Trump’s Tariff Strategy: Procurement Playbook or Poker Game?

Since my last analysis of the emerging tariff strategies, the US approach has crystallised into structured negotiation tactics to address trade imbalances and bolster specific US-based industries. So far, the strategy has resulted in four specific tariffs:

Date	Tariff Type	Scope	Rate
March 12	Steel & Aluminium	All countries	25%
April 3	Cars	All countries	25%
April 6	Base Level	All countries	10%
April 9	Reciprocal	Varies by country	Varies

I suspect the first three tariffs follow a commercial procurement playbook rather than a typical political tactic. I’ve seen similar tactics used commercially; most recently during negotiations between a major pharmaceutical company and its suppliers. The pharma company imposed a uniform payment terms increase across all suppliers, expecting compliance from the majority, complaints with belated capitulation from others, and hard-core resistance from a few; it worked. Negotiations were reserved for the minority who actively resisted.

The US strategy parallels this approach. The first three tariffs are blanket increases, positioned as baseline "quick wins" that appear equitable due to their uniform application. However, the US administration most likely anticipated resistance from economically significant partners like Canada, the EU, and China. Rather than immediately resolving conflicts with these nations, the US seems to be deliberately trying to create momentum by securing compliance from smaller or more compliant countries first.

Why Choose This Strategy?

Importantly, this strategy is being supported by a carefully orchestrated US communications campaign. By initially signalling openness to negotiation before unveiling specific reciprocal tariffs, retaliatory actions have been muted. Most countries have preferred to engage in discussions rather than risk escalation akin to the aggressive tariff exchanges between the US and China, notably illustrated by Trump’s most recent 125% tariff retaliation.

With the threat of impending reciprocal tariffs, over 50 countries are seeking to negotiate with the US. This situation strategically advantages Trump’s team in two critical ways:

1. Time – With some tariffs already imposed and active, a precedent is established, and measurable value has been secured. The US is under no immediate pressure to concede any further deals on less favourable terms, at least in the short term. Indeed, the reciprocal tariffs are now suspended for 90 days, creating a new window of opportunity for negotiating new trade deals.

   
   

2. Scope – Countries remain uncertain about the full extent of potential tariffs, particularly the specifics around other sectors (e.g. pharmaceuticals) and tariff long-term viability. This ambiguity makes it difficult for trading partners to form targeted counterproposals. Consequently, the US maintains the momentum (tariffs are now in place) and the initiative - positioning itself advantageously to dictate terms. I anticipate the US will likely require acceptance of initial tariff conditions as prerequisites for further negotiations unless significant unilateral concessions are proposed.

   
   

Economists generally agree that tariffs are detrimental, typically harming the imposing country and its trade partners by increasing consumer costs, disrupting supply chains, and risking retaliatory escalations. Trump’s strategy appears predicated on the belief that the economic pain inflicted on trade partners will outweigh domestic consequences, compelling compliance without reciprocal concessions — securing benefits at minimal cost.

What Happens Next?

As Trump approaches more challenging negotiations with China, businesses involved in international trade should prepare strategically. It will be critical to anticipate possible escalations, understand early negotiation outcomes, and leverage these insights to navigate future trade complexities effectively.

When faced with situations where one party wants changes to existing arrangements, focus on the other side’s objectives and goals - remaining clear about what is and what’s not acceptable for your team. Regular assessments of the power balance (the markets, competition, time etc.) will inform any revisions to your objectives and strategy. When proposals are made, they should be clear and specific, addressing their objectives as well. In this way, they’re much more likely to move the process forward.

April 10th 2025

If you'd like occasional email updates from Savage Macbeth with useful, actionable insights into commercial conflict resolution and negotiation, sign up here.