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Reading: Economic Diplomacy Or Gamble? Trump’s Trade Dilemma
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Home | Blogs | Economic Diplomacy Or Gamble? Trump’s Trade Dilemma

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Economic Diplomacy Or Gamble? Trump’s Trade Dilemma

Sameera
Last updated: June 26, 2025 8:11 am
By Sameera
6 Min Read
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Economic Diplomacy Or Gamble? Trump’s Trade Dilemma

US President Donald Trump has repeatedly repeated these statements in defense of his controversial economic diplomacy decisions that we will never back down. This is medicine, which is painful but necessary. But last week, President Trump wrote on his social media platform X, “BE COOL”.

Everything is going to work out well.” So the world again became interested in his next step and just four hours later, the one who had shown himself faithful in every storm backed down under pressure. Trump announced that he was temporarily suspending increased trade tariffs against 75 countries, except China, for the next 90 days.

When Donald Trump imposed retaliatory tariffs on several countries, it was not just an economic decision, but an aggressive message to the entire world that we don’t need you, we only want benefits. This approach goes against the basic principles of economic diplomacy because economic diplomacy involves mutual trust, respect, and sharing of interests.

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The United States made decisions unilaterally without any diplomatic consultation with either the G7, the World Trade Organization (WTO), nor its NATO or European allies. Which has undermined the confidence of the American leadership.

US President Donald Trump also imposed tariffs on traditional allies like France, Germany, Japan, and Canada. The world felt that the US was breaking away from the rules of the global trading system and adopting a policy of trade-by-war. These actions of the US President raise a question: has the US now become a lone trader instead of leading its allies? Currency stability is a key factor in economic diplomacy.

The discussion of reducing dependence on the dollar in the global market due to US actions has gained momentum in China, Russia, and the Gulf states. These are the same countries that were already moving towards de-dollarization, meaning that America’s behavior has weakened its financial influence.

Trump did not exempt China from the tariffs, but imposed taxes on the rest of the world as well, creating an uncertain bloc that China took advantage of. China presented itself as a center of stability. Europe, Latin America, and African countries began to consider reducing their dependence on the US market.

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Trump’s policies believed that the US benefits first, and the rest of the world later, but the main principle of economic diplomacy is that sharing interests, respecting relationships, and strengthening influence come first. Trump’s policies are for short-term benefits, but diplomacy is a game of long-term trust, which China is playing quietly and the US is losing trust in its allies and the world.

Trump’s actions have seemingly taken the global economy hostage. China imposed retaliatory tariffs in response, international markets became unstable, and uncertainty spread among investors. World economists are considering it a declaration of war against globalization.

But the question is, has Trump himself lost this war? Trump’s recent U-turn not only raises questions about his policies but also shakes the global perception of American leadership. Trump’s U-turn, which considers himself an invincible businessman, “Master Negotiator” and global chess player, tried to save the White House team by calling it a strategy, but in reality, this decision was a major economic and political defeat.

This decision has made the United States an uncertain and unreliable trading partner. It has also had negative effects on the US dollar, the global financial system, and the US economic reputation. Now the question is, is Trump capable of economic leadership?

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Trump’s dream is the America of the 1950s and 1960s when the world was devastated by wars and America was an economic giant. But the reality is that manufacturing employment in America is now only 8 percent, down from more than 30 percent in the 1970s. Its return is a dream.

It would be premature to say that Donald Trump’s presidency is a failure, but Trump’s extraordinary actions and the growing backlash against him indicate that his presidency is in danger. Trump’s presidency has now entered a testing phase.

It remains to be seen how President Trump will manage his economic war in the coming months and whether will he once again turn around in the same way as he turned around before. Or jump into a new war.

Economic Diplomacy

Economic diplomacy leads to the use of a country’s economic means, policies, and relationships to fulfill its international diplomatic goals. It interests the rise of national economic interests worldwide, such as trade, investment, and financial cooperation, as well as the use of economic resources and leverage to support foreign policy goals. This is one of the major responsibilities of the National Diplomat.

Economic diplomacy can entail dealing with trade agreements, attracting foreign investment, managing economic embargoes, and engaging in multilateral economic platforms. Economic diplomacy is typically carried out by government agencies, including foreign affairs ministries, trade departments, and embassies, in coordination with the private sector.

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