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Insights, analysis and must reads from CNN's Fareed Zakaria and the Global Public Square team, compiled by Global Briefing editor Chris Good

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April 11, 2025

Fareed: Trump’s Delayed Tariffs Invite Crony Capitalism

Now that President Donald Trump has delayed his country-specific tariffs on most of the world, Fareed writes in his latest Washington Post column that this sets the table for corruption.
 
Global markets welcomed the news of a pause in Trump’s global trade war, but Fareed writes that “sighs of relief might be premature. For one, America’s tariffs are still at a 100-plus year high by one measure, according to the Yale Budget Lab, which will cost Americans dearly. Even more important, these tariff negotiations will inevitably result in a cascade of corruption. The American economy is being transformed from the leading free market in the world to the leading example of crony capitalism.”
 
US trading partners now face pressure to approach the Trump administration with counteroffers, to which Trump has proclaimed himself open, seeking deals to avoid the steeper tariffs once Trump’s 90-day pause expires.
 
“With the highest tariffs in the industrialized world,” Fareed writes, “the American bazaar is now open. Countries and companies will descend on Washington to cut deals and gain carve-outs, exemptions and special terms. In the past few weeks, Vietnam has announced a flurry of measures designed to mollify the Trump administration and get a good trade deal. Among them: approval for Elon Musk’s Starlink to operate in the country and a plan to expedite a Trump Organization project. In fact, there are at least 19 Trump-branded real estate projects around the world that will be under development while he is president, and possibly many others in the works. … It has been deeply dispiriting to watch some of America’s legendary capitalists—canonical figures from Wall Street—endorse a dealmaking process by which the American free market is going to be pockmarked with tariffs, taxes, rules, exemptions and carve-outs.”

The Trade War Is Now About China

For now, anyway, the main feature of Trump’s global trade war is this: very high US tariff rates on China (145%) and steep Chinese retaliatory tariffs on the US (125%). Such friction between the world’s two largest economies could be consequential. How will it play out?
 
“More tit for more tat and more chaos,” Stephen Puschel writes in his China Bystander blog, describing the events in recent days. “This has all brought the China–US trade relationship to its most precarious since at least the first Trump administration.”
 
Trump could engage China in the same sort of haggling that’s expected to happen between the US and many other countries around the world. A potential sale of TikTok by Chinese owner ByteDance, which has been barred from operating TikTok in the US, could play a role in negotiations, according to Scott Kennedy, Ilaria Mazzocco, and Ryan Featherston of the Center for Strategic and International Studies. “[A] central issue is whether Presidents Trump and Xi will step up their direct communication,” the CSIS authors write. “Major decisions on how to manage the relationship—including de-escalation and authorization negotiations—can only be made by the two of them.”
 
The US is playing a bad hand against China, Adam S. Posen argues in a Foreign Affairs essay. Currently, Posen writes, the US needs China’s exports more than China needs the US market. China has lots of savings and could adjust to this trade war easily, rerouting many of its products for domestic consumption, Posen argues. “[G]iven that the U.S. economy is entirely dependent on Chinese sources for vital goods (pharmaceutical stocks, cheap electronic chips, critical minerals), it is wildly reckless not to ensure alternate suppliers or adequate domestic production before cutting off trade. By doing it the other way around, the administration is inviting exactly the kind of damage it says it wants to prevent.”

Note to readers: On Sunday’s GPS, Fareed will discuss US–China trade tensions with The Wall Street Journal’s chief China correspondent, Lingling Wei.

A New Risk Premium?

In the last nine days, financial markets have been all over the place, as US trade policy has twisted and turned. Such policy uncertainty makes the US a more hazardous place to invest, Financial Times columnist Katie Martin writes: “Over-interpreting short-term moves is a risk here. But this does all suggest some difficult truths for the US administration: stock investors would rather put money to work elsewhere, and the country’s core financial assets—Treasuries and the dollar—are losing the sheen of global hegemonic dominance that they have enjoyed for decades. The trust has gone, or at least weakened significantly, and it is hard to see what can bring it back while Trump is in the White House, or even beyond.”

If History Repeats, Trump’s Delayed Tariffs May Dissolve

So far, Trump’s on-again, off-again global tariff war has followed a script similar to what played out between the US, Canada and Mexico earlier this year. Will that recent history now serve as a roadmap for the rest of the world?
 
