By: Paarvana Sree, Research Analyst, GSDN

The second Trump tariffs are basically the trade initiatives announced by US President Donald Trump during his second tenure as the president of the US. For Trump, ‘ import tariffs ‘ served as a key aspect of negotiating the deals and also retaliating against the countries that believe to be “ripping off” the US.

After the re-election to the second term in the beginning of 2025 , Trump began resuming a trade war with China and began threatening the second one with that of Canada and Mexico. Trump made an announcement that a direct tariff on Mexico and Canada would be initially ceased for one month , until March 4, 2025 after both the countries agreed to take broader steps to protect the border security of the US . Many countries including the European union took steps to proactively negotiate to avoid tariff wars with trump.

The broader trade strategy of US President Donald Trump reflects an old worldview rooted in the mercantilism of the 19th Century, emphasizing the aspect of protection and aggressive use of tariffs. According to Trump, tariffs served many purposes – sometimes it served as a means to end, which means as a negotiating leverage to cut a deal and at times as ends to undo themselves, which means basically to encourage American manufacturing and to pay for spending and tax cuts. Under this approach according to Trump, tariffs are considered to be ‘costless’ with no defined negative impacts contained by domestic consumers by high prices or by business basically through high priced inputs and disturbed supply chains, or tariffs may increase consumer prices, but that price is worth to pay in order to revive the America industrial base. For America and its trading partners, the emergence of protectionism is an interconnected world which poses a large amount of economic, strategic and institutional risks.

Tariff Impact on China, Mexico and Canada

1) China:

The announcement of 10% tariff for China is less aggressive than previously announced 60% which provides great relief to China. China’s initial reaction to this may be the devaluation of Renminbi (RMD), which effectively counter balances the tariff by lowering the dollar price of the goods it tends to export. This tactic was effectively used by China during the first presidency term of Trump. When Renminbi is already weak, China can further be afforded to weaken the RMD in order to maintain the export competitiveness without directly escalating tensions with the US. If Trump sought to issue additional trade measures and tariffs to China, China’s reaction will be automatically a function of president Xi Jinping’s strategy for countering Trump. Xi’s position has already changed and is markedly different from the first time he engaged with Trump. Xi is more domestically stronger and is surrounded at the top of the Chinese government by a group of allies, giving him a greater aspect to navigate the external pressures.

Xi would then seek to take the merits of this politically dominant position and always seek to engage with US constructively, often prioritising the mitigation of consequent economically, while avoiding the greater risk of political instability. Trump’s tariffs to China can be seen as an immediate response to China’s limited efforts to restrict the precursors of fentanyl from making a way to the US States through Mexico and other channels . In order to address the concern of America Xi could then make more serious efforts so that China could also further seek to engage with Trump on a broader range of trade related issues, perhaps hanging down the hopes of a ” phase two” deal. If that happens, it is sure that China is more likely to take a strategy that includes drawing out various negotiations by knowing that Trump will have an political imperative to make a successful deal before the midterm elections in 2026.

China has always prepared for the return of Trump and Xi is better prepared to do a more assertive posture if he already decides to do so. Xi is now less inclined to tolerate the aggressive trade tactics of Trump. It is obvious that China might not show much patience if Trump tries to bully him. If a trade war between these countries occurs it is no doubt that China will deploy its full range of retaliatory tools against the interests of the US . Furthermore , instead of this eye for an eye imposition of counter tariffs, China will ratchet up its use of restriction of exports especially on critical materials, in order to utilise its own ” Unreliable Entities list ” and to impose its own export controls akin to the US . The foreign direct product rule potentially affects the global trade everywhere and the US who is a party to this and where any kind of component of a product can be tracked back to China. These measures will enable China to attack with greater precision, targeting the specific US companies or any kind of critical industries and potentially inflict significant Economic pain without going into a full time war.

2) Canada and Mexico

For Mexico and Canada both the countries of that these tariff threats are basically mere negotiations ploys to which further concessions can be made even before he takes his office by allowing him to declare victory and to delay the actual tariffs. The stakes in the short term are very high so that they cannot be taken for granted.

