble to bypass tariffs by relocating production or seeking cheaper labour, the oversight mechanisms that prevent exploitation begin to fray. When legal trade becomes more expensive and complex, illicit alternatives, including forced labour and trafficking, often fill the gaps.

But a word of caution to the US to rethink its strategy or rather nip its ego because while it may secure short-term gains, the erosion of trust in trade rules will ultimately destabilise the very system that’s enabling its current dominance.

Malaysia’s predicament underscores a harsh reality: without diversifying trade partnerships or building self-sufficiency in critical sectors, smaller economies will remain vulnerable to the whims of larger powers.

If Malaysia and similar economies fail to adapt, they risk becoming permanent subjects in an increasingly transactional and coercive global order because the weaponisation of tariffs is not just a trade policy but a reshaping of global economic sovereignty.

The question is, therefore, no longer whether to engage with the US but how to do so without surrendering strategic autonomy. - FMT

Charles Santiago is a former MP and a political economist.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.