A recap of the North American trade drama that unfolded in recent months: On Feb. 1, Trump announced 25% tariffs on Canada and Mexico. Seeking to avoid them, Canada and Mexico made concessions to the White House—but as Fareed wrote at the time, those concessions “were either small-bore or policies they were already pursuing. Mexico agreed to send thousands of troops to the border at the Biden administration’s request—and is doing the same for Trump. In the case of Canada, Trump’s own statement on Truth Social notes that Canada was agreeing to ‘implement’ its border plan (much of which had been announced in December).”
 
Following those talks and concessions, two days after he first announced the new 25% tariffs, Trump paused his Canada and Mexico tariffs for 30 days. Both countries planned retaliatory measures. When the 30 days ran out, on March 2, Trump imposed his 25% tariffs—but only on imports that did not comply with the United States-Mexico-Canada Agreement (USMCA) free-trade pact negotiated during Trump’s first term.
 
What does that mean? Basically, that the tariff threat went away. For instance, the Royal Bank of Canada estimated last month that 37.8% of Canadian exports to the US comply with the USMCA, while another 56.7% could be brought into compliance—meaning 94.4% of Canadian exports could end up being exempt from the tariffs Trump finally put in place. (Other sector-specific Trump tariffs—like those on steel and aluminum—still apply.) In many cases, making Canadian goods comply with the USMCA is just about paperwork, says William Reisch, a senior business and economics adviser with the Center for Strategic and International Studies and a former president of the Washington-based National Foreign Trade Council. Before Trump’s new 25% tariff, Canadian exporters could simply pay a low tariff rate if it wasn’t worth documenting and certifying their goods as USMCA compliant. Now, they’ll scramble to make those certifications. But it appears that ultimately, Trump’s splashy 25% tariffs won’t apply to much.
 
So, what made Trump turn away from his initial, aggressive plan for tariffs on Canada and Mexico? Did the token concessions satisfy him? Did threats of retaliatory tariffs cause the US president to back down? “Probably the thing that had the most impact was market reaction,” says Vincent Geloso, senior economist with the Montreal economics think tank MEI.
 
Daniel Schwanen, senior vice-president of the C.D. Howe Institute, a Canadian think tank, says things are not all “rosy” between the US and Canada now. The saga demonstrated that US trade policy can be linked to unrelated issues like border security. Future trade negotiations may or may not be “traditional,” Schwanen says. Trump’s steel and aluminum tariffs still apply to Canada, along with everyone else.
 
The trajectory of North America’s early-2025 trade drama might not apply neatly to other countries now. Reisch of CSIS notes that Canada and Mexico aren’t great blueprints for other countries around the world: They’re close US trading partners that already had free-trade arrangements with Washington. Still, damage has been done. “For Canadians, it’s become an emotional thing,” Reisch says, noting anti-US animus. Geloso observes: “From the vantage point of Canada, all of this was clearly for nothing.”

Will the US and Iran Reach a New Nuclear Deal?

Talks between the US and Iran are set to begin in Oman tomorrow, as Trump seeks a new nuclear deal—after scuttling the 2015 accord during his first term. At the Middle East Institute, Brian Katulis writes: “Trump is attempting to renegotiate a nuclear deal that took many years to complete. Other threats and risks are looming, which the White House would be wise to also try to address this time around. In addition to the nuclear issue, Iran’s support for terrorism and its actions undermining regional stability in Yemen, Iraq, Syria, and Lebanon remain major issues of concern for the United States and its Middle East partners, and one big outstanding question is how closely the United States is coordinated with those regional counterparts.”
 
Iran expert Holly Dagres writes in her The Iranist newsletter: “The Islamic Republic is dealing with a dire situation on the ground, marred by a crumbling economy, water crisis, and historic anti-regime sentiment. Striking some sort of deal in exchange for sanctions relief would be a temporary band-aid on these issues, which are in part caused by systemic mismanagement, corruption, and repression. … Faced with a two-month deadline for talks or military action against its nuclear facilities, it’s evident that Trump’s negotiation tactic against the Iranians is working in his favor thus far. That advantage may change in Oman, given that [Iranian Foreign Minister Abbas] Araghchi has more than a decade of knowledge and experience on the file, unlike the US special envoy [Steve Witkoff], who lacks the expertise to negotiate an arms control agreement. However, the US ultimately holds the cards.”

Note to readers: On Sunday’s GPS, Fareed will discuss the significance of US–Iran nuclear talks with Johns Hopkins University professor Vali Nasr.