For the automobile industries which cover up all the three countries is subjected to the United States – Mexico – Canada Agreement ( USMCA) in which there is 25% tariff on the goods crossing the border have many implications. Every vehicle produced under the framework of USMCA crosses the border

for about an average of eight times during the time of production meaning that at each stage a percentage of tariff could be compounded . This affects the employment , increase the costs , disrupts the supply chains and also make high prices for the consumers.

For Mexico it is expected that the tariffs would exacerbate tensions with the new President of Mexico Claudia Shein Baum , whose reaction would be to threaten the retaliatory measures. Mexico is constrained because much of what Trump demands from Mexico is inconsistent with the political reality and that violent cartel have become entangled in the political system of the country and attempts to control them may cause widespread domestic unrest and violence.  The political structural , practical and structural challenges of addressing the drug cartels and immigration make it unlikely that Mexico is able to meet Trump’s demands in such a way that satisfies his expectations. Shein Baum may promise a wide range of good measures that exhibit good faith efforts in order to address Trump’s concern, she might be powerless to stop the fentanyl trade . This poses the risk that Trump ‘s tariff serves as a punitive measure which is basically designed to protect the strength.

The entire trade surplus of Canada comes from crude oil exports to the US. The American refineries are specifically configured to process Canadian crude oil and crude oil unlike other manufactured goods cannot be rerouted easily. Canada’s  pipelines are basically immovable infrastructure. This dependency tends to impose a bilateral monopoly limiting the practical flexibility of both sides. Canada has other viable alternatives for its crude oil exporting and also the American refineries have the same alternatives for sourcing crude oil to process. In this case both the parties will suffer.

Trump’s adversarial stands on tariff risk the bilateral trade with both Mexico and Canada which undermine the broader North American economic partnership. Regardless of whatever national emergency premise to justify them the tariffs represents a transparent violation of USMCA undermining the stability of the agreement and increasing the growing likelihood of a contentious review which is expected to be concluded by 2026 , putting the entire aspect of trading relationship on the table once again . Trump’s  former US  trade representative , Robert Lighthizer who led the USMCA negotiations noted that “no deal is forever “.

While US continue to remain as a dominant economic power and the unilateral policy and aggressive tactics by Donald Trump may yield some immediate concessions but they may tend to have long term consequences including the alienation of key allies and  accelerating the fragmentation of global trade networks does vanishing the US influence in the global economy. Reversing those alliances is worrying given the efforts of Biden administration to reset the global trading relationships around the concept of friend sharing in which allies who are like minded are treated in preference to those seen as economic threads or strategic so as to ensure complete resilience .

China is trying to play a longer game in contrast to Trump’s short-term approach, which seeds to reduce its reliance on the US and sought to strengthen its trade relationships with other countries in global south and with the US allies such as Europe and Japan. Recent signs of China’s renewed interest in joining the comprehensive and progressive agreement for transpacific partnership signifies the efforts of Beijing to position itself as a global trade leader in contrast to the unilateralism by the US.

Always Trump’s preference is to follow a protectionist agenda. While all the international allies, domestic business interest and trading partners are likely to make a case against Trump’s aggressive set of policies the fact check on trump’s ability to sustain the energy is likely to depend on the reaction of the stock economy and also the broader economy. It is obvious that the sharp decline in the equity markets or a significant hike in the inflation would serve as most efficient check on his policies facing a recalibration.

Trump’s trade war : Impact on India

It is known that president Donald Trump has signed an executive order on reciprocal tariff which raises the concerns about the impact on exports of India ,  given the relatively high tariff rates for India.

t is to be noted that between the period of 2021 and 2024 , the US seemed to be India’s largest trading partner . From April till November 2024, trade between the two nations reached $52.89 billion and imports have reached $29.63 billion ultimately favouring India. The US accounts for about 18% of India’s total exports , 6.22% of its imports and 10.73% of overall trade.

