The rest of the world understands what many economists still don’t: the U.S. economy is keystone of the global trading system. | Economy
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You Can’t Retaliate Against Your Best Customer
Retaliation requires leverage. And in trade,
leverage comes from being able to walk away. But no one wants to walk away from the U.S. consumer.
Wolf singled out tariffs on Brazil and Laos as particularly egregious. But these examples actually underscore the point. Laos, with a tiny bilateral surplus, has no fallback market. Brazil—despite its bluster—relies on U.S. imports of commodities, aircraft, and metals to sustain key industries.
The power imbalance isn’t ideological. It’s structural.
And the same holds for bigger players. Germany doesn’t want to become a net importer. Japan can’t afford to be. China fears what would happen if it stopped running surpluses.
There is no one in a position to replace the U.S. as the buyer of last resort.
That’s why they didn’t retaliate. They negotiated.
The Realignment Already Happened
The most telling fact is not who attacked Trump’s tariffs, but what happened after. If the strategy were as flawed as Trump’s critics insisted, we would have seen retaliation, withdrawal, or disruption. Instead, we saw
a parade of trade envoys looking for terms.
Because in the end, the rest of the world understands what many economists still don’t:
the U.S. economy is a keystone of the global trading system. You attempt to rebel against it, and the whole export-led model collapses.
America’s critics may not like the new rules, but they still need access to the American market.
