Negotiate or Sink

Donald Trump paused his global trade offensive... but only for a couple of months. His strategy—"threaten, negotiate, threaten again, and negotiate until the other side is exhausted"—remains firm and in full swing. June marks the return of his threats, and all signs point to a new phase that will plunge the world back into uncertainty.  

The first victim in this new move will be the European Union. Trump wants to pressure this economic bloc to force it to take a stance. On the geopolitical chessboard, the EU remains a key player, with potential influence in North Africa and the Middle East. Trump has already announced his intention to impose 50% tariffs on European exports to the United States. Everything suggests he is pushing the EU to choose: either align with the U.S. or with Russia. The second half of the year will be decisive. Europe will have to take firm steps if it wants to maintain itself as an autonomous bloc with its own voice.  

Russia, for its part, will not back down. It will continue trying to gain ground in Ukraine. And that conflict could backfire on Trump, especially if he fails to deliver on his promise to resolve it "in a couple of days," as he claimed. All indications are that the U.S. will play its strategic card in the Middle East through Saudi Arabia. However, there are signs that the EU could move closer to Turkey to balance power in the region. That move could completely change the landscape.  

Mexico is once again in Trump’s crosshairs. By a twist of fate, his trade threats triggered an unexpected reaction: U.S. businesses rushed orders and stockpiled inventory as a precaution. The surprise was that Mexican businesses responded swiftly, sending a record volume of products north. That emergency maneuver was, quite literally, what kept Mexico from slipping into recession in the first quarter. But the outlook remains uncertain: with inventories already full, there will likely be no generous purchases in the next six months. And tariffs on the automotive industry remain in place, despite being exempt under the USMCA.  

Two key factors threaten Mexico’s economy. First: the weak dollar. Trump’s policies have made the U.S. economy unpredictable, leading to distrust from rating agencies and a drop in the currency’s value. When the dollar is strong, U.S. purchases from Mexico rise; today, that incentive has vanished. Second: a new 3.5% tax on remittances. A hard blow, directly hitting one of Mexico’s main sources of consumption and investment. The Mexican government’s lack of negotiation skills is once again on full display and will have a major impact on second-half results.  

Trump isn’t just threatening allies and rivals. He’s also fighting an internal battle. He has revived his old threat to impose direct tariffs on Chinese tech products. His main target now is Apple, which he is trying to force into manufacturing on U.S. soil. He has also taken shots at Walmart and Amazon, which passed tariff costs on to consumers. Trump expected them to absorb the price hikes... but they didn’t. Prices rose, leaving him in a bad spot with voters—and furious.  

The great enigma remains China. Months ago, Trump imposed tariffs… only to backtrack days later, saying he "didn’t want to hurt China." He then announced that both sides were in negotiations. But China has shown resilience, strength, and patience, once again putting Trump in an awkward position. In the end, he had to retreat. The global economy felt the shock of his decisions—and the U.S., inevitably, did too.