According to Aravind Panagariya, professor of economics and the Jagadeesh Bhagawati professor of Indian political economy of Columbia University , the tariffs will likely be product – specific with reference to heavy products like automobiles potentially faced by higher tariffs.

The present approach of Trump is to impose the tariff on Indian exports at the same terms that the US goods will face in India. However, this won’t apply to the same level of products as India and US exports different kinds of goods to each other. According to  Panagariya trump’s basic aim is to ensure that each country’s export faces a similar kind of tariff level. Since India is likely to impose a similar kind of higher tariff on US goods compared to Indian exports that face the US, the plan is to create a more balanced trade structure by increasing the tariff on Indian products. Automatically the tariffs will be adjusted on a product by product basis. For instance, some kinds of US exports to India already faced tariffs higher than 9.5% . So similarly certain exports to the US could also see a significantly higher tariff than a uniform rate.

According to Goldman Sachs Trump’s “reciprocal tariff ” is likely to affect India mainly in three ways.

1. country level tariff, with an average tariff increase on all US  imports from India by the weighted average differential. Under this scenario, the US effective rate of tariff on Indian products would likely increase by  ~6.5pp. This can be considered as one of the simplest ways for the implementation of reciprocal tariffs as the officials could  apply one uniform rate for each country on the top of pre-existing tariff rates.
2.  product – level reciprocity , is where the US tries to match India’s tariffs on each product imported from India . This ultimately increases the average tariff differential by approximately by ~11.5pp, but it would be more complicated with a longer timeline of implementation.
3. Reciprocity, including non-tariff barriers which includes the administrative barriers , import licenses and also export subsidies etc…This becomes the most complicated that given the cost of estimating the non-tariff barriers , but it could presumably lead to higher tariff than the other two scenarios.

Conclusion

Trump’s tariff 2.0 channels a shift towards a more radiant  form of aggressive economic nationalism, which disrupts the global trade and affects the geopolitical world order. The increase in tariff rates on Chinese Mexican and European goods ultimately fuel the retaliatory measures thus intensifying the trade wars. Supply chains will face uncertainty, compelling the business to relocate the production which potentially benefits South East Asia. The authority of the World Trade Organization weakens as unilateral tariffs bypass multilateral trade rules. The US – China tensions will escalate reinforcing economic decoupling. Allies will tend to question American reliability pushing for greater economic self-sufficiency. Developing nations suffer from volatility of markets while inflationary pressures rise globally. In short , Tariff 2.0 accelerates the geopolitical fragmentation, challenging the post war economic order built on free trade and cooperation.

By: Tanuja Baura, Research Analyst, GSDN

Both nations were in constant contact throughout the past two thousand years before Japan occupied Korea from 1910 to 1945, which affects the ongoing diplomatic relations in the Korean peninsula today. Throughout the last seven decades since World War II, while Korea remained split into two countries, Japan has experienced enduring tensions with North Korea through short-lived attempts at diplomatic contact. North Korean-controlled Chongryon operates as an unacknowledged North Korean consulate to support the ethnic Korean population in Japan. The main North Korean preoccupations of Japan consist of North Korean abduction cases of Japanese nationals together with Japanese anxieties about North Korean nuclear and missile initiatives. During previous meetings between Tokyo and North Korea for direct dialogue. The regime focused primarily on establishing diplomatic ties and financial compensation for perceived historical wrongs against the country. Multiple diplomatic efforts between Japan and North Korea have remained suspended since previous years.

Historical Background

Japan officially took control of the peninsula through annexation after achieving practical control of Korea during the aftermath of the Russo-Japanese War in 1905. Japan financed Korea’s industrial development under its imperialistic goal for an independent economic empire, which targeted most heavy industries toward the north of the peninsula. Japan received both food products and industrial resources, including steel, in addition to tools and machinery and chemical materials from Korea. Most Koreans failed to benefit from the economic growth produced during this period.

During the colonial period, Japan enforced strict and severe governing standards, which tightly confined the Korean population. Japan reached its peak of assimilation pressure against the Korean population as its empire expanded throughout the 1930s and 1940s.

During Japan’s wars across Asia and Pacific regions, the military forces, together with government institutions, recruited both female and male workers from Korea for military stations throughout the Japanese empire. Men were sometimes recruited by force when Japanese troops withdrew. Tokyo implemented these measures to force Koreans into Japanese society by officially naming them with Japanese names and demanding only Japanese language use and classifying the education of both Korean language and history as illegal.

The circumstances of Japanese colonial control led to different Korean insurgent movements, including major independence protests, which began on March 1, 1919. Left-wing resistance organizations began to rise among the ethnic Korean populations in Manchuria during the 1930s.

Kim Il-Sung led one of the partisan groups until Soviet authorities made him escape to their country following Japanese military offensives in 1941. The global conflict between Japan and World War II triggered the US and Soviet Union to carve the Korean Peninsula in two by establishing the 38th Parallel as a dividing line. Syngman Rhee led the South Korean side from the south whereas the North Korean populace followed the direction of Syngman Rhee. The two Koreas started their war against each other on June 25,1950 through a northern invasion by the North Korean People’s Army. During their administration of Japan from 1945 to 1952, the United States made this territory serve as their primary base for supplying troops into the Korean War. All crew members had to perform mine excavation duties in sea areas surrounding North Korea’s coastline as part of their work requirements.

Chongryon and Japan-DPRK Relations

During the time between 1959 and 1984, Chongrion organized the transfer of 93,000 Korean residents from Japan to North Korea, who mainly originated from the southern regions of the peninsula. Ko Yong Hui joined the group even though she is the mother of North Korean ruler Kim Jong Un along with his two brothers and three sisters. Ko had Japanese citizenship and, according to their own words, settled in North Korea during the 1960s.

The process of coming to North Korea was met with financial hardship and security service scrutiny along with restricted communication access to Japanese relatives. Japanese nationals made up thousands of immigrant individuals. The third category consisted of both Koreans and Japanese citizenship among ethnic mixtures because some had to wait years to obtain their citizenship status.

The Japanese society became aware of Chongliong through the creation of distinct ethnic communities. The organization manages all aspects of its operations through its own business ventures and banks, as well as operating educational institutions and hospitals and publishing newspapers. When restrictions did not exist in the 2000s, Chongliong managed the commercial court activities while controlling the trade flow between Japan and North Korea with minimal inspections and collection of profits from North Korean Japanese family members.

As reported, Chogins credit alliances, which were part of the Chogins chogrion system, played a crucial role in transferring money to North Korea by means of empty loan fulfilment or fraudulent money transfer schemes. Several of the regulated chogins faced bankruptcy at the end of the 1990s so Japanese governmental entities conducted consolidations and provided several billion dollars of emergency funding for depositors. After suppression from the Japanese authorities, these financial institutions faced closer examination, which led to the arrests of former leaders for embezzling funds.

Diplomatic Outreach

The Tokyo Agreement on Standardization of Relations with Seoul in 1965 made available USD 800 million alongside multiple forms of support for the recognition of ROK as “the only legal government in Korea. “The South Korean government adopted Nordpolitik policy during the late 1980s, and this led Japanese authorities to explore potential improvement of ties with communist nations such as North Korea to discuss RPDC and relations.

The top liberal Democratic official, Shin Kanemar, started discussions for normalized relations when he travelled to Pyongyang in 1990. Throughout eight rounds of diplomatic discussions between 1991 and 1992 the Japanese government maintained the proposal to compensate the South Korean ministry although they later chose to discard it.

Japan improved its relations with Pyongyang following the agreement between Washington and the RPDC which led to Japanese financial support of Kedo and donations exceeding 500,000 metric tons to feed starving North Koreans during 1995-1996.

In 2000, North Korea began receiving Japanese food aid while Pyongyang began discussing the missile program with Washington. Japan plans to deliver multiple rounds of financial help to the RPDC following more than three diplomatic meetings since 1965 according to Japanese hope. It suggests. Providers set off with financial contributions beginning from $500 million stretching to $10 billion. The debate exists over calling these funds economic assistance packages or reparations/compensation. Moreover, disputes cantering on abduction, nuclear arms and missiles developments have resulted in complete breakdown of dialogue.

Colonial Legacy, Cold War Politics, and the Korean Diaspora in Japan

The Russo-Japanese War victory resulted in Japanese control of Korea before its formal annexation occurred in 1910. The Japanese government devoted efforts to developing Korean self-sustainability through industry development with emphasis on northern Korea. The industrial sector of Korea enabled Japan to obtain steel products along with machinery and chemical supplies and various food staples. Most people from Korea received little advantage from the economic expansion.

The Japanese took an oppressive approach toward Korean citizens at this period. Japanese authorities of the 1930s and 1940s compelled Koreans to learn Japanese language thoroughly and substitute their Korean names with Japanese names while also prohibiting the teaching of both their language and history. Japanese authorities compelled numerous Koreans to occupy military positions following Japanese soldier movement restrictions while forcing various women to engage in sexual service for their soldiers.

Koreans showed resistance by staging independence protests in 1919 and creating guerrilla groups in Manchuria during the 1930s through the Japan-imposed severe policies. Kim Il-sung led one of these resisting groups until Japan targeted his movement causing him to seek refuge in the Soviet Union.

World War II resulted in an international split of Korea where the United States and Soviet Union used the 38th parallel as their border. Each of the two Korean governments established in 1948 became the Democratic People’s Republic of Korea (North Korea) under Kim Il-sung and the Republic of Korea (South Korea) under Syngman Rhee. An armed conflict materialized between North and South Korea in 1950 after North Korean forces launched an invasion against the South. During the Korean War the United States established its military operations from Japan.

The Korean population residing in Japan reached a total of two million during the final stages of the war. The majority of them went back to South Korea yet approximately 600,000 decided to make Japan their new home. The Zainichi Koreans experienced discrimination while automatically losing their Japanese citizenship status as a result.

The Cold War era brought tensions between Japan and Korea because both Koreas conducted a strategic competition to secure international recognition. The Japanese government signed an agreement with South Korea during 1965 which provided $800 million in financial aid while officially accepting South Korea as the “only lawful government of Korea.” Japan gained an opportunity to establish formal relations with North Korea when South Korea announced policy changes that focused on North Korean diplomatic dialogue.

Talks and Tensions (2000-2009)

During 2000, Japan implemented food assistance to North Korea simultaneously as talks between North Korea and the U.S. started regarding their missile initiative. The negotiations between both nations included potential Japanese economic advantages comparable to what South Korea obtained in 1965 if North Korea refused to pursue compensation while establishing bilateral diplomatic relations. 

The 2002 summit between North Korea and Japan resulted in permitting five abductee victims to visit Japan under conditions that required Japan to return the five individuals at a later time. North Korea prevented their family members from accompanying the people who left the country. After meeting with their families in Japan, the victims received no return services from North Korea while the Japanese government-maintained refusal to send them back and insisted on bringing their North Korean family members to safety. 

The initial dialogue sessions failed to achieve any advancements in both the abduction matter and North Korean nuclear projects. Japan imposed strict sanctions on North Korea after the country tested its first nuclear device in 2006, which led to complete trade restrictions and an entry ban for the North Korean ferry. 

The Six Party Talks of 2007 established the “Working Group on the Normalization of Japan-North Korea Relations” that had both abduction problem resolution and colonial rule reparation compensation as their main tasks. The position North Korea maintained regarding abductions started to become negotiable through discussions that happened in Vietnam as well as Mongolia and China. 

The other countries participating in talks engaged in granting heavy fuel oil shipments to North Korea, but Japan chose to delay providing any assistance unless the abduction issue received resolution. The 2008 move by the U.S. to remove North Korea from its terrorism sponsor list failed to gain support among Japanese officials who represented families of kidnapped people due to North Korea’s former terrorist activities. 

The relations between Japan and North Korea reached their worst point in the year 2009. Disagreements about verifying agreements together with North Korean ballistic missile launches, space launch vehicle tests, and nuclear test activities led to the Six Party Talks collapse. Due to Japan’s increased opposition, North Korea completely blocked foreign exports from its territory. 

Japan-DPRK Relations Under Kim Jong Un 

The relationship between North Korea and Japan stayed strained during Kim Jong Un’s initial two years as leader starting from 2011. Japan issued official criticism toward North Korea when the nation launched its satellite during the Kim Il Sung 100th birthday celebration period of April 2012. The Red Cross groups from North Korea and Japan assembled in China to discuss the repatriation plan for Japanese WWII soldiers killed in Korea during August 2012. Japan chose not to conduct additional talks once North Korea successfully launched its second satellite during December 2012. The development of a North Korean nuclear weapon during February 2013 led Japan to increase its diplomatic restrictions. Japan, alongside the European Union, successfully obtained UN approval for an investigation into North Korean human rights violations, especially concerning foreign citizen abductions, during the following month. 

Some discreet discussions occurred between North Korea and Japan in spite of their ongoing tensions. Isao Iijima served as a prime ministerial advisor while meeting North Korean officials in 2013. The governments of Japan and North Korea initiated their first formal discussions regarding the return of remains of soldiers who had perished in war during March of 2014.The February 2016 investigations ended when North Korea acted against Japanese sanctions that came following two North Korean actions violating UN restrictions. 

The nuclear and missile tests performed by North Korea under Kim Jong Un’s governance escalated to become Japan’s most pressing matter. The country conducted both a series of nuclear tests and numerous missile tests between 2011 and 2017. Japanese officials instructed their citizens to get indoors when two missiles passed over their territory during August and September 2017. Japan stood behind U.S. President Donald Trump’s plan called “maximum pressure” to use sanctions along with threats against North Korea in order to force them to surrender their nuclear weapons program. The diplomatic progress between North Korea and outside countries in 2018 failed to include Japanese participation. Despite diplomatic efforts between North Korea and the United States as well as South Korea and China and Russia, the country maintained no official channels of communication with Japan. 

Japan and North Korea have failed to make any progress during the period spanning from July 2022 until now. North Korea discontinued its investigations about abductions in 2016 while conducting missile tests repeatedly. The exchange between Japan and North Korea regarding high-level talks remains minimal because the only recorded meeting occurred when Abe spoke to Kim Yong Nam at the 2018 Winter Olympic Games in South Korea. Japanese officials mainly progressed their abduction concerns through United States President Trump, who confronted Kim Jong Un about the issue during their summit meetings in 2018 and 2019.

Diplomatic tendencies remain in an indefinite state. North Korea decided to seal its borders when COVID-19 reached China in 2020, hence maintaining isolation up to date despite domestic transmission of the disease in 2022. Time has aged both the Japanese families of abductees and the members who led the movement for their abduction recovery. The father of abductee Megumi Yokota, Shigeru Yokota, died in 2020, while Shigeo Iizuka departed in 2021 as the brother of an abducted person. 

Conclusion

In conclusion Japan-North Korea diplomatic relations exist in a state of tension mainly because of unresolved kidnapping incidents and North Korean diplomatic programs alongside historical disagreements between the two countries. Japan keeps strict sanctions active against North Korea while North Korea continues to stay non-engagement despite past diplomatic attempts at improving ties. The lack of direct discussion between Japan and Pyongyang as well as continued North Korean military activities create a steadily growing division. Japan has faced restrictions participating in important negotiations which restricts the attainment of security aims despite regional and worldwide collaboration efforts. Both nations face slim prospects for relationship enhancement because of their absence of meaningful diplomatic dialogue and compromise between them.